Workplace injuries are a reality for your business, as workers can be injured while performing a number of tasks. The United States Bureau of Labor Statistics reports that there were 2.8 million non-fatal workplace injuries in 2019, including traumatic injuries from machinery in the workplace and repetitive-use injuries, such as carpal tunnel syndrome.
Most states require you to carry workers’ compensation insurance, which is a type of commercial insurance. Workers’ compensation covers the financial losses you would suffer as a result of an injury on the job. Where there is more serious or permanent harm, a settlement will often result from a lump sum or a structured payment plan to the employee. Here’s an overview of how workers’ compensation settlements work and what you need to know.
How does a workers’ compensation settlement work?
When an employer has purchased workers’ compensation insurance, they notify the insurance company when an injury occurs. The carrier then coordinates payments for medical bills, lost wages, and rehabilitation costs.
The injured employee may choose not to accept workers’ compensation benefits, choosing instead to hire a lawyer to secure a larger settlement.
When an insurance company pays benefits directly, without payment, the injured worker often receives money to cover only the significant costs of the injury. For example, the insurance company will pay existing medical bills, but not necessarily future medical bills.
A settlement will take into account the injured employee’s future health care costs and ensure that they can afford the costs of their household. The settlement will also consider attorney fees, which will increase the value of the settlement and provide the worker with appropriate representation. It is common for the lawyer to work on an emergency basis and get paid after a successful settlement.
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What expenses do workers’ compensation claims cover?
Workers’ compensation is designed to cover a wide range of costs incurred when your employee is injured. When it comes to a settlement, workers’ compensation will pay for the following types of expenses:
- Lawyer fees
- Disability payments
- Medical bills
- Ambulance trips
- Future medical treatments
- Lost wages and future lost wage costs
The Workplace Compensation Process
Workers’ compensation is legislated and regulated at the state level. That’s why some states have very strict workers ‘compensation rules, while others – like Texas – don’t require you to maintain a workers’ compensation policy. Therefore, the process for settling workers’ compensation claims will likely be different depending on your state.
While most steps in the settlement process are similar, you will need to meet deadlines when filing a workers’ compensation claim and negotiating a settlement.
Here are the basic steps an employee will take to receive a workers’ compensation settlement:
- Notify your business of an injury.
- Receive medical attention.
- File a workers compensation claim.
- Receive an approved or denied claim.
- Hire a lawyer if your insurance company is unwilling to offer a settlement.
- Calculate the payment.
- Negotiate with your insurer.
- Take the case to court if the parties cannot come to an agreement.
- Receive a judgment.
- Accept payment as a lump sum or structured settlement.
Calculate the payment of compensation for workers
An important part of the settlement process is calculating the payment. This is not just an arbitrary value: there are several factors that a lawyer will take into account when calculating the compensation payment for workers. It starts with existing medical expenses and lost wages. These two factors are easy to determine because your employees’ invoices and income are readily available. The math gets complicated when you factor in impending medical bills and lost wages.
Calculating upcoming medical expenses and lost wages often relies on talking to doctors to determine what types of procedures will be needed to properly heal the injury or illness. Your employee may need surgery for their condition to worsen or, if ill, require additional levels of treatment.
In addition to salaries and medical expenses – existing and future – the lawyer will use a set rate for a specific loss. A specific loss includes loss of a limb, loss of hearing or sight, or paralysis. Each state has its own lost-of-use schedule (SLU) to help determine the rate of a specific loss.
For example, the Michigan calendar states that a loss of an inch would equal 65 weeks of lost wages, while a loss of a leg would be 215 weeks.
How are workers’ compensation agreements made?
Not all workers’ compensation cases will be subject to settlement negotiation. If the injured worker returns to work full time and has no other outstanding bills or medical appointments, the claim may be closed and considered fulfilled.
However, if the claim includes prolonged or permanent injuries, the insurance company will likely offer a settlement based on the worker’s compensation calculation. The injured worker may or may not have a lawyer at this time.
If the amount offered is acceptable, the parties prepare the documents to provide the settlement when the claim is closed. When the claim is closed, your employee usually waives their right to seek additional damages, so they must ensure that the settlement adequately covers all of their future needs.
If the proposed settlement does not adequately cover future income and medical expense needs, the injured worker and their lawyer will take the case to a judge for a formal hearing.
Workers’ Compensation Claims Hearings
In many states, if you have workers’ compensation insurance and the employee accepts benefits or a settlement, they can no longer sue you for their injuries. However, if your business is found to be at fault and the proposed settlement is deemed insufficient, the injured party will hire a personal injury lawyer and a judge will review the case at a workers’ compensation hearing.
At the workers’ compensation hearing, the judge will look at the details of the case, such as the circumstances that gave rise to the injury or illness. The judge will review the work history and listen to expert testimony about the worker’s injuries. The injured employee will ask for as much money as possible in the settlement or judgment, and will likely include pain and suffering calculations.
After considering all the evidence, the judge will make a decision for all, some, or none of what the plaintiff requested. In most cases, the judgment is on part of what the plaintiff has requested. The insurer will pay the price in the form of a lump sum or structured settlement, where it will make regular payments over time to the winning party.
Your role in the workers’ compensation settlement process
Since most states require you to have workers ‘compensation insurance (unless you qualify for a workers’ compensation exemption), you will not pay the costs associated with the injury or illness. of an employee. However, if you do not have this insurance, you will be 100% responsible for any workplace injury.
Even if you have this insurance, you will still need to participate in the workers’ compensation claim process. Your HR team must first notify the insurance company of the injury to file a claim. In some states, you must also notify the state workers compensation board.
During the claims process, you will work with the insurance company to provide any incident report for the claim, a job description with detailed duties, and proof of income to determine the average weekly salary the employee receives. . If a case goes to court, you must participate in the process and provide details about the employee’s employment and work history.
Workers’ compensation insurance
Since most states require you to have workers’ compensation insurance, it’s not about whether you should get it, but rather about getting the right policy. Having this policy will protect you from the financial ramifications of workers’ compensation and sickness claims.
Coverage goes far beyond just paying for medical bills and lost wages. Insurance will also provide for investigation and legal defense throughout a claim. Legal fees can add up quickly, and if you have a solid workers’ compensation policy, you won’t have to worry about that extra cost.