Workers’ Compensation Benefits Can Be Reduced by Other Programs

Workers’ compensation benefits are available to almost all Michigan employees who suffer a work-related injury or illness. However, workers’ compensation benefits can be reduced due to receipt of other benefits such as unemployment benefits, short-term and long-term disability benefits, retirement benefits and other employer-provided wage continuation plans.

Reducing Workers’ Compensation Benefits

A 1982 amendment to Michigan’s workers’ compensation law enabled employers and insurance companies to reduce workers’ compensation benefits by the amount of the employee’s regular pension and, in certain circumstances, a disability pension. In other words, if an employee is receiving retirement benefits from the employer for whom you were working at the time of the injury, there is a good chance that workers’ compensation benefits would be reduced. However, every employer has different pension plans and the plan must be examined to determine whether a reduction of workers’ compensation benefits is allowed.

For many years, General Motors had an agreement to pay injured workers full workers’ compensation benefits in addition to their disability pension benefits. After the company failed in 2009, a new agreement contained important language to reduce workers’ compensation benefits for disability retirees. The retroactivity of this contract provision is currently being litigated in Michigan courts.

Now, some GM workers have seen a drastic cut to their workers’ compensation benefits if they are also receiving Social Security disability payments and a disability pension.

Workers in other industries have faced this dilemma for years. One way to avoid losing workers’ compensation benefits, or having Social Security disability benefits reduced, is to have a workers’ compensation attorney carefully structure a settlement that avoids reductions as much as possible.

Structuring Settlements

Workers’ compensation settlements need to be structured to avoid reductions in Social Security disability benefits.

The net amount of any workers’ compensation settlement, after subtraction of costs and attorneys fees, will be allocated over the injured worker’s future life expectancy to either eliminate or drastically reduce any workers’ compensation off-set. By properly computing this off-set, in almost all cases, a settlement of a workers’ compensation claim in Michigan will preserve full Social Security disability benefits for an injured worker.

If you have suffered a disabling injury or illness on the job, talk to a Michigan workers’ compensation attorney before agreeing to any settlements. A workers’ compensation lawyer can assess the facts of your case and determine how a settlement should be structured to best protect you and your family.