Benefits Offsetting Workers' Compensation

In this area, we'll look at whether, and to what extent, you can offset workers' compensation benefits against benefits from other sources.

Interaction with retirement plans. Suppose your employee is on workers' compensation leave and retires. Do you have to pay the employee both the workers' compensation benefits and the retirement benefits, or can you offset one against the other? The answer is that there are no hard and fast rules, but you should note that at least one court has held that offsetting workers' compensation benefits against retirement benefits was appropriate. You may be able to offset workers' compensation benefits as long as your retirement plan does not expressly prohibit it.

Interaction with medical plans. Suppose your medical plan also includes coverage for certain workplace-related medical expenses. Does the employee get the benefit of both coverages? The answer is "not usually," although sometimes employees do get the windfall. If you discover overlapping coverage, you should notify both the workers' compensation carrier and the medical plan carrier and let them work out the coordination of benefits.

Interaction with Social Security. Sometimes Social Security will pay for disability benefits that overlap with workers' compensation benefits. Approximately half the states have laws that offset those benefits so that employees are paid only once. If you have an employee who is entitled to workers' compensation benefits, you should instruct him or her to contact the local Social Security office to find out which benefits he or she is entitled to.

Interaction with federal benefits laws. Here are some questions and answers that may help you understand how workers' compensation laws interact with other benefit laws. These questions and answers presume that the other benefit laws mentioned here apply to you, which may not be the case if you have only a few employees.

Is an employee away from work because of a workers' compensation-related injury still entitled to leave under the Family and Medical Leave Act? Yes. The injured employee's rights under the FMLA (which applies to employers with 50 or more employees) are not affected by the fact that he or she is receiving workers' compensation benefits.

Can a workers' compensation injury be considered a "disability," thus triggering rights under the Americans with Disabilities Act? Yes. The ADA (which applies to employers with 15 or more employees) defines disability as:

• having a mental or physical impairment that substantially limits a major life function
• having a record of substantially limiting impairment
• being regarded as having a substantially limiting impairment

If your injured employee fits into one of those three categories, the employee has rights under the ADA. Most importantly, depending on the category, the ADA may require that you provide reasonable accommodation in finding other work for the employee to do. Under the ADA Amendments Act of 2008 (ADAAA), unless the employee falls under the category of being regarded as having a disability you cannot just fire the employee for no longer being able to perform the job.

In the days before the ADA, employers that had maximum leave-of-absence policies would send the employee a notice of termination when the leave period was exhausted. Under the ADA, employers must send a notice by certified mail at least 30 days prior to the end of the leave that explains the reasonable accommodation requirement. Depending upon the circumstances, reasonable accommodation may have to include extending the leave period.

If an injured employee's right to participate in the group health plan ends while the employee is away from work, do I have to give the employee notice of COBRA rights? Absolutely. You should also be careful about determining when the COBRA rights are triggered. If the employee has unexpired FMLA leave time remaining, the COBRA rights are not triggered until the FMLA leave is used up.