Workers\' Compensation Benefits
If you suffered a work-related injury you will likely be able to receive workers' compensation. Under the workers' compensation system, reasonable medical expenses will be paid for, assistance in finding a new job may be provided if injuries prevent you from doing your old job, and untaxed monetary compensation may be paid while you are unable to work. To learn more about workers' compensation benefits, read below:
Recovery is usually allowed for three basic types of benefits:
- Temporary disability: benefits paid following an accident when the injured employee is unable to perform his or her regular job duties. These are designed to take the place of wages, however, usually do not amount to the entire amount of lost wages.
- Medical aid required to treat the result of the injury or occupational disease.
- Payment for permanent disability, which may include vocational rehabilitation benefits.
All three types of benefits are regulated by laws that explain what types of medical benefits are payable. The laws also set limits for the award of temporary and permanent disability.
If you become temporarily unable to work, you'll usually receive two-thirds of your average wage up to a fixed ceiling. But because these payments are tax-free, if you received decent wages prior to your injury, you'll fare reasonably well in most states. If you are married or have dependents you may receive three-fourths of your pay.
If you become permanently unable to do the work you were doing prior to the injury, or unable to do any work at all, you may be eligible to receive long-term or lump-sum benefits. The amount of the payment will depend on the nature and extent of your injuries. If you anticipate a permanent work disability, contact your local workers' compensation office as soon as possible. These benefits are rather complex and may take a while to process. Keep in mind that if you are permanently unable to return to work, you may also qualify for Social Security Disability benefits. If you think you may qualify for Social Security Benefits, we recommend that you contact a local attorney who has expertise in Social Security cases.
In addition to wages, workers' compensation covers hospital, physician, medication, and transportation costs to the doctor's office for medical treatment. Other benefits may include an attendant's allowance, vocational rehabilitation, and death benefits if the cause of death is related to the accepted job injury.
You have a right to all reasonable necessary treatment to cure or relieve the effects of the injury. Included under medical treatment compensation are all medical bills, prescriptions, and even roundtrip mileage to the hospital. You will probably have a schedule of maximum allowable medical charges. The employee is not responsible for amounts charged in excess of the maximum allowable medical charges. However, in many states, non-emergency treatment must be authorized in advance in order to get reimbursement. The schedule is not applicable to hospital, pharmacy, or nursing home charges.
If an injury prevents you from returning to your former job, assistance in getting another job (vocational rehabilitation) might be included in workers' compensation benefits. During vocational rehabilitation, a partial income is distributed, similar to temporary disability. The vocational rehabilitation benefit usually has a maximum monetary limit, and may be replaced by an offer of modified or different work from the employer.
If your injuries make it difficult for you to compete for a job with those who are uninjured, you could be entitled to a monetary award for your permanent disability. The amount and rate at which permanent disability is paid depends on how great a limitation the injury places on one's activities. Other elements taken into consideration are age, occupation and earnings at the time of injury. The determination of whether an accident caused a partial or permanent disability can involve tens of thousands of dollars (usually, as compensation for future wages).
Yes. You can receive medical care for as long as the medical evidence shows your partial disability is related to the accepted injury or condition, although in some states you may face great difficulty in getting reimbursed for medical pay if you are partially disabled and able to work. You may be required to undergo continuing medical examinations.
In addition, you may receive compensation for the loss of earning capacity you suffered if you are unable to resume regular work because of injury-related disability. This compensation is paid on the basis of the difference between your capacity to earn wages after an injury and the wages of the job you held when injured (compensation = wages of job before an injury - capacity to earn wages after an injury).
You do not pay tax on workers compensation received by you or your survivors for job-related sickness or injuries paid under a workers compensation act or workers compensation statute.
The workers compensation tax exemption on your tax return does not apply, however, to retirement plan benefits you receive based on age, length of service, or prior contributions to the plan, even though you retired because of an occupational sickness or injury.
If your employer continues to pay your regular salary or wages and requires you to turn over your workers compensation benefits, then you will be taxed on the excess amount, over and above your workers compensation benefits, that was paid to you by your employer.
The part of your workers compensation that reduces your social security benefits or equivalent railroad retirement benefits is considered social security benefits and may be taxable on your tax return under rules for those types of income. Accordingly, your workers compensation may be indirectly subject to tax on your tax return.
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