What Insurers Don’t Want You to Know About Weekly Workers’ Comp Payments

Suffering an on-the-job injury is already stressful; adding on top of that deciphering how your weekly worker’s compensation payments will be distributed, is another layer of frustration.

Most people assume they will receive their full salary while recovering from their injuries. Unfortunately, that is rarely the case. Weekly worker’s compensation payments are generally calculated in such a manner that leaves injured workers receiving far less than they deserve. And to add insult to injury, the insurance company does not make it easy to understand the intricacies involved.

The Basic Calculation Is Misleading

Here is what normally throws people off track. Workers’ compensation does not provide injured workers with 100% of their income. It provides them with a percentage of their average weekly wages and that percentage is dependent upon their ability to perform work.

If the employee is unable to work at all, he may receive approximately 95% of his pre-injury average earnings (although this varies by state and jurisdiction and has caps). Sounds reasonable, however “average earnings” does not include overtime, bonuses or other forms of supplemental income that injured workers were relying on. This is the first gap.

Things become even more complicated if the employee can perform some type of work, but not his previous job. The partial capacity payments will be greatly reduced. He may be earning less money in a modified position, and his compensation payments will be reduced further based upon the current amount he is able to earn. The insurer calculates this through the employee’s “current work capacity.” While this sounds relatively simple, it is commonly disputed between the parties.

Why Your Payments Are Likely to be Lower Than You Expect

Insurers rely on your earnings history to determine your average weekly earnings. However, they do not always calculate this in the manner that you would anticipate. Typically, they will examine your earnings during a specified time frame prior to your injury – this can vary, sometimes 12 months and sometimes a shorter time frame.

Were you experiencing a slow period prior to the injury? That will lower your average. Did you start a new job recently? You may not have sufficient history of earnings to establish a fair comparison.

Seasonal workers and those employed on a part-time/casual basis are frequently the most negatively affected by the method of calculating averages.

Additionally, most jurisdictions have a cap on the maximum weekly compensation payable regardless of your actual earnings. High-income individuals will soon learn this the hard way once their weekly payments max out at levels well below their regular net earnings.

At this point, consulting with workers compensation claim lawyers becomes relevant, as they can review your payment calculations to ensure they were done accurately and contest any miscalculations or missing income. Many employees will settle for the first figure provided to them by the insurance company without recognizing that the insurance company committed errors or omitted income they were entitled to.

Nobody Explains the Step-Down Process Clearly

Another thing that comes as a shock to many people is that the payments are not consistent throughout your claim. Most jurisdictions have a system of scheduled decreases in your weekly payments, known as “step-downs,” after a specific number of weeks.

For example, you may initially be paid at a rate of 95% of your average earnings for the initial 13 weeks. At that point, the payments may be reduced to 80% or 85% of your average earnings. After 26 weeks, or 52 weeks, the payments may be reduced again. These scheduled reductions occur based on time elapsed since the date of your injury, and not on the extent of your physical recovery.

The insurer will send you a letter indicating the reduction in payment, which is usually buried in legalese. By the time you realize what occurred, you are already receiving less money and finding it difficult to meet the expenses that remain unchanged.

When Insurers Pressure You to Go Back to Work Prematurely

Insurers have a vested interest in returning you to work as quickly as possible. While this can be a good thing if you are indeed ready to return, the pressure to do so can be overwhelming, even if you are not yet physically recovered.

They will arrange for you to see independent medical examiners. These doctors do not know your job as well as you do and are certainly not your treating physician. Their opinion carries significant weight in deciding whether to continue or reduce your payments.

If the independent medical examiner states that you have the capacity to perform light-duty work, the insurer can mandate that you seek a position that meets those requirements. Unable to find a job that allows you to accommodate your physical restrictions? Your payments may still be reduced based upon what the insurer determines you could potentially earn. This is referred to as “deemed earnings,” and it is precisely as frustrating as it sounds.

Documentation Requirements

In order to continue receiving weekly payments, the injured worker must provide the insurer with ongoing medical certifications. Failure to submit timely documentation, or documentation that is deemed incomplete, can result in the suspension of payments. In most cases, the insurer does not provide the injured worker with advance notice that their payments will cease.

Your doctor may not understand what information is needed by the insurer. The certification submitted by your doctor may simply indicate that you are “not fit for duty,” but this is not considered adequate documentation by the insurer. What the insurer requires is specificity regarding your functional limitations, your potential capacity to engage in alternative forms of work, and your overall progress toward recovery.

What You Can Do About It

Document Everything:

Keep accurate documentation of all aspects related to your injury. This includes your pre-injury payroll documents, each and every medical appointment you attend, and any and all correspondence with the insurer. If you are required to dispute the amount of your payments, these records will be crucial.

Question the Initial Payment Amount:

Do not accept the initial calculation of your payments without challenging it. Insurers make errors, and these errors can be in their favor. Ensure that the insurer has calculated your payments properly, that all of your earnings have been included, and that they have used the correct time period for the calculation.

Understand Your Review Rights:

Know your options for disputing the insurer’s decision to either reduce your payments or suspend them. Most jurisdictions have mechanisms for resolving disputes arising from the payment process, but these must be exercised within specific time frames. You will generally have limited opportunities to file reviews or appeals.

The Cost of Not Knowing

The cost of being uninformed is not limited to the immediate loss in weekly payment amounts. When someone cannot afford the new lower payments they will often exhaust all available funds (savings), incur debt, or go back to work when they are not physically ready to do so in order to make ends meet;

While some will abandon their claim and accept an underpaid settlement offer from the insurance company simply to have some degree of certainty about what their future holds and to avoid additional battles with the insurance company, this may provide short-term relief, however, this could prevent access to necessary long-term benefits due to the ongoing nature of your injuries.

Worker’s Compensation was created for the protection of injured workers, however, the complexities associated with the worker’s compensation system has resulted in many individuals not receiving all of the benefits that they are eligible for. Therefore, understanding how weekly payments function and how the most common errors/areas of pitfall exist within the worker’s compensation system, increases your ability to protect your rights and income while recovering.