Workers Compensation 101

Workers compensation is a type of insurance employers are required to have to provide benefits to employees who are injured on the job or become ill due to on the job exposures. Workers compensation (work comp) insurance provides the injured employee with medical benefits and partial wage replacement benefits. All 50 states, the District of Columbia, Guam, the Virgin Islands and Puerto Rico have workers compensation statutes. Each jurisdiction has their own unique provisions as to what their work comp laws provide.

 

 

Work comp provides benefits to the injured employee without regard as to whose fault the accident was. In return for the guaranteed benefits, the employee can not bring legal action against the employer if the employer was in someway negligent and caused the accident.   The employee is not compensated for any pain and suffering that occurs as a result of the accident. (WCxKit)

 

 

Work comp has been referred to as a combination of health insurance, disability insurance and life insurance for employees. When the employee is injured or has an occupational disease, work comp pays the medical bills like health insurance does and provides partial wage replacement like disability insurance does. If the employee dies as a result of the injury or occupational disease, work comp will pay benefits to the dependents as a form of life insurance. Work comp does not pay any of these benefits if the employee injury occurs away from the job.

 

 

Employers in Ohio, North Dakota, Puerto Rico, the Virgin Islands, Washington State and Wyoming are required to purchase their workers compensation insurance from the state/territory government. In the other states, D.C and Guam, the employers can buy their work comp coverage from a private insurance company or in most states, self insure, if they are large enough to handle the financial risk. Some states allow smaller employers to join together to self insure. About a dozen states give the employer the option of buying the insurance from the state government. Texas is the only state that classifies work comp as voluntary insurance. If a Texas employer does not have work comp coverage, the injured employee can bring a lawsuit against the employer for their injuries.

 

 

In most jurisdictions there are four primary types of benefits available to the employee. They are medical benefits, disability benefits, vocational rehabilitation and death benefits. Medical benefits pay for all types of medical expenses including doctors, hospitals, prescriptions, durable medical equipment and other medical providers (like nursing services, chiropractors, physical therapist, etc). 

 

 

Indemnity benefits can be broken down into four primary types in most jurisdictions:

 

 

Temporary total disability benefits are the most common indemnity benefit. The injured worker receives on a weekly or a bi-weekly basis a portion (two-thirds in most jurisdictions) of their average weekly wage until they are able to return to work. 

 

 

If the injured worker is able to return to work , but only for a part of the time, or at a reduced rate of pay, temporary partial disability benefits are provided to make up a portion of the lost income until the employee is able to return to work full time.

 

 

When the employee receives a permanent injury and will be partially disabled as a result of the injury, permanent partial disability is paid to the employee to compensate for their future loss of earning capacity due to the partial disability. 

 

 

If the employee receives an injury that is very severe, and the employee will never be able to return to any type of work, the employee is paid permanent total disability benefits which can either be for a set of number of weeks (for example – 500 weeks) or is paid disability benefits for life, depending on the state law.

 

 

Vocational rehabilitation benefits are designed to assist the employee who is permanently partial disabled and is unable to return to work for the employer. The vocational rehabilitation benefits assist the employee in being trained for another job or obtaining the education needed to perform other work. (WCxKit)

 

 

Death benefits (usually in amount similar to the weekly disability benefits) are paid to the surviving spouse, dependent children or other dependents of an employee who is killed on the job or dies as a result of an occupational disease. Death benefits vary by jurisdiction, with some jurisdictions requiring death benefits be paid to the surviving spouse for life while other jurisdictions cap death benefits at a certain number of weeks (for example 400 weeks) or at a set dollar amount (for example ($250,000). Dependent children usually receive a portion of the death benefits until they are 18, or 22 if attending college. Surviving spouses normally lose the death benefit if they remarry.