How Workers’ Compensation Affects Retirement in South Carolina

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Injured employees who are receiving workers’ compensation benefits often ask us whether they can retire when they are on benefits and how receiving payments can affect their future retirement. These are things that you must consider because the wrong decision can cause you to lose benefits.  Be careful before you decide to stop working. You should always get the advice of a Greenville workers’ compensation attorney, and the Dan Pruitt Injury Law Firm can help.

Your Workers’ Compensation Benefits Consist of Two Parts

First, there are two different parts of your workers’ compensation benefits:

  • The insurance company must cover the complete costs of the medical care that are reasonably related to your injury.
  • You are entitled to two-thirds of your average weekly wage prior to your injury, subject to a statutory cap.

The Difference Between Voluntary and Involuntary Retirement

The main distinction when you are retiring is whether you are stopping to work because you want to or because you must because of the severity of your injury. If you are receiving workers’ compensation benefits, you should be very careful about a voluntary choice to retire because it may cost you money.

Here, the questions that we receive relate primarily to the disability payment part of your benefits. If you choose to retire when you can still perform some work, you will forfeit your eligibility for the disability part of your workers’ compensation benefits. At a certain point, the insurance company wants to know whether you can work within the limitations that your doctor has set for you based on your diagnosis and treatment.

If you have the ability to work, you need to remain with your employer and perform work that is within your limitations, or you must find another type of job that you can perform. The insurance company will simply not allow you to choose to stop working and keep receiving two-thirds of your pre-injury salary that they were paying.

You Can Always Receive Payments for Medical Care

Even if you are not receiving payment for lost wages, workers’ compensation insurance must continue to pay for the medical care related to your injury. This part of your benefits is not contingent on your working. In some cases, you might have negotiated a lump-sum payment for your claim. You will not need to return the lost wages portion of the settlement when you retire. However, the settlement will reflect the rest of your working career up until retirement.

You might still collect Social Security payments at the same time that you receive workers’ compensation benefits. However, the lump sum settlement or your monthly benefits may trigger an offset of your Social Security retirement benefits. In addition, the regular rules of when you can begin to take your Social Security benefits still apply, regardless of the reason why you are retiring.

You Should Wait Until You Have Reached Maximum Medical Improvement

Your best course of action is to wait until you know whether you will recover and the extent of that recovery until you decide on retirement. You are better off putting off the decision of whether to retire until you know whether you can work again.

First, you will need to see whether you can work within the restrictions that your injury imposes on you. Only retire when you can show that the injury is imposing retirement on you and you are unable to work. Otherwise, you may be leaving money on the table if you prematurely decide to retire. You might still collect workers’ compensation benefits if you can show that your retirement was the result of your injury.

You should continue to pursue your medical treatment and rehabilitation to see whether you can heal from your injury. While retirement is always an option, it may not make the most financial sense for you. Consider what is best for your long-term finances if you are nearing retirement age.

Before you make any decisions that can impact your eligibility for the disability part of your workers’ compensation benefits, you should always consult an experienced attorney.

Using Your Retirement Savings When You Need It

Federal laws are changing in a way that will allow you to make better use of the money that you have saved towards retirement. There is a recent law that allows employees to withdraw up to $1,000 per year from their retirement savings for emergencies, with up to three years to pay back the distributions. You can take a hardship withdrawal from your retirement savings account. An attorney can advise you about your access to the money that you have saved.

Contact a Greenville Workers’ Compensation Lawyer Today

The Dan Pruitt Injury Law Firm can advise you when you are receiving workers’ compensation benefits. Obtaining your benefits is only part of the equation. You may encounter issues when you have already been approved for benefits that can affect your finances, and making a mistake can cost you money. To learn more about your rights and legal situation, you can call us at (864) 280-7660 or send us a message online.

Workers’ Compensation FAQs

What happens if the insurance company wrongfully stops my benefits?

You should hire an attorney to discuss the issue with the insurance company. If you do not obtain a satisfactory result, you may file an appeal.

When do I need to go back to work after an injury?

You may need to go back to work when your doctor has cleared you after reaching the point of maximum medical improvement. Your doctor may impose work restrictions that need to be observed.

Do I need to pay taxes on a hardship withdrawal from my retirement savings?

Yes, You will need to pay income taxes on your withdrawal. You may also need to potentially pay the penalty unless you can qualify for certain exceptions.

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