Both workers' compensation and disability insurance can provide income to an impaired employee. Although both programs are public, they have different requirements in terms of eligibility, processing and type, and amount and duration of payments. States implement workers' compensation in most cases. Both the federal Social Security Administration and states offer disability insurance. The focus of this guide will be social security disability benefits.
Workers' compensation vs. Social Security disability insurance
Qualifications. An employee's injury or illness must be caused by or related to work in order for the employee to qualify for workers' compensation benefits. This includes an injury received at work, during a lunch break, or at a work-sponsored activity, or an occupational illness (such as exposure to hazardous substances). For social security disability insurance, the injury or illness doesn't have to be work-related. However, benefits will only be awarded if the employee has worked long enough in jobs covered by social security and has a medical condition that meets the program's definition of disability.
Types of payments. If a workers' compensation claim is accepted, all medical expenses are covered, including hospital services and medications. Workers' compensation also pays a portion of an employee's wages if he or she can't work. Disability insurance pays a monthly benefit based on an employee's lifetime average social security earnings. It doesn't offer a separate payment for medical expenses.
Duration of payments. If an employee is temporarily disabled, workers' compensation will continue as long as the medical condition prevents an employee from returning to work. If an employee is permanently, partially, or totally disabled, he or she may receive a fixed benefit or a lifetime pension. Disability insurance continues as long as a medical condition prevents an employee from working, which may not be indefinitely.
Processing times. If a workers' compensation claim is accepted, time-loss compensation may begin within two weeks. Disability insurance, if awarded, will begin payments six months after the date the disability began.
Reviews. An employee and his or her doctor must keep the state agency that administers workers' compensation up-to-date on the progress of the employee's treatment and ability to return to work. Formal reviews for disability insurance occur from time to time, depending on the employee's prognosis.
Getting back to work. Workers' compensation generally requires beneficiaries to actively participate in back-to-work activities. The program also may cover vocational benefits, such as job training. Disability offers work incentives that continue to provide benefits while an employee attempts to work full time.
Collecting both benefits. If entitled, an employee may receive both workers' compensation and disability insurance, but the payment may not be more than the maximum allowed in the federal Social Security law.