Workers Compensation 101 Death Benefits Primer

Fortunately, the number of workers’ compensation claims involving death benefits has been gradually declining over the last several decades. The decrease in the number of death claims can be attributed to greater emphasis on safety by employers and to the implementation of OSHA requirements.

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The following discussion of death benefits in workers’ compensation is generic and is not intended to reflect the statutes of any one jurisdiction.

Definition

When an employee dies due to an on-the-job injury or occupational disease, the family members who have relied upon the employee for support are entitled to financial compensation for their loss. In addition to financial support, the family of the deceased employee is provided compensation for the cost of burial up to a state specified amount. Death benefits are a part of the workers’ compensation statutes in every jurisdiction.

Beneficiaries

The dependents of the deceased employee generally eligible for the payment of death benefits normally include:

1. the spouse

2. dependent children

3. dependent grandchildren

4. any other dependent family members

5. parents, if there are no other dependent family members

6. siblings, if there are no parents and no other dependent family members

Except for the spouse and dependent children, all beneficiaries must be able to document they were reliant upon the deceased employee for part or all of their financial support. If they are only partially reliant upon the deceased employee for support, they must be able to prove the percentage of their support they received from the deceased employee. Most jurisdictions exclude beneficiaries who received less than 20% of their support from the deceased.

The surviving spouse (or spouse plus dependent children) have the first claim to death benefits arising from the work comp accident. Other dependents are normally excluded from benefits if there is a spouse or spouse with dependent children. Elderly dependent parents and disabled family members who relied on the deceased employee for support may be left without financial support if the spouse claims all death benefits for herself/himself.

There have been some interesting court cases where the employee was separated from the spouse, but not divorced, and cohabiting with another person. The estranged spouse usually wins, but not always, especially when there are dependent children with the cohabiting partner. There have also been some court cases where same sex cohabiting partners have been approved for death benefits where they could prove financial dependency and about equal number of cases where they have been denied death benefits.

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Burial Benefits

There is a lot of variance in the amount due to the family of the deceased employee for the cost of the funeral. All jurisdictions place an upper limit on the amount that can be paid for funeral expenses with the upper limit ranging from $2,500 to $10,000. It should be noted the burial benefit is not a fixed amount in most jurisdictions. If the cost of the funeral is $6,700 and the jurisdiction has a $5,000 maximum limit, then $5,000 is paid. If the cost of the funeral is $4,700 and the jurisdiction has a $5,000 maximum limit, then the full cost of the funeral of $4,700 is paid. The surviving spouse does not get the remaining $300.

Support Benefits

The dollar amount of death benefits paid weekly (or bi-weekly or monthly) varies among the jurisdictions as much as the indemnity benefits. In some jurisdictions the death benefit amount is the same as the temporary total disability (TTD) or permanent total disability(PTD) amount. In other jurisdictions it is a percentage of the amount payable for TTD or PTD.

The amount of death benefits also varies greatly. There are three types of caps on support benefits – lifetime, time frame, and dollar amount. In some jurisdictions, the surviving spouse receives the death benefits for life unless she/he remarries. In other jurisdictions, the death benefit is paid for a specific number of weeks, or months; for example, 500 weeks or 54 months. The third and largest group of jurisdictions (about 20 jurisdictions) place a dollar cap on the amount of death benefits which are paid weekly; for example $100,000 total payment to the beneficiaries or $390,000 total payment to the beneficiaries.

When the surviving spouse has minor children who were dependent on the deceased employee for financial support, the death benefits will often be divided with the minor children until they reach age 18 or until age 25 if they are enrolled full time in an accredited college. When there are multiple minor children among whom the death benefit is divided, and a child is no longer eligible for the benefit, the remainder of the benefit is then re-divided among the remaining minor children, or spouse and minor children

Disabled children over the age of 18 usually can continue to receive the death benefits until they are no longer disabled or the cap on the time frame or dollar amount is reached.

Summary

When an employee is killed on the job it is a tragedy for the family of the deceased. The death benefits assist the family to deal with the loss of financial support. As the jurisdictions vary greatly in the amount of death benefits payable, please review your own state statutes or contact us for guidance.

Author Robert Elliott, executive vice president, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers’ Compensation costs, including airlines, healthcare, manufacturing, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. He can be contacted at: Robert_Elliott@ReduceYourWorkersComp.com or 860-553-6604.

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Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers’ comp issues.

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