What's the Difference Between Workers' Compensation and Disability?
A job-related injury or illness that renders a person unable to work can leave an employee in a financial scramble. Medical expenses are mounting, and there are other bills to pay.
One question we are often asked: “What’s the difference between workers’ compensation and disability?”
The short answer is A lot.
But first, a few similarities:
- Both workers’ compensation and disability provide monetary payments and support to workers who suffered from injuries or illness.
- Benefits of both types vary depending on one’s occupation and state. Usually, in both cases, benefits cover a portion of one’s wages until the worker can go back to work.
Now, to highlight some key differences:
- Workers’ compensation is paid for by an insurance policy supplied by the employer. Disability, meanwhile, is paid for either through employee’s health insurance or through the federal government in the form of Social Security Disability Insurance.
- Workers’ compensation covers an employee for injuries for which the employer would be liable. Meanwhile, disability benefits cover injuries that prevent you from working but aren’t necessarily work-related.
- Workers’ compensation benefits typically last longer. For example, temporary disability payments are paid until one reaches maximum medical improvement (at which point a lump sum may be offered for permanent disability). In some cases, benefits can last the lifetime of the worker or the lifetime of his or her dependents. Federal disability benefits could also last that long, but private short- or long-term disability benefits are only available for a maximum 26- to 52-weeks.
- Workers’ compensation benefits are tax-free. Disability benefits are subject to income tax.
- Workers’ compensation payments will continue at a partial rate even after you return to work. SSDI benefits and private benefits are usually halted once you return to work.
- Workers’ compensation will cover all necessary and reasonable health expenses related to occupational injury or illness, with no deductible or limitation. On group health plans that dictate private disability programs, medical bill payments are usually limited. SSDI will in some cases cover medical expenses, but there are several additional hurdles.
- Workers’ compensation coverage begins immediately after your injury/ illness. Usually, private disability will as well, but SSDI benefits require an extensive application process, and usually, applicants will endure a number of appeals before final approval.
- Workers’ compensation benefits are determined by the law. Private disability insurance is going to depend on the type of policy.
This is not to say workers’ compensation benefits are necessarily always better for an injured worker, but there are a number of advantages to it over other disability insurance programs.Can an Injured Employee Collect Both?
Technically speaking, injured workers may be entitled to workers’ compensation and private disability and SSDI.
But recognize there may be consequences to doing so.
For example, disability payments from private sources, such as pensions or insurance benefits, won’t affect SSDI benefits. However, workers’ compensation and other public disability benefits will reduce your SSDI benefits or vice versa.
The general rule followed by SSDI is if you receive workers’ compensation or some other public disability benefit AND SSDI benefits, the total amount of these benefits combined can’t exceed 80 percent of your average current earnings before you became disabled.
Similarly, if you file for short-term disability when you should have been receiving workers’ compensation benefits, you’ll likely have pay back a portion of the short-term disability benefits you received. This is referred to as an “offset.”
Let’s say, for example, a workers’ compensation claim is denied and the worker starts collecting short-term disability benefits. Worker hires an experienced workers’ compensation lawyer and wins. The worker is paid benefits. But now, the worker has been paid twice for the same injury/ illness. This is not allowed, and the money paid by short-term disability would have to be paid back.
Some workers may have a type of coverage known as Individual Disability Insurance to help supplement long-term disability benefits by protecting a higher percentage of income. So for example, it could cover things like bonuses, commissions, and other incentive pay that a traditional long-term disability plan doesn’t usually cover. Individual Disability Insurance is geared more toward executives and other professionals, though it is sometimes extended to others in the workforce too.
Understanding how these benefits can be interwoven – or not – is an important part of figuring out how to best navigate the system to maximize your benefits. We can help.
Contact the Law Offices of Jeffrey S. Glassman today for a free and confidential consultation.
Call (617) 367-2900 – NO FEE UNLESS SUCCESSFUL