BASIC (09-08)

DI 52120.265 Washington (WA) Workers’ Compensation (WC)

Citations:

SSR 94-6 , Workers’ Compensation Offset—Excluding Legal Expenses Incurred in Connection with Initial Award of Workers’ Compensation Benefits—Washington

Washington State reduces its WC benefits if the disabled worker also receives Social Security disability insurance benefits (DIB). Since WC benefits are reduced (offset), rather than DIB, this is known as reverse offset or reverse jurisdiction (RJ).

There are three types of workers’ compensation (WC) benefits payable under Washington (WA) State law.

SSA WC Type

State WC Type

Temporary Total (TT)

Time Loss

Permanent Total (PT)

Pension

Permanent Partial (PP)

Permanent Partial Disability

Washington State reduces (offsets) its Time Loss and Pension benefits if the disabled worker is also receiving Social Security retirement or DIB. The State offset also applies to Time Loss or Pension benefits paid to the spouse and children living in the same household as the disabled worker.

State law does not provide for offset of Permanent Partial Disability for the receipt of Social Security retirement or disability benefits. A Permanent Partial lump sum will cause offset of Social Security disability benefits.

Important dates

09/01/1975

Washington State reverse offset takes effect

01/16/1981

SSA offset of PP takes effect

09/01/1981

SSA offset of TT and PT takes effect

01/01/1983

State extends offset from age 62 to 65

(not recognized by SSA)

07/01/1986

State offset of RIB takes effect

06/01/1993

State TT payments switched from twice a month to daily payment made every 14 days

A. Processing Washington WC offset cases

B. How WA makes WC payments

C. Excludable expenses

D. Reverse offset

E. Processing claims involving WA WC via MCS

F. Revised WC payments

G. Verifying WC

H. Washington State WC data sheet

I. Case examples

J. References

A. Processing Washington WC offset cases

1. When to impose offset

  • Impose offset for the retroactive period of the DIB award, and

  • Impose offset beginning the month the number holder attains age 62 (use the full WC rate, not the State’s offset rate)

2. When to remove offset

  • Remove offset effective the first of the month after the calendar month of adjudication. For example, a disabled worker (30 years old) receives Washington PT benefits, and is awarded Social Security DIB with a month of entitlement (MOET) of 09/2011. The DIB claim is adjudicated 01/13/2012. DIB is offset 09/01/2011-01/31/2012 and RJ is effective 02/01/2012.

  • Remove offset effective the month after the calendar month of adjudication

Exception: If the number holder is already age 62, continue to offset at the full WC rate. (For a list of the conditions that require removal of offset, see DI 52150.025.)

3. Verifying and excluding legal expenses

  • State documents (including completed SSA-1709s) do not contain legal expense information.

  • Verify possible legal expenses through the number holder or attorney. See DI 52120.265C below.

4. When to use the Washington State WC data sheet

If adjudicating a claim with WA WC or reimposing offset at age 62:

  • Complete, date and mail or fax the Washington State WC Data Sheet . The carrier or self-insurer must receive notice timely.

  • Retain a copy of the completed data form in the electronic folder, NDRED or Paperless.

B. How WA makes WC payments

This section describes how WA makes WC payments under State law and provides instructions on how to treat these payments for SSA offset purposes.

1. Payers

  • State of Washington Department of Labor & Industries (L&I)

  • Self-insured Employer (indicated by WC claim number with prefix “S” or “T” or “W”), or

  • Third Party Administrator (i.e., a service organization hired by the self-insured employer)

2. Periodic payments

WC Type

How Awarded and Paid

State

Offset?

Amount for SSA Offset

Time Loss (TT)

Awarded monthly (30 days) and paid every two weeks at daily rate X 14*

  • Yes

  • Based on either DIB or RIB

  • Not retroactive

  • Multiply the biweekly rate by 2 1/6 to get the monthly amount or enter the biweekly amount in ICF using Frequency code E.

  • If a monthly TT rate is shown on form SSA-1709 or on a State document, divide the monthly amount by 30, round to the nearest penny, and then multiply by 7 for a weekly rate for offset (round to penny).

  • See Case Example 1 in DI 52120.265I. below.

Loss of Earning Power (LEP) (like TP)
  • Awarded monthly (30 days) and usually paid to correspond with the employer’s paycheck periods

  • Payable when TT claimant returns to work with only partially restored earning power

  • Payments are processed after L&I verifies the gross earnings paid for the calendar month

NoAdd together the payments paid for the calendar month and enter the total as a monthly amount in ICF using Frequency code M.

Pension

(PT)

  • Awarded and paid monthly (on or about the 15th of each month)

  • May be reduced because a survivor annuity option was elected (effective 07/01/1986)

  • May be reduced for prior PP

  • Yes

  • Based on either DIB or RIB

  • Not retroactive

  • Use the monthly rate (round to the next lower dime). For ICF input, enter the actual monthly rate using Frequency code M.

  • See Case Example 2 in DI 52120.265I. below.

  • If the pension was reduced because of a survivor annuity election, use the reduced amount received by the number holder per DI 52150.035.

  • For Pension awards involving prior PP lump sum awards, see DI 52120.265F. below.

*Prior to 06/01/1993, L&I made TT payments twice a month; insurance carriers and self-insured employers made TT payments biweekly. Follow DI 52150.035 to determine a monthly amount. (For periods prior to 06/01/1993, use the monthly TT rate as shown on form SSA-1709 or on the L&I document.)

3. Lump sum

WC TypeHow Awarded and PaidState Offset?Amount for SSA Offset

Permanent Partial Disability (PP)

  • Lump sum

  • May specify a monthly rate

  • May be paid in installments

No

  • Prorate the LS award following the instructions in DI 52150.060. Use the specified monthly rate, if shown.

  • If the PP is paid in installments, do not use the installment payment amounts for purposes of proration. See Case Example 3 in DI 52120.265I. below.

NOTE: Do not offset based on PP WC for any period prior to 01/16/1981. SSA’s decision to begin imposing offset based on PP WC was based on a change in State law. Claims adjudicated prior to the change in SSA’s policy were identified in normal case processing and had offset imposed with the current operating month or, if later, the month after the month of notice in Notice Provision cases.

A claimant/claimant's attorney may negotiate a voluntary lump sum settlement agreement (sometimes referred to as a "sidebar agreement") directly with the employer/insurance carrier to settle the WC claim. The agreement usually includes language where the claimant agrees to an immediate claim closure, agrees not to protest or appeal the closing order, and acknowledges that the settlement resolves all issues relating to the WC claim. These agreements are subject to offset whether or not they require approval of the Washington State WC board, and whether or not Washington State law considers the payment to be payment of weekly WC. Follow proration instructions in DI 52150.060 Prorating a Workers' Compensation/Public Disability Benefit (WC/PDB) Lump Sum Settlement.

4. Sequence of payments by type

The sequence in which WA makes TT, PT and PP payments can vary. Generally, the payments follow one of the patterns shown below. PT is always preceded by TT.

Time Loss (TT) followed by Permanent Partial (PP)

Time Loss (TT) followed by Permanent Partial (PP) followed by Gap(s) followed by Time Loss (TT) followed by Pension (PT)

Time Loss (TT) followed by Pension (PT) (possible gaps and PP)

Permanent Partial (PP) alone with no TT

5. Cost-of-living adjustments (COLAs)

WA pays a cost-of-living increase each July 1 for TT and PT benefits. The annual increase became effective 07/1984 under State law. The table below shows the COLA percentage increases from 1990 to the present:

Effective DatePercentMultiplier
07/01/2012*3.596%1.03596
07/01/2011No Cola 
07/01/20101.939%1.01939
07/01/20093.432%1.03432

07/01/2008

5.018%

1.05018

07/01/2007

5.445%

1.05445

07/01/2006

3.5%

1.035

07/01/2005

0.6%

1.006

07/01/2004

2.251%

1.02251

07/01/2003

1.9%

1.019

07/01/2002

0.9%

1.009

07/01/2001

3.59%

1.0359

07/01/2000

8.4%

1.084

07/01/1999

7.8%

1.078

07/01/1998

6.6%

1.066

07/01/1997

5.25%

1.0525

07/01/1996

4.255%

1.04255

07/01/1995

2.152%

1.02152

07/01/1994

0.703%

1.00703

07/01/1993

6.963%

1.06963

07/01/1992

5.718%

1.05718

07/01/1991

4.829%

1.04829

07/01/1990

3.955%

1.03955

*For dates of injury on or after July 1, 2011, the TT or PT COLA is not effective until the second July 1st after the date of injury. For example:
Scenario #1 - WC date of injury 06/30/2011 – first TT or PT COLA is 07/01/2012.
Scenario #2 - WC date of injury 07/01/2011 (one day later than Scenario #1) – first TT or PT COLA is 07/01/2013.


The following rules govern how the increases are determined and paid:

  • All TT & PT recipients are eligible for a full COLA increase, regardless of when benefits began.

  • The COLA percentage is added to the current benefit amount and the result is rounded to the nearest penny.

  • TT COLA increases are payable immediately; PT COLA increases first appear in the August 15 check, which will include the difference due from July 1.

6. Third party

Generally, when a third party settlement is awarded in WA, the third party reimburses L&I for any WC payments already made. L&I will adjust the WC payments by withholding future payments until the settlement amount is fully recovered. Offset does not apply in this situation to the extent L&I was repaid by the third party per DI 52105.010. See Case Example 4 in DI 52120.265I below.

C. Excludable expenses (see DI 52150.050)

1. Attorney fees

Payment of attorney fees is always the responsibility of the disabled worker in WA WC cases. The State will not normally account for nor set attorney fees. The State may pay benefits directly to the attorney who will deduct legal fees and disburse the balance to the worker. Therefore, always verify the amount of attorney fees through the number holder and/or attorney.

Under WA State law, an attorney may charge a reasonable fee of not more than 30 percent of the increase in the WC award secured by the attorney's services. Social Security Ruling SSR 94-6 included in the definition of “increase” those initial awards that increase the amount of the WC from zero to the amount awarded. Prior to the ruling, we excluded legal expenses only when WC benefits were awarded on appeal. This change in position was effective 01/31/1989.

2. Medical expenses

Medical expenses are rarely involved in WA WC cases because State law provides for direct payment of medical expenses by the WC payer.

D. Reverse offset

Since 09/1975, Washington WC law has provided for a reduction of TT and PT WC payments due to the receipt of Social Security disability insurance benefits (DIB). This is a recognized reverse offset plan. For more information on reverse offset, see DI 52105.001.

  • State law provides that offset may not be imposed until the State Department of Labor and Industries (L&I):

    1. Receives notice from SSA that the disabled worker is receiving Social Security benefits; and

    2. Notifies the worker of the offset of the L&I benefit.

  • L&I applies offset beginning the month after notification and does not retroactively apply offset. We remove offset the month following the month of adjudication.

  • L&I uses the same basic formula as we do in applying offset, limiting the total amount of WC and Social Security benefits to the higher of TFB or total WC or 80 percent ACE. For example, for a record with HA only, entitled 05/1999 with a PIA of $1289.20, total monthly WC of $2,000.00, and 80 percent ACE of $2611.20, L&I will calculate an “offset” WC payment of $1322.20 ($2611.20 minus $1289.00 MBP).

    NOTE: The instructions in this section apply to cases adjudicated 09/01/1981 or later. For cases adjudicated before 09/01/1981, do not offset for any month after 08/1975 when the number holder received TT or PT WC

1. Applying reverse offset when adjudicating a claim

  1. Offset TT and PT WC from the first possible month of offset up to and including the full calendar month of adjudication.

  2. Remove offset beginning first day of the the month after the calendar month of adjudication if the number holder is receiving TT or PT WC payments. Month of adjudication = Month A101, EF101 or DECI is signed. (However, if the month of adjudication is age 61 and 11 months or later, reverse offset will not apply for any months. See DI 52120.265D.4 below).

    • Payments under the Critical Payment System (CPS) do not constitute adjudication.

    • A delay in processing due to exceptions, etc. will not change the month of adjudication.

  3. To adjudicate a claim via MCS, see the processing instructions in DI 52120.265E. below.

  4. When adjudicating a claim with WA WC, send the Washington State WC Data Sheet to L&I or the self-insured employer. It is important to send the data sheet at the point of adjudication as L&I relies on timely and accurate notification from SSA to impose State offset.

  5. Tell the number holder to notify the nearest Social Security office if he or she receives a PP settlement or if PP payments begin.

  6. Diary for 4 months prior to age 62. If you process the claim via MCS, enter an 042 diary and update the due date to 4 months prior to age 62. Complete the DIAR screen to explain the reason for the diary.

See Case Examples 2 and 4 in DI 52120.265I below.

2. Applying reverse offset when an appeal reverses DIB cessation

Offset TT and PT WC from the effective month of DIB reinstatement up to and including the month in which adjudicative action is taken to resume DIB.

3. Applying reverse offset when WC payments start after DIB awarded

  • SSA’s WC offset applies from the first possible month of offset through the month of the award action that initiates DIB payments (and at age 62). Once SSA starts DIB payments, reverse jurisdiction applies. Therefore, if a beneficiary, who was not receiving WC payments at the time of adjudication of the DIB award, begins receiving either TT or PT payments, offset will not apply until age 62.

  • Code the case RJ and do not make any adjustments to benefits already paid. A State data sheet is not needed in this situation.

4. Reimposing offset at age 62

In 03/1982, the State extended its offset provision from age 62 to 65 for workers who are awarded TT or PT WC effective 01/01/1983 or later. Since this change in State reverse offset law was not in effect by 02/18/1981, we do not recognize the change for DIB offset purposes for cases where the DIB onset is 03/01/1981 or later and the DIB MOE is 09/1981 or later.

RJ ends the month prior to the month the number holder attains age 62.

  • RETAP will produce an alert in addition to any manual or MCS diary.

  • Resume offset beginning the month the number holder attains age 62 at the full WC rate that would have been payable had there been no State offset. Offset continues up to, but not including, the month the number holder attains age 65.

  • For instructions on protected benefit increases during the RJ period and when to establish a new ACE and TFB in age 62 reimposition cases, see DI 52105.001G.2.

  • Notify L&I that offset has been resumed and provide the amount of the MBA payable after offset. Fax or mail the Washington State WC Data Sheet to L&I. Include in Remarks “Offset resumed at age 62. MBA = $$$$$.$$.”

See Case Example 2 in DI 52120.265I below.

5. Retirement benefit considerations

WA applies offset against both DIB and RIB. When SSA re-imposes offset from age 62-65, the State treats this as a reduction in the amount of disability benefits and adjusts the WC benefits accordingly. Once SSA offset ends at age 65 (62 for pre-1981 cases), L&I will adjust the State offset for the increase in the SSA payment.

  • Do not routinely secure RIB claims from number holders age 62-65 as their DIB entitlement will usually continue to be more advantageous than the RIB.

  • Number holders can contact L&I if they want to know the effect on their specific L&I benefit amount.

  • If a number holder files for RIB in this situation, normal protective filing rules apply, i.e., there is no protective filing by the mere fact of attaining age 62.

  • Do not delay reimposing offset at 62 when developing a RIB claim.

NOTE: In a small number of cases where the number holder has been simultaneously entitled to DIB and WC for an extended period of time, the offset computation figures used by L&I and SSA may differ. In these cases, it is possible the number holder may benefit from electing RIB. Prior to electing RIB, the number holder should contact L&I to determine any changes that may occur in the WC benefit.

6. Reimposing offset retroactively

As explained in DI 52120.265D.4 above, we reimpose offset at age 62 using the full WC rate without reduction for State offset. Sometimes we discover after the fact that we failed to reimpose offset at age 62. Include AURORA paragraph PCWCP5003 in the notice when adjusting payments retroactively to age 62.

Prior to 04/26/2005, if the WC claim was closed (PT Pension awarded, or closure with or without PP), L&I was barred from making any adjustments to WC payments and therefore could only report to SSA the WC benefits “as paid,” not the full unreduced rate that would have been payable without State offset. In this situation, we used the COLA chart in DI 52120.265B.5 above to convert the last known full rate.

On 04/26/2005, WA amended State law to allow the Department of Labor & Industries or a self-insurer to retroactively adjust closed WC claims if SSA assesses an overpayment and the worker submits a written request for adjustment. The legislation was made permanent effective 07/22/2007. L&I can now provide us with the full WC rate when requested and adjust State offset as needed to pay additional benefits.

7. When to protect benefit increases at age 62

DIB increases due to COLAs, PIA recalculations or recomputations, or the imposition of a combined family maximum that occur during the reverse offset period are only protected for offset computation purposes if offset was considered for at least one month before the first reverse offset month.

For instructions on protected benefit increases during the RJ period and when to establish a new ACE and TFB in age 62 reimposition cases, see DI 52105.001G.2.

8. When we failed to remove offset in a reverse offset case

If we erroneously continued to offset benefits instead of removing offset (RJ) when we adjudicated a DIB award:

  • Verify that the WC payments are either TT or PT.

  • Remove offset retroactively effective the month after the calendar month of adjudication of the award as per DI 52120.265D.1. above. Note: Reverse offset only applies up to age 62 and only when the number holder is receiving TT or PT.

  • Send the Washington State WC Data Sheet to L&I or the self-insured employer.

NOTE: Do not verify that a reduction was actually applied by the State. It is sufficient that the plan provides for reverse offset. See DI 52105.001E.1.

E. Processing claims involving WA WC via MCS

When you answer “Y” to the mandatory question “REVERSE JURISDICTION INVOLVED?” on the MCS Common WC/PDB Claim Data (WPCL) Screen, you must enter a start date for reverse offset. Since the start date for reverse offset for WA depends on the claim adjudication date, you will not know the start date at the time you input a disability claim involving WA periodic payments through MCS.

Process disability claims involving WA WC where TT or PT payments have been awarded as follows:

  1. Input the following on the WPCL Screen:

    • Reverse Jurisdiction Involved? Y

    • If Yes, Start (MMDDCCYY) ______. (Input the Date of Filing plus 3 months.)

    • No Stop Date is required. However, a stop date equal to age 62 may be used.

  2. Establish an issue of “WPCL” on the DW01 screen.

  3. Do not input Non-Medical Completion (SPORT) or Auto-Initiate on these claims.

  4. When a claim is approved, update the START date on the WPCL screen to reflect the first of the month following the month the DECI screen is completed.

  5. Update the DW01 to reflect receipt of the WPCL issue and indicate the reverse jurisdiction start month in the REMARKS column.

  6. Enter an 042 diary on the DECI screen and change the due date on the DIAR screen to 4 months prior to age 62.

  7. If the WC/PDB data must be input via ICF WC/PDB (e.g., due to an MCS processing limitation), enter “Y” under “REVERSE JURISDICTION INVOLVED (Y/N)” and the appropriate first of the month START date on the ICF WCCD screen. For more information on ICF entries, see MSOM ICFT2 031.012.

F. When the State revises WC payments

Sometimes L&I sends us an amended or corrected SSA-1709. This usually happens when a worker’s closed WC case was reopened on appeal. When a Pension is awarded, L&I may reopen and reverse a prior PP lump sum award. In this case, L&I must revise the periodic payment and lump sum information that they previously furnished us. L&I will attempt to redistribute the LS to any gaps in periodic payments then prorate the remainder of the LS by reducing the monthly Pension amount.

If we previously applied offset based on the now-voided PP award, process the amended SSA-1709 as follows:

  1. Use the amended SSA-1709 to rework the WC offset.

  2. Use the unreduced PT “Pension” amount as the WC rate effective with the date of the first PT payment.

G. Verifying WC

For verifying WA WC payments which includes contact information for the State of Washington Department of Labor and Industries.

H. Washington State WC data sheet

Washington State WC data sheet (titled “Washington State Workers’ Compensation Social Security Benefit Notification and Data Form”).

I. Case examples

Access the following case examples at:

  1. Determining Time Loss (TT) Rates – COLA Involved

  2. Pension (PT) Award

  3. Permanent Partial (PP) Lump Sum Award – Paid in Installments

  4. Third Party Settlement – Deducted from WC Payments

J. References


To Link to this section - Use this URL:
http://policy.ssa.gov/poms.nsf/lnx/0452120265
DI 52120.265 - Washington (WA) Workers' Compensation (WC) - 10/05/2012
Batch run: 10/05/2012
Rev:10/05/2012