What is Worker's Compensation?
- Workers' compensation is a state-specific public welfare program designed to assist individuals who have been injured due to activity arising out of and in the course of their employment. As a social welfare program, it traces its roots to Germany in 1881. Some 30 years later (1911), Wisconsin became the first state to enact modern workers' compensation laws and by 1949 all states and the District of Columbia had addressed the issue. Today, workers' compensation systems are fundamentally very similar to these original enactments but reflect advancements in health care benefits and the creation of programs to retrain people and improve their return to work outcomes.
- It's important to distinguish workers' compensation from other benefit programs that are substantially regulated by the Employee Retirement Income Savings Act (ERISA) - a federal law. That's why workers' compensation generally isn't considered an employee "benefit" such as heath insurance or short and long-term disability programs. Your privacy rights as an injured worker are also different than your rights under group health programs, allowing more disclosure when the injury occurs on the job.While workers' compensation programs exist is almost every state, each state deals with workers' compensation differently. Generally, workers' compensation benefits are mandated and must be provided and paid for by your employer. The employer at the time of injury is usually responsible for all payment of benefits, including medical and disability benefits, for your lifetime, even if you should leave the employment where the injury occurred.With a few exceptions, injured workers don't have to contribute to the cost of their company's workers' compensation program, such as with deductibles or co-pays.
- Workers' compensation isn't a benefit arranged by an employer; it's a mandatory state program that's intended to promote workplace safety and to mitigate against the effects of an on-the-job injury. It's significantly different from group health benefits as well. An employer may self-insure its obligations or purchase a policy of workers' compensation insurance. An employer cannot, however, make any payments to injured workers directly or refuse to provide the various documents and reports required of state agencies when there is an on-the-job injury.
- Most workers' compensation systems have very strict time frames that have to be followed in order to secure benefits. These include when the employer must be given first notice of the injury, when the employer must provide certain forms and instructions to the injured worker to file a claim, and when benefits must be paid. In addition, when there are disputes to be adjudicated through an administrative process, time frames must be followed that are similar to those in the civil courts.
- The purpose of workers' compensation is to provide benefits to injured workers regardless of whether the employer or the worker was the one at fault for the injury. These benefits include lifetime medical treatment, temporary disability (a cash benefit to replace lost income while the worker is healing), and, potentially, permanent disability which is a monetary award intended to approximate the loss of function resulting from the injury. In the event of death resulting from employment-related injuries, workers' compensation provides benefits to the deceased worker's dependents. Some states also provide vocational training to assist in returning workers to the workforce in new or modified duties that can accommodate their limitations.
- Employers, insurers, medical providers, and employees all share in the costs associated with workers' compensation fraud and abuse. In addition, disability benefits will seldom replace 100 percent of an injured worker's prior earnings. If a claim drags on in the administrative process, the adverse financial consequences on the individual and his family can be significant. The workers' compensation maze can be a difficult one to maneuver, a condition that only adds to the frustration for both employers and workers.
- National Academy of Social Insurance (NASI) is an organization that provides general information and research on a number of social insurance topics, including workers' compensation (http://www.nasi.org)
Each state has its own administrative agency overseeing workers' compensation.
Employees of the federal government and certain specific private sector employment, such as longshore workers, receive compensation benefits from the federal government. A summary of these laws can be found at the United States Department of Labor.