Who Pays Workers Compensation Benefits

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Workers' compensation benefits are an insurance function. In some states, certain businesses or employers are exempt from carrying this type of policy based on their size or the type of employment they maintain. Non-exempt employers, however, must pay for an insurance policy or maintain a self-insurance fund to pay for the medical care, a portion of lost wages, and rehabilitation of employees injured on the job.

If an employee is injured while working or attending a work-related function, he or she is eligible to file a claim to pay for directly related expenses. A person is then assigned to administer the claim, usually an insurance adjuster or claims manager from a risk management department. Most employers have purchased a worker's compensation insurance policy that will make the actual payment for the benefits. Each state has a different state-approved formula that is used to calculate medical and disability benefits that are paid. Some employers are self-insured, and in this case the employer or the adjusting company is responsible for paying the workers' compensation benefits to the employee who was injured.

If an employer hasn't provided for eligible employees' insurance coverage, they can be liable to the employee for either damages in civil action or workers' compensation benefits. The employer cannot begin a business without, from the start, acquiring insurance covering compensation benefits, or without getting relief from insurance or furnishing a bond. It's considered a class 'D' felony if a person has done so knowingly and willfully.

The adjuster assigned to manage the claim pre-approves or denies the payment of benefits. He or she will assign a physician or facility to manage medical care and make arrangements in advance of treatment for payment of the bills. Additionally, the claim adjuster arranges for payment of any other compensable expenses for which the claimant applies. Individual state laws determine the exact types of benefits that are paid as well as the duration of an employer's responsibility.

Some benefits may be paid directly to the injured employee. For example, a portion of lost wages, reimbursement for transportation expenses, or an award in compensation for the loss of a body part would usually be made in direct payment to the employee. These payments may be made incrementally, may be paid in a single lump sum, or sometimes made in more than one lump sum amount. Many times, a combination of types of these payments occur. The state laws and the nature of the injury are looked at together in determining the method of payment.

While some employees may view workers' compensation as a means to obtain whatever they feel the injury is worth within their own circumstances, the truth is that insurance companies are not forced to be generous with this type of benefit. There are many factors that place limits on what needs to be paid. Each state will determine the value of your injury and respond accordingly. Some states also end an employer's responsibility after a certain period of time has elapsed. In order to set reasonable expectations, it is in an injured employee's best interest to seek out information to become knowledgeable about his or her own rights and responsibilities under their individual state's workers compensation laws.


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