Understanding workers' comp disability

When an employee sustains an injury or becomes ill as a result of doing work-related activities, their medical expenses may be covered by workers’ compensation insurance.

Unlike health insurance, a work compensation policy is held by the employer, not the employee. The employer pays a fee to the insurance carrier every month; in return, the business receives workers’ compensation coverage for its employees.

Sometimes employees suffer injuries or illnesses that result in significant impairments. Consequently, injured workers may be temporarily or permanently unable to do their jobs. These types of injuries or illnesses are categorized as disabilities.

When an employee sustains a work-related injury or illness that results in a disability, the treating physician must determine three things:

• the level of disability (temporary or permanent, total or partial)
• whether the employee has reached maximum medical improvement (MMI)
• a workers’ comp impairment rating

The level of disability has several different categories. A disability may be temporary or permanent. These terms are relatively self-explanatory; a temporary disability means that the employee is unable to do their pre-injury job for only a limited period of time. This period can last up to three years in most cases. A permanent disability, however, means that the employee will be impaired in some way for the perpetual future.

A disability may also be total or partial. A total disability means an employee is impaired to the point that they cannot perform their job entirely. This may be a temporary total disability (such as a broken arm, for example, which will ultimately heal) or a permanent total disability (such as the loss of a limb). A partial disability means that the impairment only partly hinders the employee’s ability to perform their pre-injury job.

Medical maximum improvement (MMI) is the point at which the employee’s illness or injury has improved as much as it will, with or without further medical treatment. The MMI is an important metric because it helps to determine whether the employee has a disability and whether they are eligible for an impairment rating payout. For example, if a worker sustains a debilitating injury that is unlikely to heal to its pre-injury state, such as the loss of an eye, they would reach MMI when the eye injury has healed and is no longer painful. But because the loss of an eye is permanent, there is no future point at which that worker would be able to see out of that eye again. At that point, the treating physician would assign an impairment rating.

An impairment rating, which is usually issued by the treating physician, is another important aspect in understanding workers’ compensation disability and determining an impaired employee’s payouts.