Workers’ comp coverage and disability insurance are often confused; sometimes, the two phrases are even used interchangeably. And while they have certain similarities, employers and employees should understand the fundamental difference between them.
The Basics of Workers’ Comp Coverage:
Workers’ Compensation is a type of on-the-job injury insurance for companies that benefits employees who sustain injuries (or illnesses) while working. By law, your employer pays the premium for workers’ comp coverage. Workers’ compensation coverage can provide for medical care, wages for lost time, and more, but covered incidents are limited to work-related accidents.
The Basics of Disability Insurance:
The first main difference between workers’ compensation and disability insurance is that while your employer provides workers’ comp coverage (and pays the premium), employees pay the premium for disability insurance. In fact, disability benefits typically don’t cover workplace injuries and tend to pay less in wage loss benefits than workers’ compensation claims. Disability insurance also does not cover medical bills. Disability insurance pays out a percentage of the employee’s income (if they become disabled/unable to work) for a specified time. The amount of time varies depending on the specific type of disability insurance coverage. In addition to standard short- and long-term disability insurance, individuals injured on the job may also qualify for Social Security Disability Insurance (SSDI), provided by the federal government. As long as you remain disabled, qualified individuals will continue to receive disability payments until they reach retirement age. However, many will encounter challenges attempting to qualify for SSDI.
Workers’ Compensation: the Pros
Understanding the benefits of workers’ compensation is essential to know what to expect and how to obtain the help you need when the need arises.
The employer pays the cost of workers’ comp coverage.
Benefits may cover more than you expect. For example, workers’ compensation benefits can cover lost wages, continuing care costs, funeral expenses, and continued pay for a limited time to care for the surviving family if an employee dies on the job.
Injuries can be reported immediately (it’s actually required), which helps avoid delayed benefits and medical treatment issues.
Workers’ Compensation: the Cons
Workers’ compensation protects employers from being sued, so when you access workers’ compensation benefits, you give up the right to sue your employer for an injury.
With workers’ compensation claims, there is a statute of limitations. In Oklahoma, injured workers must report their injury to their employer within 30 days and file their workers’ compensation claim within one year of the incident or six months of the final medical treatment for the injury.
Disability Insurance: the Pros
If you qualify for SSDI, you could stay on disability benefits indefinitely as long as the disability continues, which is essential for those who suffer severe or permanent disabilities. (But this only applies to SSDI, which most will not qualify for – other forms of disability insurance are limited to specified periods).
SSDI is not factored in as income for retirement benefits (for years with $0 earnings), so SSDI recipients could earn more in retirement.
Disability Insurance: the Cons
Disability insurance can be short-lived (short-term disability insurance only offers benefits for about three to six months).
When dealing with disability benefits, there is an elimination period or waiting period (generally one to two weeks for short-term disability and 90 days for long-term disability).
You pay the monthly premiums for disability insurance. (Prices vary depending on the coverage obtained and the benefits provided. For example, disability insurance with shorter elimination periods (or waiting periods) generally has a higher premium).
Workers’ Compensation Coverage is Employer-Provided:
While you get workers’ compensation automatically through your employer (with minimal exceptions), some choose to obtain optional disability insurance for added coverage. While both have their intended purposes, there is some overlap in some instances. Now that we’ve gone through the differences between workers’ compensation and disability insurance, and run through the pros and cons of each, hopefully, you have a clearer understanding of what coverages you have in place, what coverages are available to you, and when to access which type of coverage.
If you are injured on the job and have questions about how to seek compensation for your injury, get in touch with Armstrong & Vaught, PLC, Premier Workers’ Compensation, Employment, and Social Security Law Firm. We are devoted to providing excellent legal services to clients from all walks of life. Contact us online or call (918) 582-2500 to schedule a free initial consultation with an experienced attorney.