Understanding How Worker’s Compensation Actually Works in Practice

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    Figures from the Bureau of Labor Statistics estimate there are 3.4 cases for worker’s compensation for every 100 full-time workers.

    Despite workplaces today being safer than they were just a few decades ago, accidents still happen. And when they do, your life can change in the blink of an eye. As you deal with the fallout of a work-related injury or illness, you need the correct information to make informed decisions.

    Keep reading for an in-depth understanding of how worker’s comp works, who the insurance covers, and what benefits you can receive.

    How Worker’s Compensation Functions

    Worker’s comp is a kind of insurance policy that helps employees financially if they suffer an injury at work.

    Even though it’s the employee who benefits from worker’s comp, they don’t pay for it. It is the employer who pays for all eligible workers.

    In most states, carrying worker’s comp is mandatory. What does vary is how each of these states governs the administration of worker’s comp. For example, states will differ on the minimum number of employees one needs to hire to carry workers’ comp.

    Should an employer contravene this legal requirement, they face stiff fines. Additionally, employers flouting the worker’s comp regulations may end up being sued by their staff.

    Having worker’s comp benefits both employees and those who hire them. Whenever a worker suffers an on-the-job accident, they can be sure they will receive medical care which won’t eat into their already strained finances.

    Should such an employee end up needing extended care, worker’s comp can food the bill. But that’s not all. Worker’s comp also compensates eligible employees (look here for more on eligibility) for wages they lose due to work-related injury or illness.

    In instances where a worker can’t resume their old job post-injury, worker’s comp can help foot training costs to help them gain new skills for different positions to get back to gainful employment.

    For the employer, worker’s comp ensures their staff doesn’t sue them after suffering a work-related injury since there is an alternative remedy.

    How Do Employees File a Worker’s Comp Claim?

    For all eligible employees, worker’s comp offers several benefits, and these include:

    • Medical expenses and other related hospital costs
    • Rehabilitation benefits (should a worker require rehabilitation services)
    • Disability benefits (split between temporary disability, temporary partial, permanent partial, and permanent total disability)
    • Death benefits

    To access these benefits, you’ll need to navigate the claims process after your injury or illness:

    Step 1: Medical Care

    The moment you suffer injury or illness while on the job, you should seek immediate medical attention. Doing so not only protects your health but also helps shore up your worker’s comp claim.

    Step 2: Report the Injury

    You should immediately alert your employer about the on-the-job injury. Each state has a statute of limitations on how long you can wait before reporting a workplace injury.

    If you wait too long, you could lose some of your benefits in some states. And when you file a report after the allowable period lapse, your claim becomes invalid.

    Step 3: Fill in Worker’s Comp Claims Forms

    As soon as you report your work injury to your employer, they should furnish you with the necessary claim forms. If you don’t get these forms from your employer, you can download them from your state’s worker’s comp board website.

    As with filing a claim, you also have to watch out for the statute of limitations on how long you have to file the claim forms. Ensure you keep a copy of these forms for your records.

    Step 4: Attend Medical Evaluation Appointments

    There are cases where health care claims may encounter disputes. In such instances, you’ll need to attend all medical evaluation appointments.

    Ensure you don’t miss such an appointment as it is critical to your case.

    How Much of Your Worker’s Comp Benefits Will You Keep?

    For many workers relying on their worker’s comp benefits, how much of the payout they retain is a vital issue. More so because many times, navigating worker’s comp will mean facing appeals, settlement negotiations, etc.

    The first deduction you’ll likely face from your compensation package is the attorney’s fees. Typically, a lawyer handling a worker’s comp case will work on contingency.

    As such, you’ll pay them the agreed percentage of the total award. In some states, the attorney will only earn a percentage of a portion of the award instead.

    In case you win your case on appeal, the insurance firm may be forced by the court to pay your medical bills. That amount also comes out of your award unless you paid the expenses out of pocket, in which case you can retain that portion.

    Workers who qualify for Medicare will have to pay a portion of their award to the government. Additionally, any permanent disability advances you received from the state will be due from the settlement money.

    Another payment that can be deducted from your total award is any outstanding child-support bills.

    Any employee who receives Social Security Disability Insurance (SSDI) benefits may have to pay part of the total award to the government. That only happens when your SSDI and worker’s comp benefits add up to an amount that can trigger the reduction of your SSDI benefits (known as an offset), which you’ll need to pay taxes for.

    The compensation you receive can influence your tax credits eligibility. If the Internal Revenue Service determines that the worker’s comp benefits you get are a form of income to you, your eligibility for the tax credits in question.

    Keep Your Workers and Organization Safe With Worker’s Comp

    All it takes for a work-related injury or illness to flip your life’s trajectory around is a few seconds. In the aftermath of such an unfortunate incident, you need to know how worker’s compensation works so you can best protect your interests.

    Operating a business is not easy, more so when you have staff to look out for. Our website is a treasure trove of business and leadership insights to help you support your workers so that they can get the best out of themselves. Check out more of our content to learn how you can develop a better organization and win.

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