Repeal of workers' compensation reform would be costly

(April 21, 2006) A bill still being considered by lawmakers would give some employees who are out on workers' compensation a powerful new incentive not to return to work.

SB-25 eliminates the Social Security offset for workers’ compensation benefits — and the measure applies to people who are injured before they reach retirement age, despite what proponents of the bill are saying.

The offset was specifically designed to preserve the integrity of workers’ compensation as a wage-replacement — not retirement income — system.

Currently, an employee injured during the course of employment receives workers’ comp benefits; if that employee subsequently becomes eligible for Social Security, the workers’ comp benefits are reduced by the amount of the Social Security benefits. But with the offset eliminated, the employee could use workers’ comp as an additional retirement benefit — and have no incentive to return to work.

The cost of this proposal to Connecticut employers is expected to be $8 million in the first year alone, according to a recent impact statement issued by the National Council on Compensation Insurance (NCCI). That increased cost would continue in future years.

A similar measure for state employees — at a cost of nearly $500,000 to the state in fiscal year 2007 — is included in the revised state budget approved by the Appropriations Committee.

The business community has been willing to look at the system as it applies to people who are receiving Social Security and who go back to work to make ends meet and are injured.

But SB-25 goes too far by including all workers who receive workers’ comp and then become eligible for Social Security.