The Second “Fiscal Cliff” in Workers’ Compensation Claims

DISCLAIMER: We are not professional, licensed, or certified financial planners.

However, we sometimes feel as though we’re serving in such a role with clients who have a permanent disability that’s either going to preclude their return to the work they were doing when they were injured (Partial Permanent Disability) or are unlikely to ever return to work in any capacity (Total Permanent Disability). We have discussed the first abrupt change in the flow of monetary benefits in Part I of this topic when the Temporary Total Disability (TTD) benefits have stopped. Ordinarily, the TTD benefits stop about two (2) to three (3) years after the date of injury.

As I explained in Part I, some of the interruption in the financial life of our clients can be overcome by applying for State Disability Insurance (SDI) benefits within the first 18 to 24 months after the date of injury. When you are opening an SDI claim while still receiving TTD benefits, you will not be receiving SDI benefits until the TTD benefits stop. Then, you “re-open” the SDI claim you started several months before and start the flow of SDI benefits (which are frequently about the same amount as you were receiving in TTD benefits).

However, SDI benefits will only be paid at the full rate for up to one (1) year. So this benefit, too, will eventually come to an end. That end is what makes for the “Second Fiscal Cliff” in your Workers’ Compensation claim. This is where things get really tough. So, it takes some pro-active planning to reduce the impact.

WHAT TO DO? First of all, when your TTD benefits are about to run out, or you have just gotten your last TTD check and you are waiting to start receiving your SDI benefits (ASSUMING you and your employer have paid into this fund long enough for you to qualify for benefits), you have to ask yourself some fundamental questions:

• Am I ever going to be able to go back to doing the work I did before?

• How do I see my physical and mental recovery progressing?

• Am I getting better, getting worse, staying the same?

If the future looks dark or uncertain — and you do not hold out much hope that you will be able to return to the kind of work you’ve done in your past working life (not necessarily just kind of work you were doing when you were injured), we need to pose an important question:

• Are you able to learn a new skill in a relatively short period of time (usually between 10 weeks and, at maximum, 6 months) that is likely to equip you for new employment in the open labor market?

If you don’t perceive yourself capable of learning new job skills (or enhancing ones you have from previous work experience) so that you will again be employable, your best option is to apply as soon as possible for Social Security Disability Insurance (SSDI). You must have worked at least 20 quarters (i.e., 5 years) within the past 40 quarters (i.e., 10 years) to qualify for SSDI.

Note: If you do not qualify for SSDI, you may qualify for Supplemental Security Income which has its own separate qualifications and problems. We will discuss SSI more fully in another blog.

It usually takes between 6 to 18 months from the date you apply for SSDI benefits to get benefits coming to you. This assumes, of course, that your application is eventually approved or granted by a Social Security Judge.

Note: As mentioned above, while we do not represent clients in their application for SSDI benefits, we can refer you to specialists who handle these cases. Additionally, we can help with your application and claim process by providing medical evidence supportive of your claim.

Because it can sometimes take more than a year to get SSDI benefits coming to you (depending upon how far we have to go with your claim to get you the maximum results from the Social Security Administration). We counsel our clients to apply early for SSDI. The end objective is simple: Keep enough benefits flowing to you to keep you at as high a level of living as is possible under the circumstances.

As you can see, the first benefits are usually TTD. But, they will run out in 2 years or so. So, assuming you have are qualified and opened your SDI (State Disability) claim within the first 2 years after your date of injury, you will receive SDI for around a year after the TTD stops (assuming you have a doctor who will continue to certify you for those benefits — something most of the doctors we recommend will help you with).

Then, assuming you have qualified and started your SSDI (Social Security) claim either before or when your TTD benefits have stopped, it’s likely you will start receiving SSDI benefits before State Disability runs out.

This is the plan of action we’ve followed in many cases. And, it’s worked out successfully for our clients. The “Second Fiscal Cliff” was huge disruption in their financial life and they were able to transition through the changes in benefits without becoming destitute. It may not be a perfect solution, but it’s the best that can be done when the injury and following disability remove you from the work force.

THEN WHAT? We will either go to trial and seek the highest award we can get for you, or we will negotiate a settlement that is the best we believe is achievable under the circumstances. The final award or settlement is usually the best news we’re able to provide for our clients after (frequently) protracted litigation and battles over medical care and benefits. Sometimes, we are able to do this before you have reached the doorway to SSDI. But, in the more serious cases, this is frequently the course the case takes. SSDI is a Godsend and a lifesaver for those who find themselves at the end of their work life earlier than planned.

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NOTICE: Making a false or fraudulent Workers Compensation claim is a felony subject to up to 5 years in prison or a fine of up to $50,000 or double the value of the fraud, whichever is greater, or by both imprisonment and fine.