What benefits can I expect from workers' compensation?
- All workers' compensation laws provide the following four core benefits: medical expenses; indemnity payments for temporary and permanent disability (total and partial); physical and vocational rehabilitation (varies widely state to state); death benefits.
- No workers' comp system requires employees to share in the cost of medical services. Employees never pay a medical deductible or co-payment for service.
- In all but seven states, workers' compensation laws require insurers to provide complete medical coverage without durational or monetary limitations. Special provisions limiting medical coverage apply in Arkansas, Florida, Hawaii, New Jersey, Ohio, Montana, and Tennessee.
- State workers' compensation benefits for both temporary and permanent disability pay between 66 2/3 percent and 80 percent of lost wages, up to varying set dollar maximums. Indemnity payments also are subject to time limits. Depending on the nature of the disability, payments are made for life, the "duration of disability," or a specified number of weeks. Example: In California, a worker who is determined to have a temporary total disability receives payments for the duration of their disability. Those with a permanent total disability receive the state's temporary disability benefit up to $490 per week for life.
- Temporary and permanent disabilities are also classified as partial or total. This affects workers' compensation benefits as well. Permanent partial disabilities, enabling employees to return to work in the same or a different function, pay lower benefits than permanent total disabilities. Example: In Alabama, carriers must pay 66 2/3 percent of an employee's lost wages for 300 weeks if he or she suffers a permanent partial disability. Individuals with permanent total disabilities receive 66 2/3 of their lost wages for the duration of their permanent disability.
- Most states provide disfigurement benefits for serious injuries to the head, face, or neck (or any body part visible in the normal course of work), which "handicap employment" or hinder "earning capacity."
- Before paying temporary workers' comp benefits, most states require employees to satisfy a waiting period, which is usually between 3 and 7 days. If an employee can't work after the waiting period, he or she qualifies for disability payments. Temporary disability payments generally stop when an employee returns to work or their physician releases them for work.
- Most workers' comp laws require employers and insurers to pay for physical and vocation rehabilitation services. Employer responsibilities vary widely from state to state. To learn more, click here. Only North Carolina, Pennsylvania, and Wyoming do not have vocational rehabilitation provisions in their workers compensation laws.
- Spouses of fatally injured employees receive workers' compensation death benefits, including burial funds from $3,000 in Alabama to $15,000 in Minnesota. Spouses with children receive greater workers' compensation benefits than those without children. Children are generally paid benefits until 18, unless they are physically or mentally disabled. Also, remarriage affects benefits. Example: Louisiana pays 32 1/2 percent of lost wages to spouses and 65 percent to spouses with children. Maine, in contrast, pays 85 percent to both spouses and spouses with children.
- In every state, workers' compensation benefits are subject to "offsets," or reductions, if the employee is receiving funds from other state or federal programs, such as a state unemployment agency or the U.S. Social Security Administration. Offsets can be as much as 50 percent.
Dos and don'ts of workers' compensation insurance...
- Use the Internet to compare workers' comp policies and request workers' comp insurance quotes. Often costs for similar policies from different carriers will vary.
- Select an insurance agent who is familiar with your industry and appropriate carriers. A good agent will uncover discounts and advocate for you during premium negotiations.
- Keep an eye on your workers' comp premiums. Make sure your business is not being misclassified, causing premium increases. There are some 600 (NCCI) workers' compensation classifications, which group businesses with similar hazard exposures together. Each classification is assigned a risk rate (loss cost), which directly affects a company's workers' comp premiums and workers compensation benefits.
- Strive to keep your workplace free of hazards to avoid workers' comp claims. Also, make safety a priority, posting appropriate safety procedures and precautions.