What is the Hartman Formula?

By Sara Toor M.A. & Cameron Lindahl M.S. 

​If you are an Applicant Attorney or an individual that works extensively with individuals who will be receiving a Workers’ Compensation claim, you are most likely aware of the Hartman Formula. For those who are not familiar with the Hartman Formula, this blog will describe the Hartman Formula and its purpose.

According to the Social Security Administration, “the Hartman Formula is a common name for California WC LS settlements that specify life expectancy (LE) rate. Attorneys often characterize settlements using this LE based proration method.” 

For clients who receive Social Security Disability Insurance Benefits (SSDI) and are receiving a workers’ compensation settlement the Hartman language and formula is important. Why? To preserve an individual’s income benefits. When an individual receives both Social Security Disability benefits and workers’ compensation benefits, the individual’s Social Security Disability benefits can be reduced or offset.This information can be found under 42 U.S.C. §424a, 20 C.F.R. §404.408.

In addition, under 42 U.S.C. §424a, claimants who receive SSDI and workers’ compensation cannot be paid more than 80% of their pre-disability average earnings. The purpose for this is to avoid the duplication of benefits.

The Hartman Formula assists in calculating the reduction or offset to the claimant. By having lump sum rewards spread out over the claimant’s life expectancy will assist in lowering any Social Security reduction or offset or at times remove the reduction or offset altogether. The specific calculations to reduce the offset are done by an attorney and placed into the settlement documents, also called a C&R (Compromise and Release), which is then submitted to the Social Security Administration. When the settlement documents are finally submitted to the Social Security Administration no updates, modifications are permitted, which is why it is crucial to address any offset issues in the original document.

DISCLAIMER: The information provided by CPT Institute is for informational purposes only and is intended to be used as a non-legal guide prior to consultation with an attorney familiar with your specific legal situation. CPT Institute is not engaged in the practice of law or in rendering legal advice or counsel. No such legal advice or counseling is either expressly or impliedly intended. This form is not a substitute for the advice or counsel of an attorney. If you require legal advice, you should seek the services of an attorney. © 2018 CPT Institute All rights reserved.

Further Reading/Sources:

https://www.ssa.gov/OP_Home/cfr20/404/404-0408.htm

https://www.ssa.gov/pubs/EN-05-10018.pdf

https://secure.ssa.gov/poms.nsf/lnx/0452120030

https://www.ssa.gov/OP_Home/ssact/title02/0224.htm

http://www.iclega.org/adrwc/ppts/ADR%20in%20the%20Workers%20Compensation%20arena%20seminar.pdf

http://www.delellis.com/images/Work_Comp_Offset_Article.pdf

https://www.americanbar.org/content/dam/aba/administrative/labor_law/meetings/2011/ac2011/088.authcheckdam.pdf