Morgan’s Tip of the Week – PTD Terms

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As our workforce ages in Florida, we will continue to see an increase in PTD claims.  (Here’s a link to two great studies on the workforce aging and population in Florida).

 I often get questions about some of the terms and nuances of PTD.  Here are a few terms/issues I see most often:

Present Day Value (PDV)–  Well, in plain English, it means how much do I have to put in the bank today to cover the bi-weekly PTD payments over time.  The younger the claimant is, the more you save because you have more time to earn interest.  A good starting point for evaluating a likely PTD claim is that many settle for ½ of the PDV.  It may take more if it’s clearly PTD or less if you have a strong argument.

Discount Factor– It’s the interest rate you use in calculating the Present Day Value.   Today, most people argue for 2% interest.  While interest rates may go up in the future, a quick search of the interwebs shows interest rates from most banks between .08% and .11% on large deposits.  It’s hard for us to argue for 4% or higher.   The higher the interest rate, the lower the PDV (you have to put less in the bank to start because you will earn more in interest)

PTD supplemental benefits (D/A after 10/1/03)- end at 62 (unless they didn’t work long enough because of the accident to qualify for SSD).  Easy formula:  3% x the PTD benefit x # of years since the accident.   Update January 1st of each year.

Social Security Offsets–  It’s a complicated formula, it’s on the DWC-14 .  The SS Offset ends at age 62 because SS Disability converts to SS Retirement at 62, and we can’t offset with  SSR.   You CAN take the SS Offset on TTD benefits, but usually that doesn’t make sense because if you wait till the clmt is collecting PTD Supps, you get a bigger offset. Once you start taking the offset you can’t recalculate it.   However, if the clmt is approaching 62, it may make sense to start the offset early since it ends.   I calculate it both ways and see which is a better deal for the E/C, wait or take it early.   (Not all states have a right to SSO like Florida, so always check if you are handling other states.)

Accidents after age 70– PTD benefits end at 75 unless the claimant was over 70 at the time of the accident.  If so, the claimant gets 5 years of PTD benefits (and no supps and no SSO).   Something to consider, it may make more sense to accept a claimant as PTD early  if that will be the case, and pay 5 years of PTD rather than 1-2 years of TTD/TPD, and then 5 years of PTD.  Hey I don’t make the rules….

Rated Ages– PTD benefits end at 75 (accept for those accidents after 70), but if the claimant has other personal health conditions, or because of the injuries from the accident, their life expectancy may be less than 75.  The rated age is their life expectancy given the overall health, and you can use that to lesson the PDV.  Less years you have to pay, less money you need in the bank.