Types of Workers' Compensation Benefits

Workers' compensation pays for medical care for work-related injuries immediately; it pays temporary disability benefits after a waiting period of three to seven days; and it pays permanent partial and permanent total disability benefits to workers who have lasting consequences of disabilities caused on the job. This is in contrast to Social Security Disability Insurance payments, which begin five months after the onset of the injury or condition that makes the individual unable to work. Medicare coverage begins 29 months after the onset of the injury.

Medical only: Workers’ compensation pays 100 percent of medical costs for injured workers and pays cash benefits for lost work time after a three-to-seven-day waiting period. Most workers’ compensation cases do not involve lost work time greater than the waiting period for cash benefits. In these cases, only medical costs are paid. “Medical only” cases are quite common in workers’ compensation, but they represent only a small share of overall payments. According to the National Council on Compensation Insurance (NCCI), medical-only cases accounted for 76 percent of workers’ compensation cases, but only 7 percent of all payments of cash and medical benefits in the 37 NCCI-covered states for policy years spanning 1998–2007.

Temporary disability: Cash benefits differ according to the duration and severity of the worker’s disability. Temporary total disability (TTD) benefits are paid when a work-related injury or illness temporarily prevents a worker from returning to the pre-injury job or another job for the same employer for which the worker is otherwise qualified.  Most workers who receive TTD benefits fully recover and return to work, at which time benefits end. In some cases, however, injured workers return to work before they reach maximum medical improvement, often with restricted duties and lower or differential pay.  When injured workers return to work at less than the pre-injury wage, they receive temporary partial disability (TPD) benefits in most states. Temporary disability benefits are the most common type of cash benefits. They account for 61 percent of cases involving cash benefits and 17 percent of total benefits (cash plus medical) in those cases.

Permanent disability: If an injured worker has severe impairments that are judged to be permanent after he or she reaches maximum medical improvement, permanent disability benefits may be paid. Permanent total disability (PTD) benefits are paid to workers who are unable to work because of a work-related injury or illness. Permanent partial disability (PPD) benefits are paid when the worker has physical impairments that, although permanent, do not completely limit his or her ability to work.  Permanent total disabilities account for less than one percent of all cases that involve cash benefits, and only 9 percent of total cash benefit payments.