Workers’ comp reform still under attack

(April 28, 2006) Despite making progress to improve Connecticut’s economy and prospects for job growth this week, lawmakers are still in danger of undermining their positive efforts by repealing one of the state’s landmark workers’ comp reforms.

SB-25, now before the state Senate, eliminates the Social Security offset for workers’ compensation benefits. That would repeal a key system reform and give some employees who are out on workers’ comp a powerful new reason not to return to work.

Retirement nest egg - Despite what the bill’s proponents say, SB-25 applies to people who are injured before they reach retirement age — giving claimants in that category the prospect of building a substantial retirement nest egg of both workers’ comp and Social Security benefits. The Social Security offset was specifically designed to preserve the integrity of workers’ compensation as a wage-replacement — not a retirement income — system.

What’s more, the offset was one part of a package of reforms that the General Assembly enacted to tame Connecticut’s out-of-control workers’ comp system in the early 1990s and stop the exodus of jobs from the state. Together, the reforms worked and made the system fairer, more efficient and less costly. And Connecticut workers’ compensation benefits are still among the most generous in the nation.

Yet even though the reforms have been noted nationally as successes — and, in fact have been copied by other states — some legislators each year have tried to overturn them.

Because the reforms have helped employers, employees and the economy of the state, it makes little economic sense to pass a measure such as SB-25 and break up a package of legislation that has benefited the state for more than a decade.

The cost of this proposal to Connecticut employers is expected to be $8 million in the first year alone, according to 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 workers’ comp 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.

For more information, contact CBIA’s Bonnie Stewart at 860-244-1900 or stewartb@cbia.com.