The concept behind workers’ compensation laws is simple: anyone injured or sickened by working conditions deserves to receive medical care and disability insurance payments, as funded by insurance rates paid by their employer. Because of this, all workers are eligible for compensation benefits, with no maximum salary to cap eligibility for the program. All states limit the amount of benefits a worker may receive each week however, which may be significantly less than their regular salary.
Maximum Weekly Benefit
While each state’s laws governing workers' compensation vary, each limits the amount of benefits a worker may receive while he receives disability insurance. Most states set maximum weekly disability benefits at 100 percent of the state’s weekly average wage, according to the Social Security Administration. Because average earnings vary significantly by state, maximum benefits in 2010 ranged from $422.31 in Mississippi to $1,438 in Connecticut.
Disability benefits, which serve as a replacement for wages lost when a worker is injured, are different from medical benefits, which provide unlimited medical coverage in most states.
Just as states’ laws differ on the maximum benefit amount, their formulas used to determine a worker’s compensation benefit vary. Although a majority of states – 36 as of 2011, according to the Social Security Administration – set disability benefits as 66.67 percent of a worker’s weekly wage, they may be as low as 40 percent of a worker’s weekly wage. If the portion of a worker’s wage exceeds the state’s maximum benefit, she only receives the maximum. For example, a worker who typically earned $1,200 a week in a state with a 66-percent benefit rate should would receive about $800 weekly. If her state’s maximum benefit is $670 weekly, she’ll receive that amount, not the figure created by the formula.
Duration of Benefits
Most states don’t allow beneficiaries who are partially disabled – injured and unable to return to their old job, but able to work – to collect disability benefits forever. While duration for partial disability benefit eligibility varies by state law, most states only provide partial disability benefits for five years. Some states provide lifetime permanent disability benefits, and federal Social Security Disability Insurance, which is a program independent of workers compensation insurance with its own maximum benefit levels, may provide lifetime benefits for qualifying beneficiaries.
Workers' Compensation Insurance Rates
Some states require businesses to provide workers’ compensation benefits through a private insurance provider, while other states offer a state-administered insurance program. Workers’ compensation insurance rates are based on a worker’s occupation – construction workers are more likely to make claims than white-collar workers – and an employer’s claims history, with unsafe workplaces having higher rates than a safe workplace in the same industry. Employers pay insurance rates as a percentage of a worker’s weekly salary.
- Find Law: All About Your Workers Compensation Benefits
- Social Security Administration: Chart of States’ Maximum Workers’ Compensation (WC) Benefits
- Social Security Administration: Benefit Adequacy in State Workers’ Compensation Programs
- Entrepreneur; Workers Compensation Insurance; Joan E. Lisante; April 2001