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If you are receiving monetary benefits from the Department of Labor and Industries (L&I) you may also apply for disability or retirement benefits with the Social Security Administration (SSA). If you receive monetary payments from both social security and L&I, your benefits may be reduced. This reduction is called the “offset” of benefits. All benefits from SSA and L&I are combined, to calculate the offset. Between both agencies, you are able to receive up to 80 percent of your average current earnings (ACE). This means that if you are receiving your full benefits from social security (disability or retirement), your L&I benefits will be reduced, per the offset rules. When you receive social security benefits and time loss or pension benefits from L&I, there is always an offset which is assessed by one agency or the other. The exception would be that if the wages you were earning at the time of your injury were significantly lower that the wages earned in your previous employment history, then the offset may be minimal.
You cannot be offset by both agencies at the same time. Only one agency can implement the offset at a time. The legal authority for L&I offsetting benefits is outlined in RCW 51.32.220 and RCW 51.32.225. SSA has been required, by law, to offset your benefits since 1965. SSA implements the offset between the ages of 62-66. L&I implements the offset at all other times.
Average current earnings (ACE) are based upon a specified period of your highest monthly reported earnings. Your ACE is generally calculated from the reported earnings to social security. However, if you have W-2 forms or income tax records showing a higher wage, this information can be provided to L&I for calculating the offset. Generally, L&I uses the highest year’s wages reported by social security. If it is to your benefit, L&I may take your highest five years earnings, divide by five and use that figure in your offset calculation.
Offset Changes Between the Ages of 62-66
(Also known as the offset flip)
When you turn 62, the Social Security Administration (SSA) is required to take the offset. This means SSA should reduce your benefits, per the offset rules. When SSA reduces your benefits, you must contact L & I immediately to report the change in benefits.
SSA will assess you an overpayment, if the offset was not implemented at age 62. When this happens, L&I will remove the offset and pay your time loss or pension benefits at the full rate.
Many times, SSA does not implement the offset until you turn 63 and, thus, you receive notice of an overpayment, for the previous year. When that happens, you must contact L&I so their offset is removed and your previously paid benefits are recalculated. Please keep in mind that if SSA assesses you an overpayment, more likely than not, L&I will pay the underpayment of your time loss or pension benefits. When you receive the recalculated benefits from L&I, you then should repay SSA the amount due for the overpayment. Many times, L&I will recalculate your benefits and pay you more than the SSA overpayment. You are only obligated to pay SSA the amount of their overpayment and any remaining balance is yours to keep.
When you turn 66, the offset flips again, for the final time. This means at the age of 66, you should receive your full SSA benefits and L&I will reimplement the offset on your time loss or pension benefits. To avoid any additional overpayment from L&I, you will need to advise L&I that your SSA benefits are now being paid at the full rate.
After the age of 66, the Social Security Administration may tell you that your benefits can no longer be offset. This is true for SSA. However, the Department of Labor and Industries is required to continue to offset your benefits, for the remaining time wherein you are receiving SSA disability or retirement benefits.
Overpayments assessed by the Social Security Administration
And the Department of Labor and Industries
The Social Security Administration can assess you an overpayment for any time period. There is no limitation of how or when the overpayment is assessed. SSA will notify you of an overpayment and generally stop your monetary benefits, until the overpayment is fully recovered.
The Department of Labor and Industries is only able to recover an overpayment for the previous six months, if the overpayment is due to a miscalculation on the SSA offset. RCW 51.32.220. The Department of Labor and Industries will notify you of any overpayment and will start to recoup that overpayment immediately. L&I will deduct 25 percent of your benefits and apply those benefits to the overpayment, thereby reducing your time loss or pension benefit by 25 percent, until the overpayment is recouped. You can request the reduction in benefits be reduced; however, you may be required to provide information regarding all of your assets and debts in order to obtain a reduction. Any reduction is at the discretion of the Director of the Department. There is no guarantee a reduction and/or waiver will be granted.
Cost of Living Increase
Once an offset is in place, your claim is reviewed every three years to determine if you are eligible for a triennial cost of living increase (COLA). If you do not benefit from a triennial redetermination, you may receive your COLA every July 1st, so long as you are eligible to receive the COLA.
Social Security Survivor Benefits
Social security survivor benefits are not offset from L&I benefits. If you are receiving widow’s benefits, under a spouse’s social security account, those benefits cannot be offset against your L&I benefits.
Credit for fees paid to your attorney
When applying for social security benefits, SSA will take into consideration the fees you paid to an attorney, when calculating the offset of benefits. The Department of Labor and Industries will not consider the fees paid to an attorney when calculating the offset.
The office of Ostrander & Deuel, PLLC does not handle social security cases. We do, however, see the offset of benefits all the time and help our clients understand the offset rules and ensure all underpayments by L&I are calculated and paid to our clients. We also have referrals to attorneys who may be able to help you with any social security issues you may have!
Click the links below to read more about the SSA Offset!