Since the early 1900s, States have required employers to provide workers’ compensation insurance for their employees. The system is based on the concept that industrial accidents are inevitable, and employers should be shielded from tort liability. Most employers buy workers’ comp through private insurers or state-certified compensation funds. In some cases, coverage is mandatory; in others, it’s a negotiated benefit in collective bargaining agreements.
Medical Payments
All states mandate the workers’ compensation system and provide injured employees with medical and wage loss benefits. The design evolved through a social contract between management and labor, and it protects businesses from costly civil suits. Part A of a workers compensation insurance policy satisfies state insurance requirements and provides medical care, death, disability, and rehabilitation benefits to insured employees on a no-fault basis. It also pays lost time compensation according to a predetermined schedule, which is usually tax-free. When an employee is injured or becomes ill at work, you should ensure they receive prompt medical treatment from physicians authorized by the state workers’ compensation board and participating providers under your health insurance plan. Physicians who do not follow this practice could face malpractice lawsuits and delay receiving payment from the workers’ comp insurer. Medical deductibles are an option in some workers’ comp policies to help control costs. These are based on payroll calculations, so be sure that yours correctly accounts for overtime pay. Training personnel to promptly report on-the-job accidents to their full-time supervisor and record the information accurately is also a good idea.
Loss of Earnings
When an injury prevents a person from earning their regular salary, they can file a claim for lost earnings. This type of damage is considered a particular category, as it has a clear monetary value that can be calculated and awarded. Generally, it is up to the victim to prove that another party caused their injuries and is liable for their damages. This includes verifying that the other party owed them a duty of care and that their breach resulted in injuries. In most cases, this will involve a plaintiff showing that the other party caused their damage by negligence or recklessness. Damages for past lost income are easy to calculate and usually only require examining work attendance records, pay stubs, and tax returns. However, future loss of earnings is a more complex calculation since it involves predicting the victim’s ability to earn their average salary in the future. Often, these calculations include factors like their professional skills, age, and life expectancy. They may also have the impact of a long absence from work on their career prospects and professional advancement.
Temporary Disability
Temporary disability is the term for benefits that pay a portion of an injured employee’s lost wages while they recover from their work-related condition. Unlike other types of disability insurance, which may be designed to cover any injury, temporary disability policies are expressly intended to replace income from work-related injuries. Generally, employees that are temporarily disabled receive weekly or biweekly checks that are a fraction (usually two-thirds) of their average gross income. In addition, the policy provides medical coverage and short-term use of a disability aid like a wheelchair or motorized scooter. Benefit payments for a temporary disability continue until the injury causes a loss of functionality found by a Workers’ Compensation Commission to have reached maximum medical improvement or a period prescribed in the statute has run (the number of weeks varies by body part). Some union contracts also provide supplemental wages, paid leave, health insurance coverage, and retirement service credit/ seniority benefits. Many employers offer long-term disability plans to help their employees with the financial burdens of a severe disability. These plans can be delivered with the State’s workers’ comp program to provide comprehensive financial protection and a seamless administrative experience if an employee’s disability extends beyond 90 days.
Permanent Disability
If your injury or illness prevents you from performing your old job, you’ll be considered permanent and disabled. You’ll receive ongoing workers’ compensation disability benefits based on a percentage of your average weekly wage and typically paid until you reach a designated age. Your doctor may assign a permanent impairment rating, which is used to determine your disability benefit rate. Unlike the scheduling system, this method considers your age, job, skill, pain level, and motion limitations to determine a percentage of loss of function multiplied by 500 weeks to arrive at a disability rating. While the rationale for compensating for permanent disabilities is relatively straightforward, states have wide variations in how they establish rates. The differences in approach are most pronounced for permanent partial disabilities, where the differences among states can be striking. In some cases, these differences have led to contention and litigation. These disagreements often center on how to determine the extent of the injured worker’s impairment and what the rate should be.
