Workers Compensation is a form of insurance that almost all employers with one or more employees must carry. It provides no-fault benefits to workers injured on the job. Workers compensation law in every state contains an exclusive remedy provision that stipulates that the benefits prescribed in the act are the sole remedy against the employer for covered injuries sustained on the job. The employee receives medical, disability rehabilitation, and death benefits in exchange for waiving the right to sue their employee.
Medical benefits are payments for the medical treatment of an injured employee. These benefits account for more than half of the total workers compensation benefit payments in the United States. Most states provide for unlimited medical benefits in terms of both dollar amounts and duration. In the few states that put a limit on medical benefits, these benefits may be exceeded upon the authorization of the state’s workers compensation administrator.
Disability benefits compensate a worker for their loss of income or earning capacity that is a result of a work related injury. The amount of weekly benefit received by a disabled worker is a percentage of the workers wage. That percentage is determined by the class of disability the worker is placed into. There are four classes of disability and they are:
The most common class of disability is temporary total disability. An employee in this class would be expected to recover from the injury and return to employment but is unable to do any type of work while recovering.
Permanent total disability is when an employee suffers an injury that leaves him or her unable to do any kind of work for the remainder of his or her life. This is the most severe disability class. Most states provide permanent total disability benefits for life.
Permanent partial disability occurs when an employee suffers an injury from which he or she will never recover, but the injury is such that the ability to work is only partially affected. In other words, the employee can still do some work, but his or her earning capacity is less than it would be had no injury occurred.
Temporary partial disability occurs when an employee can still do some work but is unable to earn his or her usual wage until full recovery. This benefit is typically calculated as a percentage of the difference between the weekly wage earned during the recovery period and the weekly wage that would have been earned had no injury taken place.
For disability benefits, states have a waiting period during which benefits are not payable. This length of time varies from state to state, but is typically 3 days. This waiting period essentially acts as a deductible and eliminates the administrative work for small claims. There is no waiting period to receive medical benefits.
Over time, most state workers compensation laws have added provisions related to the rehabilitation of injured workers. These provisions generally reimburse rehabilitation-related expenses for an injured worker.
If a worker is killed during the course of employment, death benefits are paid to the workers family. These benefits consist of a burial allowance and a weekly income benefit designed to help compensate those dependent on the lost income. This payment also varies from state to state, but is typically expressed as a percentage of the weekly wages of the deceased worker. Often times, there is a time limit on how long these benefits are paid. For children of a deceased worker, benefits typically end at age 18 and a spouse’s benefit’s usually ends when he or she is remarried.
J.Krug & Associates, Inc.