Changes within the Department of Government Efficiency could have negative economic repercussions for states that rely on a loophole that allows workers' compensation insurance carriers to benefit from Social Security disability payments through reverse offsets. 

Jon L. Gelman

Reverse offsets

A reverse offset is when workers' compensation benefits are reduced because the recipient also receives Social Security Disability Insurance benefits. In this scenario, the workers' compensation company or the employer benefits from the offset, not the federal government. This contrasts with the standard offset, where SSDI benefits are reduced due to WC benefits.

Reverse offset states

Several states utilize a reverse offset. Those include Alaska, California, Colorado, Florida, Louisiana, Minnesota, Montana, Nevada, New Jersey, New York, North Dakota, Ohio, Oregon, Washington and Wisconsin.   

The ACE

Generally, the reverse offset ensures that the combined benefits do not exceed a certain cap, typically the average current earnings. It is important to note that the specific rules and regulations governing reverse offsets can vary significantly from state to state.   

Anticipated DOGE impacts

DOGE), led by Elon Musk, significantly impacts the Social Security Administration, reducing personnel and office locations. Reports indicate that the SSA is preparing for substantial layoffs, potentially reducing up to 50% of its workforce. This translates to thousands of job losses within the agency, and delays in processing claims are expected. There are also plans to close numerous Social Security field offices nationwide. These changes are occurring as part of the Trump administration's efforts to reduce the size of the federal workforce through DOGE, which aims to cut what it deems wasteful government spending. Eliminating the reverse offset aligns with DOGE's mission to reduce government spending.   

Concerns

These reductions raise concerns among advocates and lawmakers who worry about the negative impact on the SSA's ability to serve beneficiaries. Some fear that wait times for services will increase and that access to benefits will be hindered. There is also concern about the access that DOGE has been granted to the personal information of those receiving social security.

Social Security Disability claims are often complex, requiring medical documentation and thorough reviews. Reductions in experienced staff could lead to errors and delays.   

The changes implemented by DOGE are expected to strain the SSA's resources, resulting in a less efficient and more time-consuming process for Social Security disability claims. This will financially impact state workers' compensation systems, which now have the economic benefit of a Social Security reverse offset.

Claimants' attorney Jon L. Gelman is the author of "New Jersey Workers’ Compensation Law" and co-author of the national treatise "Modern Workers’ Compensation Law." He is based in Wayne, New Jersey. This blog post is republished with permission.