Monday, June 29, 2009

Workers’ compensation and Social Insurance Disabilty

In much of the world, workers’ compensation is part of larger social insurance schemes. In Canada amd the US, social security systems are separate from workers’ compensation but there can be overlaps in coverage and varying treatments on the benefits payable.

On the contribution side, workers and employers are generally required to contribute to a social security system. In Canada, that system is called the Canada Pension Plan (CPP) in most of Canada and the Quebec Pension Plan (QPP) in that province. In the US, the Social Security system fulfils this role. Each of these plans has its own provisions for cases involving disability. In the case of the Canada Pension Plan, an individual with a condition that is ‘Severe and Prolonged’ may be eligible for a benefit from CPP Disability.

A worker who develops a debilitating condition not related to work may collect from the appropriate social insurance plan. Where the condition or injury that gave rise to the disability is work related, the worker may or may not have eligibility under both the social insurance disability plan and the appropriate workers’ compensation legislation.
Where workers’ compensation and social insurance are both potential payers, there are three main public policy alternatives:
  • Fully stackable- the worker may collect from both plans
  • Fully integrated- the worker collects full entitlement from one plan (the ‘first payer’) and an amount equivalent to the full entitlement from the other plan less anything payable from first payer
  • Partially integrated- The worker’s entitlement to one plan is reduced or ‘offset’ by some portion of the entitlement of the other insurance.

Currently, workers in British Columbia experience a partially integrated system whereby WorkSafeBC deducts 50% of the applicable CPP disability benefits from a worker’s permanent disability award where the injury occurred on or after June 30, 2002. Of course, this only applies if the worker is eligible for CPP Disability. Workers with a job-related injury in Quebec, however, go to the CSST (Quebec’s workers’ compensation system) and cannot apply to the Quebec Pension Plan.

In the US, the offset usually works the other way around. According to the National Academy of Social Insurance’s fact sheet of the topic:

An offset for concurrent receipt of workers’ compensation was contained in the original 1956 Social Security disability program, eliminated in 1958, and reinstituted in 1965. The 1965 Social Security Amendments required that Disability Insurance benefits be reduced when the worker is also eligible for periodic or lump-sum workers’ compensation payments, so that the combined amount of workers’ compensation and Social Security disability benefits does not exceed 80 percent of the worker’s average current earnings. The combined payments after the reduction, however, will never be less than the amount of total Social Security disability benefits before the reduction …Under the 1965 law, the Social Security disability benefit will not be reduced if the state workers’ compensation law or plan provided for a reverse offset (a reduction of the workers’ compensation benefit of a worker also receiving Disability Insurance).

Each of the public policy alternatives has its pros and cons. There is no one right way to provide workers compensation and social security benefits. It is important, however, to be mindful of the interplay between the two systems when considering either a change in public policy or comparing benefits across jurisdictions.

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