Cost-shifting between workers comp and Social Security disability disputed

The idea that the costs for caring for injured workers have shifted to Social Security Disability Insurance is being disputed by a recent study conducted by the National Council on Compensation Insurance Inc.

The study, released March 26, is focused on the interaction between SSDI and workers compensation benefits and explores cost-shifting that may occur between the two programs.

“There have been some allegations or thoughts that perhaps workers comp cuts in benefits or the tightening of compensability standards at the state level might induce injured workers to file for SSDI … we found that the majority of states did not decrease benefits with a specific focus on permanent partial disability and permanent total disability,” said Jim Davis, director and actuary for Boca Raton, Florida-based NCCI.

Looking at the overall amount that is paid through SSDI is important, according to Emily Spieler, a professor of law at Northeastern University School of Law in Boston.

“Over the last 20 years with changes in workers compensation laws, people have always gotten injured at work, they have gotten permanent partial disability settlements, they have tried to go back to work and haven’t been able to return. They will apply for Social Security disability, sometimes while they are receiving the partial benefits, but the amount that is paid out by Social Security over a lifetime for someone who has a workplace injury may be far higher than is paid by workers compensation,” said Ms. Spieler.

NCCI saw the biggest change occur in the number of SSDI applications during the 2007-2009 recession.

“The largest increase in SSDI applications was during the great recession and this is common across states … and that is in contrast or versus any kind of activity at the state level,” said Mr. Davis.

The number of Social Security Disability Insurance beneficiaries rose 58%, and SSDI expenditures grew 138%, to $143 billion from $60 billion, from 2001 to 2015. Since 2010, the number of SSDI beneficiaries has been relatively stable, and spending growth has moderated, according to the study.

In states like Illinois and Nebraska, a person who receives both workers comp permanent total disability benefits and SSDI, in these cases workers comp shoulders a greater portion of total benefits, according to Mr. Davis.

“We have two different programs here. They serve different purposes, and from time to time there might be changes, perhaps to better align the program to its original intent, and that’s what we have seen. We have seen some changes that can shift costs in either direction, but that is not necessarily a bad thing,” said Mr. Davis.

There are still some lingering questions, said Ms. Spieler.

“I think there are three questions, and this research addresses one of them,” she said. “The first is to what extent does workers compensation pay for the costs of disability arising out of injury or illness? … the second question is to what extent have what they call ‘benefit changes’ had an impact on this cost shift? And there I think the report is accurate … the third question is … whether changes in the law have led to reductions in the amount that people are getting in workers compensation, not because the weekly benefits are different but because the way claims are looked at is different.”

This article was first published by Business Insurance.

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