There are many different faces to workers’ compensation insurance. However, its basic tenets are that it is designed to protect employees from the costly ramifications of getting hurt on the job.
Anyone who gets hurt on the job could face significant recovery bills, not to mention substantial income insecurity created by the fact that they might be unable to work following an on-the-job injury. Workers’ compensation is designed to protect the employee financially during their recovery period, and to free the business from most liability for the injuries. Therefore, it helps to understand the basic coverage of this plan, and how it can apply to disabilities, in particular.
The Basics of Workers’ Compensation Insurance
Workers compensation has many different facets. It works to protect employees and businesses in case an employee is injured on the job by providing compensation for medical expenses and legal fees resulting from the injury.
The main sections of workers compensation are:
- Medical Expenses: Provides compensation for important immediate medical bills for the injured worker, such as an ambulance, surgery, hospital stay and more.
- Legal Expenses: Covers the business in case an employee sues for an injury. This can include court costs, attorney expenses and settlement fees.
- Disability Coverage: Has various aspects of compensation for employees who are disabled to a work-related injury.
- Death Benefits: Provides compensation to an employee’s family in the unfortunate case that the employee passes away due to a work-related injury.
However, when it comes to disabilities, the definition and use of workers’ compensation benefits become more specific. After all, a disability caused by a workplace injury is often substantially more expensive and requires a much longer recovery than other injuries.
There are four main types of disability coverage: partial temporary disability, partial permanent disability, total temporary disability and total permanent disability. Each disability is ranked based on a percentage. Let’s take a closer look at how each facet of coverage works.
Partial Temporary Disability
Partial temporary disability means the employee is partially disabled for a temporary amount of time. Disability generally means that you are unable to return to work. Partial disability means that you can do some work, but not in the capacity that you used to. An example of this would be tearing a tendon and having limited movement while it heals.
Partial Permanent Disability
A partial permanent disability is determined by the areas of the body affected and the amount the employee can work afterward. An example of a partial permanent disability includes a paralyzed leg or a severed finger.
Total Temporary Disability
Total temporary disability means the injured employee is completely unable to work for a certain period of time after the work-related injury. An example of this would be a warehouse worker breaking their arm, rendering them unable to move boxes while their arm heals.
Total Permanent Disability
Total permanent disability is perhaps the most severe type of disability. This means the employee is unable to return to work due to disability. An example of total permanent disability would be the employee suffering from paralysis in 90% or more of their body, loss of both hands above the wrist, loss of both feet, total loss of hearing and sight or loss of a hand and a foot.
It’s important to remember that when workplace injuries occur, you must take immediate steps to initiate a workers’ compensation claim. Even though an initial injury might seem minor, a more severe medical issue could arise at a later date. As a result, waiting too long to file a claim may limit the compensation for which an employee might be able to qualify.
How Are Disability Benefits Paid for Workers Compensation?
The amount of workers’ compensation benefits and length of time they are paid for disability depends on the situation and injury.
Some benefits may be paid as a lump sum while others can also be paid on a month-to-month basis. In cases of total permanent disability or partial permanent disability, benefits could be paid for the rest of the employee’s life. These benefits can go towards services such as:
- Physical therapy
- Wage replacement
Generally, wage replacement is calculated as a percentage of the employee’s weekly wages and is paid as long as the disabled employee is unable to work.
All employees should be aware of their employer’s workers’ compensation limits. Not all states require businesses to carry workers’ compensation insurance. Texas, for example, doesn’t require businesses to carry this insurance, but still makes an employer who doesn’t carry coverage liable for any employee injuries. Other states have exclusions for certain business and positions.
Most businesses that are required to carry workers compensation include high-risk or primarily physical jobs, such as construction. Still, this is a critical benefit for almost all businesses, and it’s a much safer decision to invest in the cost of your insurance plan, than to face the prospect of paying an employee an injury settlement out of pocket.
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