WISCONSIN WORKER INCOME BENEFITS & HOW THEY INTERACT
Whether you are out of work due to injury, disability, or some other reason that was not your fault, you may be facing financial hardship because you are no longer earning income from wages or a salary. It can help to learn about several benefits available through your employer and/or state and federal government that may assist financially as you manage this difficult time.
PRIMARY BENEFIT PROGRAMS THAT HELP INJURED OR DISABLED WORKERS IN WISCONSIN
If you are injured on the job, you may be able to seek Worker’s Compensation (“WC”) benefits and Long-Term Disability benefits (LTDI) from your employer.
For those who are forced to take from leave the workforce due to disability, you may be eligible for LTDI from your employer and Social Security Disability Benefits (SSDI) through the Social Security Administration.
In any situation (including the above) where you are out of work through no fault of your own, you may be eligible for Unemployment Insurance benefits (UI).
It is common to try securing as much money as quickly as possible from every possible source. However, people who receive benefits from more than one source should be aware of considerations and complications of filing for multiple benefits; it pays (literally) to learn your options and possible consequences. Seek advice from an attorney before seeking multiple types of benefits to make sure you understand how these benefits interact with each other.
While there is no hard and fast rule for how to maximize your benefits or how to best accomplish your goals, this post reviews the most common interactions of work loss benefits. While this information is helpful, it should not take the place of having an attorney evaluate your individual situation. Hawks Quindel, S.C. specializes in all of these employee benefit areas and we are ready and willing to work with you to develop a plan for managing and navigating this difficult time.
HOW SOCIAL SECURITY DISABILITY (SSDI) AND WORKER’S COMPENSATION (WC) BENEFITS INTERACT AND AFFECT EACH OTHER IN WISCONSIN
The relationship between SSDI benefits and Worker’s Compensation benefits is not the same in Wisconsin as in other states. In most states, Worker’s Compensation benefits reduce SSDI benefits. In Wisconsin, the reverse is true: SSDI benefits reduce Worker’s Compensation benefits.
Unfortunately, the calculation for Wisconsin’s SSDI-WC reduction is extremely complicated. An attorney may be able to help estimate the reduction. The most significant reductions occur in WC claims for permanent total disability.
Importantly, SSDI benefits can only go as far back as one year before the application for benefits is filed, if the person has already been disabled (in this case, due to a work injury) for five months. Practically speaking, this means if a person pursues a WC claim immediately and can resolve it within 17 months of their injury, they may be able to avoid reduction from SSDI. For example, consider a scenario where John is injured at work on January 1, 2021, applies for SSDI on February 1, 2021, and is approved on April 1, 2022. With the SSDI approval, John could be awarded back benefits from June 1, 2021 to April 1, 2022 (in additional to regular monthly benefits going forward, if he is still unable to work) because June 1 is five months after he first became unable to work. In John’s case, he would ideally want to file and resolve his WC matter before April 1, 2022 to avoid benefit reductions. If John’s WC matter is resolved after April 1, 2022, his WC benefit amount would be reduced because he is already receiving SSDI benefits. In any event, because SSDI benefits end when a person starts taking social security retirement, the WC reduction drops off at that time.
HOW SOCIAL SECURITY DISABILITY (SSDI) AND UNEMPLOYMENT INSURANCE (UI) BENEFITS INTERACT IN WISCONSIN
The relationship between these SSDI benefits and Unemployment benefits is another where Wisconsin rules differ from most other states. Wisconsin has a strict rule that SSDI recipients cannot also receive UI. There was a small caveat to this rule for Pandemic Unemployment benefits during parts of 2020 – 2021, but this exception ended September 4, 2021.
Practically speaking, Wisconsin’s special SSDI-UI restriction means while a person may be able to start receiving UI benefits much sooner than SSDI, if you are ultimately approved for SSDI benefits covering the same time period during which you received UI benefits, the UI division will seek repayment of those benefits. If you think you might be in this category, the safest course of action is to hold onto your SSDI back benefits once you receive them and wait to see if UI demands repayment.
Several Madison attorneys recently filed a class action lawsuit to overturn the eligibility ban in Wisconsin because it is discriminatory against people with disabilities. If this lawsuit prevails, it will be good news for injured and/or disabled workers in Wisconsin who are still capable of work.
HOW SOCIAL SECURITY DISABILITY (SSDI) AND LONG TERM DISABILITY (LTDI) BENEFITS INTERACT IN WISCONSIN
Often, a LTDI policy will require a Wisconsin benefit recipient to also apply for SSDI. Because both LTDI and SSDI benefits provide income to a person unable to work due to a medical condition, many LTDI policies will reduce your LTDI benefit by the amount you receive in SSDI benefits.
If you have dependent children who start to receive Dependent benefits when you are approved for SSDI, those benefits also usually reduce the LTDI benefit amount.
If a person receives LTDI benefits while they await SSDI approval, once they are approved for SSDI and receive back benefits for the time spent waiting, the LTDI carrier may seek repayment of benefits paid out during that time period.
For this reason, the safest approach is to save/reserve your SSDI back benefits until you know whether and how much LTDI must be repaid. Not all LTDI policies are the same, so it is imperative to have an attorney evaluate your individual situation.
For more details on the interaction between SSDI and LTDI benefits in Wisconsin, see Attorney Jessa Victor’s blog post.
HOW WORKER’S COMPENSATION (WC) AND LONG TERM DISABILITY (LTDI) BENEFITS INTERACT IN WISCONSIN
Most LTDI policies require that the LTDI benefit be reduced “dollar-for-dollar” based on worker’s compensation benefit payments. Even after WC benefits are deducted from a LTDI benefit, some LTDI benefit remains due, particularly when a policy provides for a minimum monthly benefit. LTDI benefits are also often paid out for a longer period than WC benefits.
For more details on the interaction between these benefits, see Attorney Bill Parson’s blog post.
HOW WORKER’S COMPENSATION (WC) AND UNEMPLOYMENT INSURANCE (UI) INTERACT IN WISCONSIN
WC and UI benefits typically have a “dollar-for-dollar” offset in Wisconsin because UI and WC benefits are both viewed as sources of lost wages. For example, where a person’s WC claim is conceded and s/he is receiving weekly temporary-total disability (TTD) benefits, those benefits are treated as wages by UI and usually fully offset any potential UI benefits. Most often the TTD weekly amount (two-thirds of regular income) is greater than the UI amount (capped at $370/week) anyway.
When a person’s WC claim is initially denied and the claim is appealed, the result is often a settlement that accounts for TTD that would have been paid if the claim was not initially denied. In that situation, if UI discovers the WC settlement compensating for a time period during which the person was also receiving UI benefits, UI may seek repayment of the UI benefits paid prior to the WC settlement.
At the very end of a WC case, a person may be assigned a permanent-partial disability (PPD) rating sustained as a result of their injury. An award of PPD benefits does not bar UI, but may present an issue of the person’s availability/ability to work, which is a requirement for UI eligibility. UI requires that a person be able and available to work within their restrictions, so if you have PPD but are still able to work within restrictions, you may still be eligible for UI. If you PPD restricts you to being unable to work at all, you will not be eligible for UI.
HOW LONG TERM DISABILITY (LTDI) AND UNEMPLOYMENT (UI) INTERACT IN WISCONSIN
The relationship between LTDI and Unemployment Insurance benefits is similar to that between LTDI and SSDI.
Depending on the terms of the LTDI policy, the LTDI benefit may be offset by a person’s UI benefit amount. If a person is initially denied LTDI benefits, appeals, and is ultimately awarded back benefits for a time period during which s/he was also receiving UI benefits, LTDI may be reduced by the actual amount of UI benefits received.
If LTDI pays the back benefit and later learns that the person was also receiving UI during the covered period, LTDI may seek repayment in the amount of the UI benefits.
SETTLEMENT AGREEMENTS FOR WRONGFUL TERMINATION, PERSONAL INJURY, ETC.
The theme throughout the scenarios discussed above is that most benefits are meant to replace wages for the period a person is out of work. Thus, benefit providers do not want a person “double-dipping,” or receiving wage replacement benefits from private insurance when they are already receiving similar wage replacement benefits from a government entity.
Workers often sue employers for poor treatment, such as wrongful termination, discrimination, harassment, breach of contract, and other scenarios. Most often, the worker and the company will settle the suit out of court, and the worker will receive a fixed sum of money in compensation. While the worker may appreciate the settlement, they should be aware that receipt of other benefits related to their previous employment may put a claim on some portion of their settlement award.
The danger with settlement agreements is that money paid out to a worker may be considered back pay or lost wages by their insurance company or government entity that funds the benefits described above. For that reason, there may be a repayment impact on previously paid benefits. Careful structuring of the settlement agreement is usually the best way to try to avoid these problems. Always advise an attorney representing you in a settlement agreement of other benefits you may be receiving.
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