Workers’ Compensation, Retirement, Social Security, and Voluntary Removal from the Workforce in Pennsylvania: A Comprehensive Guide

Many of the workers’ compensation cases we manage are with people who have stopped working. In many of these cases, the employer and insurance company will attempt to stop paying for benefits in one form or another. One method is by arguing that the individual has retired and no longer qualifies for workers’ compensation. In Pennsylvania, people can continue receiving workers’ compensation benefits and their retirement (SSR, SSD, Pension) under the right circumstances. Understanding these nuances can help prevent you from missing out on the income you deserve after you step out of the workforce.

‘Voluntary Removal’

The most important question a court will consider in one of these cases is whether or not the individual voluntarily removed themselves from the workforce.

Voluntary removal is when someone leaves the workforce, with really no intention of returning. In many cases, voluntary removal can create hurdles for receiving benefits as opposed to when someone stops working when their injuries are so severe, they can no longer continue working in any level of employment.

To determine whether one has voluntarily removed themselves from the workforce in a work-related injury setting, Pennsylvania courts look at indicators or indicia of whether one has so removed themselves to bar receipt of benefits. If it is determined one has voluntarily removed themselves from the workforce, they would be ineligible for future wage loss benefits.

The courts take into account these indicia or considerations to review. This includes:

• Whether you receive other benefits (a pension, Social Security, etc.) - Your acceptance of a retirement pension or social security retirement could make it appear that you have removed yourself from the workforce.
• Employment status - If you have no interest in ever working in any capacity again, you may appear to have willingly removed yourself from the workforce despite your injury.
• The extent of your injury - Why did you stop working? Were you on restrictions and stopped? Is your injury so severe you can’t perform any work?

Although none of the following may be dispositive alone, together your employer or their workers' compensation insurance carrier may use them

to prove you voluntarily removed yourself from the workforce:

• An admission from you that you are fully retired
• Your acceptance of a retirement pension
• Your refusal to transition into suitable light-duty employment to accommodate your injury
• Your refusal to look for other jobs that are suitable for your physical capabilities

If your employer can prove you voluntarily removed yourself from the workforce, they could discontinue your workers’ compensation benefits.

When You Can Continue Receiving Workers’ Comp Benefits

Your benefits may continue after you retire or take a pension if you haven’t "voluntarily removed yourself from the workforce" and other certain conditions are met. These could include:

• You aren’t capable of any level of work due to your injury.
• Your employer is unable to accommodate your physical restrictions so you stop working and arguably search for a suitable alternative. (Note: Before searching for employment, consult us or your attorney. Doing so could potentially be used to assess you an earning capacity.)
• A change in circumstances after you stop work you go back into the workforce.
• You have evidence that you had done some search for suitable work. (Again, talk to an attorney before doing so to avoid being assessed an earning capacity. There is a fine line here so be careful.)

Under these circumstances, you may continue to receive full or partial workers’ compensation benefits, depending on whether you receive other benefits like a retirement pension or Social Security.

Your Pension, Social Security Benefits, and Workers’ Compensation Benefits

You may receive a pension and/or Social Security at the same time as your workers’ compensation benefits, but these earnings lower your workers’ compensation payments.

Pension Earnings

Your pension benefits may directly offset your workers’ comp benefits. Under Pennsylvania workers’ compensation laws, your monthly pension value is divided by 4.34, and the result offsets your workers’ compensation benefits on a weekly basis.

Example: You receive $2,500 each month as part of your pension. When divided by 4.34, this becomes $576.03. Because of this, your workers’ compensation benefits are offset by $576.03 each week.

Social Security Earnings

Like pension benefits, your Social Security earnings could significantly offset your workers’ comp benefits, but there is a difference as to whether you receive Social Security Retirement benefits or Social Security Disability Insurance (SSDI) benefits. And the timing of receipt. If you start receiving Social Security Retirement benefits after your injury, your workers’ compensation benefits will be slashed by 50 cents on the dollar of your Social Security Retirement earnings.

To see this in action, pretend you are entitled to $1,500 a month in workers’ comp benefits and you receive $1,200 in Social Security Retirement each month. Fifty percent of $1,200 is $600, so your workers’ compensation benefits would drop from $1,500 to $900 a month.

If you were on Social Security Retirement before the work injury, there should be no offset or reduction of your workers' compensation.

There is an opposite effect on Social Security Disability payments. Workers’ compensation benefits affect Social Security Disability Insurance benefits. The Social Security Administration calculates the combined amounts of your workers’ compensation benefits and your SSDI benefits. Generally, Workers Compensation pays 66 2/3% of your average weekly wage (depending on your earnings, the weekly benefit is calculated differently, e.g., in some cases it is 90%). Thus, your SSDI will be reduced by the amount of Workers Compensation. The Social Security Administration will reduce your SSDI payments so in conjunction with W/C, the total will to bring you to the full rate Social Security would’ve paid absent Workers Compensation. To illustrate, assume you earned $3,000 a month in SSDI. If your workers’ compensation benefits totaled $1,400 per month, your SSDI payments would be reduced to $1,600 so the total combined W/C and SSDI equals the $3,000.

Get the Protection You Deserve

The nuances within voluntary retirement and workers’ comp benefits are tricky. Ensure your benefits are protected with a workers’ comp lawyer who fights for the check you deserve. Contact Dugan & Associates today to continue receiving the benefits you’re entitled to.