Written By: Charles Taylor Matthews
CREDITS AND OFFSETS IN LOUISIANA WORKERS’ COMPENSATION LAW
Social Security Disability benefits can be offset; however, this offset can only be applied in cases involving permanent total disability (PTD). Employers must obtain judicial approval before applying this credit, as self-implementation is prohibited. The Social Security Administration (SSA) calculates the offset amount—typically upon request through FORM-WC-1004—and recalculates it periodically, often every three years. Notably, an employee’s total combined benefits may not drop below the statutory workers’ compensation rate, even when the offset is applied. No offset is permitted for Social Security retirement benefits, as such a credit has been deemed unconstitutional. The attractiveness of this offset is limited by the fact that you must have the court to declare the claimant entitled to PTD benefits prior to applying for the credit, so this offset is really limited to those case in which everyone, including you, accept that the claimant is permanently and totally disabled and will never reenter the workforce in any capacity.
Another important credit is available when an employee receives unemployment compensation. During any week in which the employee receives unemployment benefits, they are not entitled to temporary total disability (TTD), permanent total disability (PTD), or supplemental earnings benefits (SEB) under workers’ compensation. However, permanent partial disability (PPD) benefits may still be paid concurrently. This offset is calculated on a week-by-week basis, regardless of the unemployment compensation amount. Additionally, employers may claim a credit when an employee receives other workers’ compensation benefits or disability benefits funded by the employer. The credit in such cases is limited to the extent of the employer’s financial contribution and is calculated before any reductions by the disability insurer. If a conflict arises between the insurance contract and statutory law, the statute prevails.
Additional credits that available to employers include:
- Deductions for prior payments
- Offsets for medical bills
- Credits for voluntary payments
With respect to medical expenses, employers can avoid liability for medical bills already paid by third parties, such as private health insurers. This offset does not apply when bills are paid by the employee, family members, or public assistance programs like Medicaid. Additionally, if the employee or their spouse contributes to the health insurance premium, the offset is limited to the employer’s proportional share.
Finally, employers may recover voluntary payments made in error, such as unearned wages or mistaken benefit payments. Courts have generally allowed employers to recoup these overpayments by reducing future benefits rather than halting them entirely. We recommend a 50% reduction in the weekly compensation payment until the credit is recouped. But monitor the credit, as taking the credit for too long could put in a position to face a penalty for underpayment of indemnity benefits. The safest method is to stop taking the credit one full week prior to exhaustion of the credit.
Altogether, these statutory credits and offsets play a critical role in balancing the interests of employers and employees within Louisiana’s workers’ compensation system.