BASIC (09-08)

Offset applies to all Minnesota WC unless specifically noted. See DI 52120.130B in this section for applicability of Minnesota reverse offset.

A. Types of Minnesota WC payments and payment provisions

For maximum rates visit: DI 52150.045

1. Permanent Total (PT)

Benefits are calculated as 66 2/3 percent of the individual’s wage subject to the State maximum. WC payments end when the individual reaches age 67 because the State of Minnesota considers the individual to be retired from the labor market. Reverse offset may apply. See DI 52120.130B.

2. Temporary Total (TT)

TT WC is calculated as 66 2/3 percent of the individual’s wage subject to the State maximum. TT WC will pay for a maximum of 104 weeks for injuries before 10/01/08 and a maximum of 130 weeks for injuries on or after 10/01/08, but may be extended if approved for a retraining program. Reverse offset may apply. See DI 52120.130B.

3. Temporary Partial (TP)

TP WC payments will not be issued for more than 225 total weeks or for more than 450 weeks after the date of the injury. TP payments are only issued if the worker is employed and TP can be paid concurrently with PT payments. If a worker is in an approved training program and working at a wage loss during retraining, the TPD paid does not count against the 225 or 450 week limit.

4. Permanent Partial (PP)

PP is paid out only after TT terminates. The money may be paid out in a lump sum or weekly. The total amount payable is determined based upon a percentage of disability to the whole body. The percentage of disability is then applied to a compensation table to determine the amount of the award.

• Prior to 10/01/95 there are two types of PP WC payments referred to as Economic Recovery Compensation (ERC) and Impairment Compensation (IC). Impairment Compensation typically was paid out in a lump sum.

• 10/01/95 and later Minnesota simply used the terminology of Permanent Partial.

• PP payments can be paid concurrently with TP and PT.

See DI 52120.130A for PP Lump Sum considerations.

5. Lump Sum (LS) awards

The Social Security Administration (SSA) is not bound by the terms of any amended LS award. DI 52150.065 contains additional information on addenda.

• PP Lump Sum Considerations

  Prorate PP LS awards as follows:

  If the individual receives a PP lump sum award and periodic payments have not ended, prorate the PP award beginning with the date of the PP award, unless the award specifies otherwise.

  If periodic payments have stopped, prorate the PP award beginning with the day after periodic payments ended.

• TP LS considerations

  When a TP benefit is the latest periodic payment rate prior to issuance of an LS settlement, follow DI 52150.060E.3. to determine the rate at which to offset.

  The situation may occur where an individual receives a reduced WC benefit because he or she has returned to work at lower pay than the pre-injury wage. In these situations, we will offset using the latest rate paid, even if the reduced payment rate will cause there to be no offset.

B. Reverse offset

Reverse offset applies only to PT, but there are circumstances when TT WC, TP, or vocational retraining benefits become classified as PT and affect the determination of reverse offset.

NOTE: If the award does not specify that it is permanent total WC, then it is subject to SSA offset.

1. Permanent Total (PT) reverse offset

Reverse offset provision applies and DIB will not be reduced when:

• The worker has been paid $25,000.00 in PT (or benefits properly reclassified as PT, see DI 52120.130B.3), and

• Both the Social Security disability insurance benefits (DIB) and the WC are based on the same injury or impairment. Assume it is the same injury or impairment unless there is evidence to the contrary. If questionable, development is necessary.

  NOTE: Reverse offset will apply regardless of the method of payments (i.e., reverse offset applies to both periodic payments and Lump Sum (LS) awards).

2. Vocational retraining – effect on reverse offset

• Vocational rehabilitation may be included in the $25,000.00 PT amount if such payments are made in lieu of PT WC.

• The inclusion of vocational retraining payments is effective 10/04/83.

• DIB will not be reduced when $25,000 of PT WC, including retraining payments in lieu of PT, has been made.

3. When TT WC is reclassified as PT – effect on reverse offset

Only WC benefits paid for PT disability may be included in the “$25,000.00 of weekly compensation” required to be paid before payments for PT disability may be reduced by the amount of DIB being paid. For this reason, TT disability will only be involved in reverse offset if the TT disability is reclassified as PT disability.

• Conditions for TT WC classification as PT WC

  WC payments made under an initial award of TT disability may be considered to be payments for PT disability and counted towards the $25,000.00 PT amount based upon:

  An administrative order or finding of the Department of Labor and Industry which States past, present, and future total disability benefits are deemed to be payments for PT disability, or

  A decision of a WC judge which States that past, present, and future total disability benefits are deemed to be payments for PT disability, or

  A stipulation approved by the Department of Labor and Industry or compensation judge that States that past, present and future total disability benefits are deemed to be payments for PT disability.

• Determine the date to remove WC offset due to reclassification of TT WC

  When the order, finding, decision or approved stipulation reclassifies TT WC payments as PT WC payments, offset is removed effective with the date $25,000.00 in PT WC benefits is paid. This represents a revised opinion concerning the date offset is removed. See DI 52120.130B.3. in this section for reopening cases where offset is removed prospectively.

  If the $25,000.00 PT amount is met in a retroactive period, then offset is removed retroactive as of the date the $25,000.00 in PT is met.

  If the $25,000.00 PT amount is not reached as of a date prior to the date of the order, finding, decision or approved stipulation, offset continues up to the date the $25,000.00 PT amount is reached. The case must be diaried for removal of offset, if appropriate.

• Reopening cases where WC offset was not removed retroactively

  During the 1980s and early 1990s, SSA reversed its position several times regarding the application of the offset provisions once $25,000 in PT had been paid. For some cases adjudicated on or after 01/88 up through some time in 1991 where TT WC benefits were reclassified as PT, WC offset was not removed retroactively. Rather, offset was removed effective with the date of the approved order, finding, decision, or stipulation. SSA reversed that position and reopened any case that was pending on appeal at the time of the change of position, and any case identified during normal case processing where the prior decision that only removed offset prospectively was less than 12 months old. At the present time, we are well past the time limit for reopening of any case where offset was only removed prospectively. If any cases where the removal of offset was done prospectively only are currently encountered, the assumption should be that they were worked correctly based on the rules in effect at the time.

• When SSA will not include TT WC in $25,000 of PT to remove offset

  If none of the conditions in DI 52120.130B.3. are met, SSA will not recognize the employer's reduction of the WC benefits, even if:

  The employer has declared that the past and present payments are payments for PT disability, or

  The employee agrees to the reduction in WC, unless the WC judge or WC Court of Appeals formally approves the stipulation. In this case, the employee has been underpaid WC, i.e., the employee has had his/her WC benefits improperly reduced.

4. TP reclassified as PT

TP may be reclassified as PT in the following situations:

• A stipulation of the parties is approved by the court, or

• By way of an actual determination by the court at a hearing or other WC legal or formal proceeding.

5. Reclassification of Economic Recovery Compensation (ERC) benefits to PT

The reclassification of economic recovery compensation (ERC) benefits (a type of permanent partial workers compensation benefit that existed prior to 1995) to permanent total benefits is not recognized by the Social Security Administration. Do not count any of the reclassified ERC benefits toward the $25,000 limit.

C. Supplementary WC

For injuries occurring prior to 10/01/95 Minnesota pays a supplementary payment to individuals who meet certain qualifications. See DI 52120.130C.2 in this section concerning the effect of supplementary payments on the offset computation.

1. Eligibility for supplementary WC and effective dates of State saw requirements

The State has had various eligibility requirements for supplementary WC payments. The date of injury is the controlling date when determining which laws apply.

• Effective 10/01/1995

  Supplementary payments are not paid for injuries occurring 10/01/1995 and later.

• WC Injuries On or After 10/01/1983

  The worker is eligible after receiving TT or PT WC for 208 weeks.

• Effective 04/08/1978

  The worker need not be continuously disabled. Total disability can be intermittent. Supplementary WC is paid when there has been a total of 104 weeks of total disability. Supplementary WC is also paid when a subsequent injury occurs 4 years or more after the original injury and the subsequent injury relates to the original injury.

• Effective 07/1973

  The worker must have been totally (permanent or temporary) and continuously disabled for more than 104 weeks and for the remainder of the “continuous total disablement.” Supplementary WC is paid effective with the 105th week.

2. Effect of supplementary benefits on WC offset

• Pre-1978 Provision

  Prior to 1978:

  1. Minnesota reduces its supplementary WC when the individual is receiving DIB. Therefore, SSA will remove offset for any DIB claimant receiving Minnesota supplementary payments.

  2. Offset is removed as early as the worker began receiving supplementary WC, but not before 07/73.

• 1978 Provision

  Generally, if SSA is paying the individual a full DIB benefit, then SSA will continue to pay a full DIB benefit and not offset for receipt of Supplementary Benefits. In situations when SSA already offsets the DIB benefit, then SSA will include the Supplementary Benefits in the offset calculation.

  Beginning 1978:

  Minnesota reduces its supplementary WC only when the individual receives full Social Security benefits, i.e., DIB is not reduced due to WC offset. SSA will not offset DIB due to the receipt of supplementary benefits when full Social Security benefits are payable. If the individual's benefits are reduced due to the receipt of WC, including the receipt of PP WC, the State will not reduce its supplementary WC benefits.

  Individuals who receive TT or PT WC benefits of less than $25,000 may also become entitled to supplementary benefits depending on such factors as the period of disability or the amount of WC benefits being paid. If the NH's DIB is being offset due to the receipt of TT or PT WC, the State cannot reduce the supplementary WC benefits. Therefore, the supplementary benefits are subject to SSA's offset and must be figured in the offset computation.

  If the TT or PT WC does not cause offset (e.g., a high ACE precludes offset), the State will reduce the supplementary payment because SSA is paying full DIB, i.e., DIB is not being reduced due to the receipt of WC. Thus, in this situation, the supplementary WC benefit is not subject to SSA's offset.

  NOTE: SSA's offset of supplementary WC due to the receipt of reduced DIB, i.e., DIB reduced due to the receipt of WC, will apply only to new and pending cases adjudicated on or after 10/1991 or previously adjudicated cases worked on or after 10/1991.

3. Procedure – supplementary payments

Because of the varying criteria for injuries prior to 10/01/1995, it generally will not be possible to determine if the WC individual is eligible for supplementary WC based on injuries and length of time WC has been paid.

• Supplementary benefits before 1978

  For supplementary benefits before 1978:

  Question the worker regarding the receipt of supplementary WC.

  Verify if the worker is eligible for such payment.

  Offset DIB up to the time the worker is eligible for supplementary WC.

  Code the reverse offset, “RJ”, if offset is removed or not imposed due to the worker's receipt of supplementary WC.

• Supplementary benefits after 1977

  For supplementary benefits after 1977:

  Question the worker regarding the receipt of supplementary WC.

  Verify if the worker is eligible for such payment and the amount of the payment.

  If the individual receives reduced DIB (e.g., the individual is receiving TT WC or a PP lump sum is being prorated), then SSA offsets the supplementary WC.

  If the individual is receiving full DIB (e.g., a high ACE precludes offset or offset is removed because the individual has received $25,000 in PT), do not offset for the supplementary WC. Code the reverse offset, “RJ”, on the MBR.

• Possible re-imposition of offset and notice instructions

  An individual receiving supplementary WC can lose eligibility for such benefits (e.g., the WC rating may be changed from total or partial) at which point offset of DIB would be applicable. Therefore, when offset is not applicable because of the individual's eligibility for supplementary WC, include in the notice to the individual a dictated paragraph advising why offset is not applicable. If eligibility to supplementary WC benefits ceases, he or she should notify SSA so that any offset may be re-imposed.

D. Cost-of-living Adjustments (COLA)

Minnesota provides a COLA increase on WC payments. The COLA increase may have an affect on offset.

• For Date of Injuries (DOIs) 10/01/95 and later

  The first COLA is paid on the 4^th anniversary of the DOI. Future COLAs are then paid every year on the anniversary date of the injury.

• For DOIs 10/01/92-09/30/95

  COLAs were paid on the anniversary date of the injury and the first COLA was delayed until the 2^nd anniversary.

• For DOIs 10/01/75-09/30/92

  COLAs were paid every year effective on October 1^st.

• For DOIs prior to 10/01/75

  There were no COLA increases.

E. Attorney fees

Attorneys cannot receive any more than 25 percent of the first $4,000 awarded and 20 percent of the next $60,000 awarded. This means the maximum attorney fee paid will be $13,000.

NOTE: Treatment of subdivision 7 fee reimbursements under Minn. Stat.176.081, subd.7, should be deducted from the excludable legal expenses, because they serve as reimbursement to the employee for attorney fees. See POMS PR 02505.026 Minnesota PR 09-134 for further information.

F. Retirement insurance benefits (RIB) considerations

Minnesota offset provisions are complicated. Instruct all individuals to verify with Minnesota Labor and Industries the effect of any RIB elections.

1. RIB considerations for Permanent Total (PT) Benefits

The State of Minnesota imposes offset if the criteria described above is met, per DI 52120.130B. If reverse offset applies it will apply to a RIB benefit as well as a DIB benefit.

NOTE: If reverse offset does not currently apply, determine if the $25,000 criteria will be met in the future before advising any RIB election.

2. RIB Considerations for Temporary Total (TT) Benefits

Electing RIB may cause a cessation of the individual’s TT disability benefit.

Minnesota State Law states that, “Temporary total disability payments shall cease at retirement. "Retirement" means that a preponderance of the evidence supports a conclusion that an employee has retired.” For injuries occurring after 01/01/1984, an individual who receives Social Security old age and survivor insurance retirement benefits is presumed retired from the labor market. State law indicates that an individual may dispute the finding of retirement.

G. References:

http://www.dli.mn.gov/WorkComp.asp - Minnesota Worker's Compensation site

PR 02505.026 - For precedent information regarding PP WC reclassification as PT to avoid offset

DI 52105.001- Reverse Offset Plans

DI 52150.045 - For individual State maximum rates visit

DI 52150.060 - Prorating a WC/PDB Lump Sum Settlement

DI 52150.030 - Considering the RIB Option

DI 52150.050 - Excludable Expenses