The opinion
PELLEGRINI, Judge,
concurring.
While I concur in the result reached by the majority, I disagree with the majority’s rationale. I disagree with the majority’s rationale that because workers’ compensation benefits were paid by Rite Aid Corporation’s (Employer) insurance carrier and not Employer itself, no offset was permitted under Section 204(a) of the Workers’ Compensation Act. 1 Instead, I would hold that although Employer would be entitled to an offset, the funds Denise Kramer (Claimant) received were not “severance benefits” but “otherwise earned income” as that term is defined in 34 Pa. Code § 123.2 for which an offset is not permitted.
Pursuant to the collective bargaining agreement (CBA) effective July 26, 1993 through July 26, 1997 between Employer and Teamsters Local 776 (Union), Employer was prohibited from relocating its Shiremanstown, Pennsylvania facility out-of-state. However, pursuant to Addendum C of the CBA entitled “Severance Agreement” which went into effect on July 27, 1997, Employer was permitted to relocate the Shiremanstown facility out-of-state provided that employees who were laid off due to the closure received “severance benefits.” Among the benefits listed in Addendum C was a lump sum payment to employees based upon years of service with Employer, payment for accrued vacation days, personal days etc. ... which were earned by employees but not taken, and earned pension credits and continued health insurance credit based on years of service. Addendum C further provided that receipt of the benefits was conditioned upon employees signing a release agreed to by the parties.
On February 20,1998, while working for Employer’s Shiremanstown facility, Claimant sustained a work-related injury to her neck and began receiving temporary disability benefits in the amount of $364.86 per week. Subsequent to Claimant’s return to work in June 1998, Employer relocated the facility to Maryland, at which time Claimant was laid off and her workers’ compensation benefits were reinstated. Pursuant to Addendum C, Claimant signed a release agreement which provided that in return for receipt of “severance benefits,” she would continue to work at the facility until released by management, not participate in any strikes, slowdowns, boycotts, suits or other action against Employer, and would release Employer from all claims or suits arising out of employment other than workers’ compensation claims or a grievance under the CBA. Claimant then received a check from Employer in the amount of $3,355.02 representing the net amount of severance pay due.
On May 14, 1999, Employer sent Claimant a notice of compensation benefits offset informing her that it intended to use the “severance benefits” as an offset against her workers’ compensation benefits pursuant to Section 204(a) of the Act, 77 P.S. *962 § 71(a), which provides that an employer directly liable for compensation benefits can use severance benefits it paid as credit against the compensation award. Severance benefits are defined in 34 Pa.Code § 123.2. as follows:
A benefit which is taxable to the employe and paid as a result of the employe’s separation from employment by the employer liable for the payment of workers’ compensation, including benefits in the form of tangible property. The term does not include payments received by the employe based upon unused vacation or sick leave or otherwise earned income.
As a result of the offset, Claimant did not receive compensation benefits from June 5, 1999 until August 10, 1999, when total disability benefits were reinstated.
Contending that the payment of “severance benefits” could not offset her compensation benefits because they were “otherwise earned income,” Claimant filed an offset review petition. The WCJ denied the petition determining that the money received by Claimant was paid as a result of her separation from employment and constituted “severance benefits” as that term is defined in 34 Pa.Code § 123.2. The Board affirmed and this appeal followed.
On appeal, the majority determines that there are no facts of record which would establish that the payment was not “severance benefits” as defined in 34 Pa.Code § 123.2. However, it goes on to determine that because Employer was not self-insured, its carrier, and not Employer, was directly liable for the payment of Claimant’s compensation benefits and Employer was not entitled to credit pursuant to Section 204(a) of the Act.
While I do not disagree with the majority’s outcome of not allowing the offset, I disagree with the majority’s rationale that because its insurance carrier, and not Employer, is directly liable for compensation payments, an offset cannot be taken pursuant to Section 204(a) of the Act, 77 P.S. § 71(a). Section 204(a) provides in pertinent part:
[SJeverance benefits paid by the employer directly liable for the payment of compensation and the benefits from a pension plan to the extent funded by the employer directly liable for the payment of compensation which are received by an employe shall also be credited against the amount of the award...
The majority holds that because Employer pays a premium to its carrier and the carrier itself is directly responsible for the disbursement of the specific compensation award, Section 204(a) is inapplicable. However, this ignores that an employer is always ultimately liable for compensation payments, not the carrier. Although an insurance carrier may directly disburse a compensation award to an injured employee, the only source of the funds is from the employer whose rates, for the most part, are experienced based.
Although I believe Employer (and its insurance carrier) is entitled to an offset for any “severance benefits” it pays, I do not believe, in this case, that Claimant received “severance benefits” as that term is defined in 34 Pa.Code § 123.2. Instead, because payment was premised upon what Claimant had actually earned and in lieu of exercising her bargained-for contractual rights, the benefits constituted “otherwise earned income.” I believe Addendum C established that Employer’s payment was based upon what Claimant was entitled to under her employment contract, including accrued sick days, vacation days and accrued pension benefits, which are expressly excluded by 34 Pa,Code § 123.2. Moreover, payment under the Addendum was conditioned upon Claimant signing a re *963 lease in which she gave up significant bargained-for rights, including the right to strike and participate in suits against Employer, and also released Employer from all claims pursuant to her employment contract, excluding workers’ compensation claims and claims under the collective bargaining agreement. Because payments of benefits already accrued are expressly excluded under 34 Pa.Code § 123.2, as well as requiring Claimant to sign a release to receive those payments, they are not “severance benefits” as that term is normally defined and should be treated as “otherwise earned income.”
Because I disagree with the majority’s rationale, I concur in the result only.
. Act of June 2, 1915, P.L. 736, as amended, 77 P.S. § 71(a).