Court Bars Workers' Comp Offset Growth From COLAs

A split Pennsylvania Commonwealth Court panel holds that employers cannot raise a workers' comp offset with Social Security cost-of-living increases.

Updated on Nov. 10, 2026 in Retirement Planning

Court Bars Workers' Comp Offset Growth From COLAs

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Should injured workers keep their full cost-of-living increases from Social Security benefits?

The Pennsylvania Commonwealth Court ruled 4-3 on November 9, 2026, that employers cannot increase workers' compensation offsets based on Social Security cost-of-living adjustments. The decision locks the offset at the initial Social Security benefit amount for the employee at issue.

Why it matters

The ruling ends a practice in which employers took half of each cost-of-living increase from workers' compensation payments, affecting injured workers who also collect Social Security retirement benefits. The court found no other state that has examined the question has allowed the offset, and courts in Colorado, Florida, Montana, and New Hampshire rejected it.

The court's 4-3 split and the employee's weekly payment falling to $247.56 under a 50% offset show the financial effect of the practice. It is not yet known whether the Pennsylvania Supreme Court will take up the case on appeal.

The players

Pennsylvania Commonwealth Court

The state appellate court that issued the 4-3 ruling barring employers from increasing workers' comp offsets with Social Security cost-of-living adjustments.

The details

The employee was injured on the job in 1997 while working for the Commonwealth of Pennsylvania and began collecting Social Security retirement in March 2017. The employer applied a 50% offset under the state's Workers' Compensation Act and increased it by half of each Social Security cost-of-living adjustment until the employee challenged it in 2023. The court read the statutory word "benefits" as excluding the federally funded inflation adjustment.

1997: Employee injured on the job while working for Pennsylvania.
March 2017: Employee began collecting Social Security retirement benefits.
2023: Employee challenged the offset.
November 9, 2026: Commonwealth Court issued its 4-3 ruling.

Legal Context

Courts in Colorado, Florida, Montana, and New Hampshire have reached the same conclusion, rejecting offsets tied to Social Security cost-of-living increases. Pennsylvania's ruling aligns with that trend and sets the state's own rule on the question.

Workers collecting both workers' comp and Social Security in Pennsylvania may see their offset frozen at the initial benefit amount rather than shrinking as cost-of-living increases arrive. Retirees should review how any workers' comp offset affects their monthly income planning.

The takeaway

Injured workers who also draw Social Security should confirm how their workers' comp offset is calculated, since cost-of-living increases may not reduce their benefits in every state. Monitor whether the ruling is appealed, because a Pennsylvania Supreme Court decision could change the rule.