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Workers Compensation Insurance 101

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Workers Compensation laws provide benefits to employees who are injured while on the job or come down with an illness that is job related.

With Workers Compensation, it doesn't matter who caused the incident - the employer, the employee, a fellow employee, a machine, or even a third person (such as in an accident when the employee was using a vehicle for work.) 

The classic situation covered by Workers Compensation Insurance is an industrial accident. In addition, Workers Compensation covers such work related conditions as:

  • Carpal tunnel problems from repetitive motion.
  • Black lung disease of miners.
  • HIV from needle sticks by medical personnel.

Workers Compensation benefits usually include payment of medical bills relating to a job related incident plus an ongoing income to replace lost wages and reimbursement for expenses. Workers Compensation laws also provide benefits for dependents of workers who are killed because of work-related accidents or illnesses.

Some laws limit the amount an injured employee can recover from an employer and eliminate the liability of co-workers in most accidents.

Who Workers Compensation covers:

Typically, workers' compensation insurance covers every employee, including both full time and part time. There may be an exemption for specific classes of people, such as:

  • Owners
  • Officers
  • Employees of small companies such as employers with only 3 employees
  • Domestic employees
  • Farm Hands
  • Independent contractors

Some employers cover exempt employees even though they don't have to.

Payment for Workers Compensation Insurance: Employers pay 100% of the cost.  Employees pay nothing.  

Injury on the job caused by another party: In most instances, an injured worker may bring a claim against whoever other than the employer is the cause of the injury. This is called a "third party action." For example, if the piece of equipment which injured the employee was defective, the employee could make a claim against the manufacturer of the machine.  To avoid double payments to the employee, the workers' compensation insurance company usually gets to recover money it paid to the employee from the funds payable by the third party which is at fault.  

SSDI and SSI and Pension payments: Deductions from benefits: An employee can file for Workers Compensation as well as for benefits under Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) programs. or a pension benefit. In some states, workers compensation benefits are cut by these other amounts collected so the employee does not collect the same amount twice.

Filing a Workers Compensation claim will not slow down or hinder an application for either SSDI or SSI benefits.  

  • Social Security will process your claim and start payments even while a Workers Compensation claim is pending.
  • Social Security does retain the right to recover any payments made which are later duplicated if a Workers Compensation claim is approved. 

Workers Compensation laws are both federal and state. 

  • Federal laws cover employees of the federal government. There are also federal laws which cover employees in various aspects of interstate commerce and seamen. (for information, click here.)
  • Every state has its own Workers Compensation law.
  • To learn about the Workers Compensation law in your state:
    • Employers are generally required to post notices about this coverage in the workers' areas. The notices generally provide information about how to obtain more information. If there is no easy-to-spot notice, ask the HR department or your supervisor if there is no HR department.
    • Contact your state's Workers Compensation Board. You can find a listing of contact information at: offsite link

Starting a claim is time sensitive:  Each state has rules about how long a period of time you have during which you must file a claim. If the claim isn't filed in that time period, you lose your right to file a Workers' Compensation claim.

How to start a claim: To start a claim: complete a claim form and submit it to either your employer or your state's Workers' Compensation Board. Normally, an employer will have the claim forms available. If not, you can obtain the claim forms from your state's Workers Compensation Board (see above). 

What happens after a claim is filed: 

  • The employer is given an opportunity to respond to the claim.
  • If the employer contests the claim, a hearing will be scheduled to determine whether, or how much, compensation is owed to the employee. You may be required to submit to a  medical exam. Since the medical exam is likely to be conducted by a doctor who is friendly to the insurance company rather than being "independent," it is advisable to consult with an attorney before agreeing to take the exam.  Free or low cost attorneys are available if needed.
  • If there is no contest, payment of medical bills and wages will be made by the insurance company.

Does an employee need a lawyer to file a claim? No.But:

  • If you belong to a union, a union representative may be able to help. If not, consider consulting with an attorney. Let the attorney know:
    • You are only seeking a consultation.
    • Depending on what he or she has to say, you may engage the person to work on your case.
  • If your situation is not simple and clear cut, it is advisable to at least speak with a person who is knowledgeable about Workers' Compensation claims to help assure:  (a) that you receive an award, and (b) that is for the maximum amount.
  • If an employer contests the claim, it is advisable to at least speak with an expert, preferably an experienced attorney. Lawyers usually represent clients in Workers Compensation cases on a contingency basis which means they only get paid if the employee gets paid. 

Attorneys in workers compensation cases usually are paid on a contingency fee basis. If an employee loses, do does the attorney. If an employee wins, the attorney receives a percentage of the amount awarded. Fees are generally subject to approval through the Workers Compensation system.  

If a claim is contested: If an employer contests the claim, it is advisable to at least speak with an expert, preferably an experienced attorney. Lawyers usually represent clients in Workers Compensation cases on a contingency basis which means they only get paid if the employee gets paid. 

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