Michigan work accident lawyer explains how retirement benefits paid by Social Security can reduce your wage loss benefits under workers comp.
We recently got a call from a nice man who was on workers comp and turning 65. He had heard from a neighbor that his workers comp benefits could be reduced once he started getting retirement benefits from Social Security.
Sadly, we had to confirm this fact and explain that there will be an offset. Michigan law provides that an employer or insurance company can coordinate 50% of the amount of old-age benefits received under the Social Security Act.
Here is an example of how the offset works: Mr. X is receiving $300 per week in workers comp benefits. Mr. X starts getting $1,000 per month from Social Security for retirement benefits. The employer or its insurance company can coordinate 50% of his weekly Social Security amount or $115. The new workers comp rate will be $185 per week.
Not Social Security Disability
Social Security also pays benefits to people who are disabled. These benefits cannot be used to reduce workers comp payments. This is an important distinction as some people can qualify for either disability benefits or early retirement benefits.
Social Security disability benefits will be automatically converted to retirement benefits at a specific age. The retirement age depends upon the year you were born. For some people it is age 65 while others must wait until 67.
An employer or insurance company should notify you in advance before reducing your wage loss benefits under workers comp. Most will require that you sign an authorization to release information from the Social Security Administration. If you fail to comply with this request, your workers comp benefits can be reduced or stopped.
Other age reductions
Your workers comp benefits can be reduced at age 65 even if you delay the receipt of Social Security retirement benefits. Michigan law allows for a 5% reduction each year until you reach age 75.
An employer or insurance company must select either the age 65 reduction or the Social Security reduction but not both.
Planning for the future
It is a good idea to plan for the future. The best way to do this is by speaking with an experienced Michigan lawyer about your legal rights. Sometimes a settlement before you turn 65 can maximize the total amount of benefits over your lifetime.
To speak with one of our work accident lawyers in Michigan, call (855) 221-COMP for a free telephone consultation. We never charge a fee unless you are successful with your case.
- Alex Berman is the founder of Michigan Workers Comp Lawyers. He’s been representing injured and disabled workers exclusively for more than 35 years. Alex has helped countless people obtain workers comp benefits and never charges a fee to evaluate a case.
- Photo courtesy of Creative Commons, by Images_of_Money.