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The difference between workers' comp payments and workers' comp disability payments

Workers’ compensation insurance covers medical bills for a business’s employees if they become injured at work. However, expenses arising from immediate medical care are only part of the equation. For example, a worker may sustain an injury that affects them long-term or prevents them from ever returning to work.

Such medical issues are referred to as “disabilities.” An injury or illness is considered a disability if there is a factor that prevents the worker from completing their work duties in any capacity. A disability may be classified as temporary or permanent.

A temporary disability is one that only affects an employee for a short period of time. It is considered a disability when it prevents the employee from working their pre-injury job entirely. “Temporary” also doesn’t necessarily mean “short-term.” Temporary disability payments can be disbursed to employees for up to three years.

A permanent disability is one that affects an employee for the rest of their life. It may be a “permanent total disability,” in which case the employee cannot work at their pre-injury job at all, or ever, due to their injury. An employee with a permanent total disability may receive workers’ comp disability payments for 15 years or until they are eligible for Social Security.

Insurance companies typically compensate workers for medical expenses right away or after only a few days. According to the National Council of Social Insurance, “Most workers’ compensation cases do not involve lost work time greater than the waiting period for cash benefits.” In other words, a “medical-only” workers’ comp claim usually results in only a few days of missed work.

Workers’ comp disability payments, however, are usually paid out after a short waiting period (around two weeks). Part of the reason for this delay is that a physician needs to assess the worker’s injury or illness and assign the worker a specific disability rating that reflects the severity and extent of their disability.

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How workers’ comp disability payments are calculated

Workers’ comp disability payments, whether temporary or permanent, depend on the worker’s disability rating, also called an impairment rating. Impairment rating payouts can change significantly depending on where the injury is on the body, severity, and how much it hinders or prevents the worker from doing their pre-injury job.

These ratings may reflect whole-body impairment or the impairment of a particular area of the body, depending on the insurance company and the state. For example, if the employee loses their left hand, they may receive a 100% impairment rating for that hand, but their whole-body impairment rating would be much lower.

To calculate workers’ comp disability payments, insurance companies take an impairment rating and multiply it by a certain rate. This number determines what the employee will receive (either weekly or biweekly) as work injury compensation.

One important factor for determining disability and impairment ratings is whether the employee has reached “maximum medical improvement” (MMI). This condition occurs when the injured employee has recovered as much as they will ever recover. Only after the employee’s condition has reached MMI will the treating physician assign a workers’ comp impairment rating. This is because the rating is designed to reflect a permanent level of impairment.

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Permanent total disability and permanent partial disability payments are usually weekly payments that are about two-thirds the amount of the worker’s pre-injury weekly wage. Employees may receive for permanent total disability, payments usually occur once a week for the rest of their lives. Permanent partial disability pay may have different payment length terms depending on the injury. Employees are entitled to receive these payments once the workers’ comp claim is approved and processed. In most states, this process can take around a month but can vary depending on the specifics of the situation.

Yes. A permanent impairment means a physical, functional, or psychological loss of ability that is expected to last for the rest of the person’s life.

Total disability is considered any impairment of mind or body that is assigned an impairment rating of 100%. This type of disability prevents injured workers from gaining substantial employment while they recover from injuries. Permanent total disability refers to an impairment that is likely to continue through the rest of a person’s life and prevents them from being able to work full-time. Total permanent disability refers to an impairment with which an individual can longer work again due to their permanent injuries.

A person’s degree of disability is determined by the treating physician. The degree of disability should reflect a combination of the doctor’s medical judgment, the employee’s physical exam results, and diagnostic tests (MRIs, CT scans, X-Rays, etc.). Sometimes the degree of disability will be represented as a percentage, such as 25%, 33%, 50%, etc., indicating the percentage of the person’s impairment to their total level of function.

Impairment rating payouts are calculated by multiplying the impairment rating assigned to the employee’s covered illness by $2,500.. For example, if a physician assigns an impairment rating of 40% or 40 points, to calculate the impairment award, the formula would be $2,500 X 40 to equal a total impairment award of $100,000.

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