Workers’ compensation benefits extend to employees who suffer work-related injuries, illness or death. Here’s a look at 4 types and why they’re important.
Does your company keep a workers’ compensation insurance policy active in case employees are injured on the job? Whether it’s state-run, privately insured, or self-funded, companies with employees should have a workers’ compensation plan to cover work injuries and work-related illness.
Here’s a look at the 4 primary types of workers’ compensation benefits and why they’re important to employers and employees.
Medical and healthcare coverage
A primary function of workers’ compensation insurance is to pay medical costs related to an injury or illness that occurred on or was caused by the job. It’s important to understand that the medical coverage for injured workers will only apply to injuries acquired at work, on the clock, or as a direct result of the job. Covered illnesses must also be directly linked to the job.
This means that if you have an accident while in a company vehicle and are performing your job, you’ll most likely qualify for compensation benefits. But an accident that occurs while you’re commuting to or from work in your private vehicle typically would not be covered.
The medical care coverage of workman’s comp does not have a maximum benefit limit per individual injured. It generally applies to:
- Medical payments to doctors, nurses, specialty care centers, and other healthcare providers.
- Medical equipment, such as walkers, wheelchairs, canes, and oxygen.
- Payments for at-home care provided by a nurse.
- Medical bills pertaining to hospital treatment, stays, and surgeries.
- Other medical expenses related to the workplace injury or illness.
Lost wages and disability benefits
Workers’ compensation insurance may also pay the employee for lost wages while they’re out of work due to their injury or illness. This also extends to cases of temporary and permanent disability. The lost wages payments are calculated according to the employee’s average weekly wage (AWW) for a period preceding the injury. Details that factor into AWW include actual numbers of hours and days worked during that period and what the employee was paid.
The lost wages payment is also affected by the worker’s disability status. This means that the insurance company evaluates how disabled the employee is according to doctors’ notes. This is typically noted as a percentage. If a sick or injured worker is 100% disabled, they can perform no work. However, if they are 50% disabled, they may be able to return for lighter duty.
In terms of actual payout, a 100%-disabled person would generally be entitled to 2/3 of their gross pay. That would be like continuing to receive their net pay.
The length of time a person receives these workers’ comp benefits depends on their injury, recovery time, disability status, and the state in which they live. There is also a brief waiting period before the injured employee starts receiving benefits.
Workers’ compensation pays for the vocational rehabilitation of injured employees who are getting ready to return to work. This can include physical therapy and job retraining. It might also include therapy to help the individual deal mentally with their work-related injury, any lasting effects, and return to their previous job or one that better suits their current abilities.
Funeral expenses and survivor benefits
Sometimes an employee dies as a result of work-related injuries or accidents. When an employee loses their life this way, a calculation is made to determine the surviving family members’ death benefits. While medical payments do not have a minimum or maximum, the death benefit does. Survivors, usually the spouse and children, will receive at least a minimum amount, and the calculation can also max out. The surviving family members can use this money to pay bills and any funeral expenses not covered by the workers’ compensation policy. (Some workers’ comp policies do cover funeral expenses.)
Worker’s compensation insurance isn’t always legally required. However, companies with 1 or more employees should maintain some workers’ compensation plan as part of their employee compensation package. Not only will it help pay employees’ medical expenses, lost wages, and death benefits if ever necessary, but it also covers employers. Without workers’ comp, a business could find itself deep into legal and financial trouble. If sued by the affected party(ies), they can be held financially responsible for medical costs and more. And if they’re uninsured in a state that requires it, they can face steep monetary penalties, temporary closure, or even jail time.
For more information, see our guide to what workers’ compensation is and additional benefits to employers and employees alike.
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