Understanding the relationship between workers' comp and SSDI
Injured workers may be entitled to benefits under their state's workers' compensation program, Social Security Disability Insurance, or both. Here's what you need to understand about how they work together.
Many industries across the U.S. have jobs with a increased exposure to risks. For employees working under such conditions, high-risk jobs open the door to injuries, illnesses and the possibility of not being able to return to work.
Fortunately for U.S. workers, there are both federal and state insurance programs they may turn to for assistance. Social Security Disability Insurance (SSDI), a federal program, provides benefits to people who become disabled and can’t work, regardless of whether their disability was job-related. Workers’ compensation (WC) insurance, which states regulate, provides benefits to workers whose disability is specifically job-related.
The National Council on Compensation Insurance’s (NCCI) latest research brief, “Social Security Disability Insurance and Workers Compensation,” examines the interplay between SSDI and WC benefits. Because disabled workers can file for both SSDI and WC benefits, it’s critical to understand how federal and state insurance programs share the costs incurred in caring for these individuals.
Related: How to increase injured employee engagement in the workers’ comp system
Burden falls on WC programs in ‘Standard Offset’ states
In the majority of states — referred to as “Standard Offset” states — the SSDI benefit for dual recipients may be offset to ensure that the combined benefits don’t exceed a cap established by the Social Security Administration. However, in 14 states — referred to as “Reverse Offset” states — the WC benefit may be offset for some or all benefit types to ensure that the combined benefits don’t exceed a cap established by the state.
NCCI reported that WC share of total benefits paid for dual recipients of WC permanent total disability and SSDI ranged from 68% in a low-WC benefit state to 90% in a high-benefit state. For example, in Nebraska, a relatively low-benefit state for permanent total disability, WC pays 83% of total first-year benefits. Comparatively, SSDI pays 17% — a full 72% less than it would pay if WC didn’t exist.
Related: Workers’ comp and pain management experts discuss alternatives to opioids
Highs and lows
The number of SSDI beneficiaries rose 58%, and SSDI expenditures grew 138% (from $60 billion to $143 billion) over the 15-year period between 2001 and 2015, peaking in 2010. Since then, the number of SSDI beneficiaries has been relatively stable, and spending growth has moderated.
Increases in Social Security retirement age, individuals continuing to work at older ages and rising obesity rates are among the numerous factors cited as possible contributors to the growth in the SSDI program.
Workers suffer in a number of ways
The study examined the top five SSDI conditions for the 8.9 million disabled workers in 2015. Diseases of the musculoskeletal system and mental disorders account for more than 60% of the cases.
These are the top five conditions:
- Musculoskeletal system — 31.7%
- Mental disorders — 30.6%
- Diseases of the nervous system and sense organs — 9.4%
- Diseases of the circulatory system — 8.2%
- Injuries — 3.9%
- All others — 16.2%
Our workforce is changing, and so too will the risks that come with it. Understanding the interplay between both programs is an important factor for regulators and legislators, among others, when considering changes to their state’s WC system.
Related: 10 more issues impacting workers’ compensation in 2018