With many types of benefits available for injured and out of work employees, it can be difficult to remember who is entitled to a credit or offset when an employee is also receiving workers’ compensation benefits. In North Carolina, an out of work injured employee potentially could receive workers’ compensation benefits and Social Security disability insurance benefits, unemployment benefits, Federal pandemic unemployment assistance, Social Security retirement benefits, and a variety of employer benefits.

The following is a summary of how different disability benefits and plans correlate with North Carolina workers’ compensation benefits.

• Social Security Disability Insurance Benefits – An injured employee may receive workers’ compensation and Social Security disability insurance benefits at the same time, but there is no reduction for the workers’ compensation carrier. Instead, the Social Security Administration receives the offset and will reduce the Social Security disability payments by the amount received through workers’ compensation.
• North Carolina Division of Employment Security Unemployment Benefits – Generally, an injured employee should not receive unemployment benefits and workers’ compensation benefits at the same time. However, it can happen from time to time depending on the facts of a filed claim. Pursuant to NCGS § 97-42.1, the workers’ compensation carrier is entitled to a credit towards both temporary total disability (TTD) and temporary partial disability (TPD) benefits for any benefits paid under the Employment Security Law. However, there is no credit towards permanent partial disability (PPD) benefits owed.
• Federal Pandemic Unemployment Programs – Generally, there is no offset of credit since the benefits paid are federal benefits, instead of state benefits.
• Social Security Retirement Benefits – When an injured employee is receiving extended compensation in excess of 500 weeks, pursuant to NCGS § 97-29(c), the workers’ compensation carrier is entitled to a one hundred percent (100%) credit for any Social Security retirement benefits also received by the employee.
• Employment Benefits – There are a variety of different employment benefits and payments that can come up during a claim. Generally, pursuant to NCGS § 97-42, if the payment is not due and payable when made, the Commission likely will award a credit for such benefits paid. Such benefits could be employer-funded salary continuation, disability or other income replacement plans. Of note, the disability plans (i.e., LTD and/or STD) must be one hundred percent (100%) employer-funded to receive the credit. However, a workers’ compensation carrier is not entitled to a credit for retirement or severance pay. The Courts have held that such payments are an earned benefit of a contractual nature which is due and payable when received.

Practice Tip for Insurers

With the different types of benefits owed, it can be difficult to remember how such benefits correlate with North Carolina Workers Compensation benefits, especially when a credit or reduction can be made. Upon receipt of a file, investigate to see if the injured employee is receiving any other benefits, and if a reduction can be asserted to reduce the insurer’s disability payments.

If you have questions about disability reduction or credits, or other aspects of a workers’ compensation claim in North Carolina, reach out to Matthew Flammia or a member of our Workers’ Compensation team.