When you go to work each day, the last thing you expect is to be injured while on the job. But sadly, accidents can and do happen and often result in employees having to take time off work while they heal. Virtually every business in the United States is required to have insurance to cover this eventually. Workers' compensation provides wage replacement and medical benefits to anyone who is injured at work, in exchange for relinquishing the right to sue the employer for negligence.
Workers' compensation is a formula system where payments are a percentage of your average gross weekly pay. Once you know how long you will be off work, the calculation is fairly straightforward.
Types of Workers' Compensation Benefits
Workers' compensation is a type of insurance policy that pays out whenever someone is injured while at work. It's different from a regular personal injury damages claim because you will not get any damages for "pain and suffering." Rather, a workers' compensation payout focuses more or less exclusively on providing income due to your inability to work.
While each state has its own payout structure, generally, there are four main categories of compensation:
- Temporary total disability
- Temporary partial disability
- Permanent impairment
- Reimbursement of medical bills
Temporary Total Disability Payments: 66 2/3 Rule
The most common category of workers' compensation is the temporary total disability payment. This is paid while you are healing from an injury and not able to work at all. The amount you get is governed by state law, but it is usually a multiplier of your gross weekly wages. The most common calculation is about two-thirds – 66 2/3 percent – of your gross average weekly wage over the previous year, including any overtime, tips, bonuses and vacation pay.
In most states, there's a cap on the amount of benefit you can receive regardless of how much you were earning at the time of the accident. That figure is normally around $1,000 per week, although the exact amount depends on the average wage rate in your state.
Here's an example. In Pennsylvania, the 2019 temporary total disability rate is:
- 66 2/3 percent if your weekly wage falls between $1,537.50 and $768.76, to a maximum compensation of $1,049 per week.
- A fixed sum of $524.50 per week if your average weekly wage is between $768.75 and $592.78.
- 90 percent of the average weekly wage if you earn $582.77 per week or less.
In most states, there's a small waiting period before the payment kicks in. In California, for example, you're not entitled to temporary disability payments until you've missed three days of work. Exceptions apply if you're off work for more than 14 days or you're hospitalized.
Temporary Partial Disability Payments
If your doctor says that you can work while healing, but you must be switched to lighter duties or work fewer hours, then you can receive partial temporary disability payments. In this situation, you will receive a percentage of the total disability payment benefit based on your current earning capacity.
Suppose, for instance, that you work 75 percent time and earn 75 percent of your usual wage while healing. Here, you are entitled to receive 25 percent of the workers' compensation benefit. If you receive 40 percent of your usual wage, you should receive 60 percent of the compensation benefit, and so on.
Using numbers to illustrate, if you earned $1,000 per week before the accident but now earn only $600, your benefit would be 66 2/3 percent of the "missing" $400, which would equal $267 per week in compensation.
Permanent Impairment Payments
Permanent impairment payments are paid out when someone is so disabled due to their job-related injury that it permanently impacts her ability to work. You will only receive this payment if your doctor certifies that your medical condition is "permanent and stationary" – meaning you will not get better with time or further treatment.
For these types of injuries, the payout will depend on the "disability rating" you receive. A disability rating is intended to reflect the degree to which injury impairs your ability to work, ranging from 0 percent (the injury does not prevent you from working) to 100 percent (you will never work again). The higher the percentage, the worse the disability.
Of course, it is disingenuous to say that every person with a leg amputation, for example, will be affected in the same way. Thus, disability ratings are not one-size-fits-all. The starting point is the American Medical Association's Guidelines to Impairment, a book that gives impairment ratings to various common types of injury, based on what a typical person with this type of injury can and cannot do.
However, your doctor's records are critical in determining what you will eventually get for the settlement of a permanent impairment claim. The insurer will look at your doctor's reports and your own testimony to determine how the injury has affected you. For instance, if the AMA Guidelines and state law recommend a $200,000 payment for complete loss of use of a leg, but the doctor believes you have 25 percent use of your leg, then you would receive 75 percent of $200,000, which is $150,000.
Your age, occupation and future earning potential also factor into the calculation. This means that a laborer in his 30s who injures himself so severely that he will never work again is going to be in a different situation to a 65-year-old office worker who is close to retirement anyway.
Payment of Medical Bills
As soon as you report the incident to your employer and file a worker's compensation claim, the insurance company should begin paying for any medical treatment that's reasonably associated with the injury. This includes doctor's bills, hospital bills, physical therapy and prescription medicines. There should be with no out-of-pocket or deductible cost to you, the employee.
In some states, the insurer is responsible for a certain amount of medical costs even if it ultimately denies the claim. California, for instance, requires that insurers pay up to $10,000 of your medical costs even if your claim is rejected.
For some injuries, you may have to get authorization from the insurance company before receiving the treatment. This is to determine whether the treatment (and the cost) is medically necessary. The rules are typically more lenient in the first 30 days after an injury to ensure you receive prompt medical attention.
How Long Do Benefits Last?
While most people should receive the temporary (weekly) benefit for as long as they need to be away from work, for those with long-term injuries, there are limits on how long the benefit will continue. Most states have a maximum length of time for paying the benefit – in California, it's 104 weeks; in Maine, it's 520 weeks for most types of injury.
Understand that you don't have to take these weeks all in one go. For many injuries, the workers' comp payment may need to stop and start again; for example, if you went back to work but then needed additional surgery. In addition, the state workers' compensation board has the discretion to extend your benefits if you can show extreme financial hardship caused by your inability to work.
- Martin Law: How Much Money Will I Get From My Workers Compensation Claim and How Is It Calculated?
- AllLaw: How Much in Workers' Compensation Benefits Will You Get?
- Medscape: Impairment Rating and Disability Determination
- Nolo: How Workers' Compensation Payments Are Calculated for Injured Employees in California
- Nolo: How Much Are Workers' Compensation Benefits in Maine?
Jayne Thompson earned an LLB in Law and Business Administration from the University of Birmingham and an LLM in International Law from the University of East London. She practiced in various “big law” firms before launching a career as a commercial writer. Her work has appeared on numerous financial blogs including Wealth Soup and Synchrony. Find her at www.whiterosecopywriting.com.