Imagine that you were injured at work close to the age of retirement. The insurance carrier provides you with medical treatment and temporary disability since you are medically unable to return to work due to your injuries. The question arises: should you proceed with your retirement? The answer is unequivocally NO, at least until you are discharged by the workers’ compensation physician as reaching maximum medical improvement [“MMI”].
It is common for an employer to fill an injured worker’s position if he is out of work for an extended period of time (over 12 weeks), although it is illegal to terminate an employee in retaliation for filing a workers’ compensation claim. Larger employers generally keep their injured employees “on the books” for longer periods of time, warning that their employment will be terminated unless they return to work within a 12-month period. Employees nearing retirement may mistakenly panic, believing that their temporary disability benefits will end once their employment is terminated. This fear is unfounded. The NJ Workers’ Compensation Act provides that temporary disability benefits are payable from the day the injured employee is first unable to work until the day they are able to “resume work and continue permanently.” If employment is terminated because of the injury, a termination from employment will not trigger a cessation of workers’ compensation benefits.
What is the downside of retiring when you are receiving workers’ compensation benefits? Your temporary disability benefits will immediately be suspended by the carrier under the premise that you can no longer prove a “lost wage.” If an employee voluntarily removes himself from the workforce, the workers’ compensation carrier will argue that he is no longer entitled to receive temporary disability benefits since there is no wage to replace.
How should an employee prepare for the inevitable day when the workers’ compensation physician will declare him to reach MMI, resulting in the carrier terminating temporary disability benefits? Be ready to file your retirement paperwork, effective on the date you are released by your physician.
Another option for the injured worker nearing retirement is to attempt to return to work on a light duty basis, until reaching full retirement age. Avoid performing any work which could cause injury. If the employer terminates employment due to poor performance, then the injured worker may apply for unemployment benefits while searching for another job within his physical capabilities or complete the retirement application at that juncture.
An injured employees who is out of work for an extended period may also consider filing for social security disability [“SSD”] benefits, so that they have some benefit to fall back on once workers’ compensation benefits cease. Combined benefits between workers’ compensation and social security disability will be capped at 80% of your average cumulative earnings. The New Jersey Appellate Division has ruled that an award of SSD does not preclude the payment of workers’ compensation, given the setoff provisions in the Social Security Act.
Retiring prematurely equates to an announcement that you are no longer “ready, willing, and able” to work, even if you were medically cleared to do so. Do not make this mistake, which provides the insurance carrier with an opportunity to terminate your workers’ compensation benefits.