Workers’ Compensation 101: Understanding Wage Replacement Insurance

By Rhonda Burgess
Kopelman Sitton Law Group

"I think workers' compensation insurance is wildly important to employees, especially those who work in manufacturing industries where the risk of injury is much higher than with other career paths. Think about individuals who are predisposed to specific diseases- if they fall ill and can no longer work, workers' compensation is literally a lifeline for them. Medical expenses have skyrocketed over the years, and the sudden onset of an illness or an injury can cause unfathomable economic strain. As a wife and mother, if I were ever not able to work due to a health issue, my stress and anxiety over finances would be greatly spared knowing that I have workers' compensation insurance to keep my family and me afloat while I heal. Life is always full of surprises, so preparing for them as best as you can is always worth it, in my opinion. "

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Workers’ Compensation 101: Understanding Wage Replacement Insurance

Workers’ compensation insurance provides medical benefits

and wage replacement to employees who have been injured in the course of their employment. Employers are required to carry workers compensation in all 50 states, and it helps protect employees in the event of an on-the-job injury. 

While the claim process for workers’ compensation is supposed to be straightforward, the guidelines for determining if an injury or illness qualifies for compensation can be difficult. In addition, certain procedures must be followed when filing a claim. 

Whether you have been injured at work or you would just like to familiarize yourself with the basics of how workers’ compensation wage replacement insurance works, you’ve come to the right place. Keep reading to learn more. 

The Goal of Workers’ Compensation

Workers’ compensation is a type of insurance that is meant to help injured employees while they are unable to work. Its goal is to provide workers with a fast and efficient means of collecting payment when suffering from a work-related injury or illness. In workers’ comp cases, whether the employer or the employee was responsible for the injury is typically irrelevant. As long as the employee was injured or became ill while on the job, he or she can file a workers’ compensation claim. 

An on-the-job injury or work-related illness can cause extreme hardship due to the unanticipated loss of income. Workers’ compensation is intended to serve as wage replacement to help  employees pay bills and undergo necessary treatment during their recovery period. 

Workers’ compensation also protects the employer from lawsuits. However, the employer must provide benefits to injured employees through workers’ comp even if they were not at fault for the accident. 

Types of Injuries that Qualify for Workers’ Compensation

 Just about any type of on-the-job injury or work-related illness qualifies for workers’ comp. Some of the most common injuries include back pain as the result of lifting heavy objects or falling, injuries from traffic accidents, burns, or respiratory problems caused by the use of chemicals. 

People who suffer from injuries caused by repetitive motions—such as wrist injuries caused by typing—may also file claims for compensation. In some instances, stress-related injuries are also covered. Generally speaking, workers’ compensation insurance provides coverage for any and all injuries and illnesses incurred during the performance of normal job duties. Injuries that occur at off-site locations—such as while traveling for business—are also covered. 

While many injuries not caused by employer negligence are usually covered, those caused by employee misconduct are not. Injuries and illnesses that occur outside of the scope of employment and those caused by “acts of God” also are not covered. 

Expenses Covered by Workers’ Comp

Wage replacement is one of the primary purposes of workers’ compensation insurance, and most employees are entitled to two-thirds of their average wage. There is, however, a fixed maximum amount that the benefits will not exceed. While two-thirds of a worker’s average wage may seem modest, keep in mind that workers’ compensation benefits are non-taxable. Injured workers are eligible for wage replacement after just a few days of missed work. 

Workers’ compensation also provides coverage for treatment an employee must undergo as the result of a work-related injury or illness. Things like doctor’s appointments, physical therapy, prescription medication, etc. are all covered. It also provides compensation for permanent injuries and covers retraining costs incurred as the result of an injury or illness. 

Filing a Workers’ Compensation Claim

If you have been injured or experienced a work-related illness, the first step is reporting the problem to your employer. This is required by law, in most states, but different states have different time limits in place. Thirty days is the average amount of time states allow, but some give employees only a few days while others allow up to a year for reporting. Regardless of how much time your state allows, though, it is in your best interest to notify your employer as quickly as possible. 

For serious injuries and illnesses, go to your local emergency room or urgent care center right away. For non-emergency treatment, follow your state’s rules. Many require you to seek treatment from a medical provider that has been designated by your employer. Failure to do so could result in workers’ comp refusing to pay for your treatment. 

When you report the problem, your employer should provide you with the necessary forms for filing a workers’ compensation claim. Once filled out, most employers submit this paperwork to their insurance company as well as the workers’ compensation agency for the state. In some states, this is all you need to do to start your claim. 

In other states, however, you must also file a workers’ compensation claim with the state’s agency to start your case. The deadline for this important step varies from state to state. Like reporting your injury, it’s always best to file your claim as quickly as possible. If your employer refuses to help you file a claim, contact your local workers’ compensation office. This typically remedies the situation. 

What Happens Next

After a claim has been filed, the insurance company will investigate to determine whether to approve or deny your request. The insurer must notify you of its decision. This usually happens within two to four weeks. 

If your claim has been approved, you will automatically begin receiving benefits. If your claim is denied—which often happens since denials are common—you have the right to appeal the decision. 

If you have been denied and want to file an appeal, it is best to consult with an experienced workers’ compensation attorney. A lawyer will help you determine whether an appeal is worth pursuing and work with you to reach a favorable outcome. A good lawyer understands the laws regarding workers’ compensation in your state, and he can guide you through the appeals process to help you get the compensation to which you are entitled.