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When one of your employees sustains an injury that makes working impossible for the duration of the injury or disability, filing workers’ compensation and disability claims as appropriate often becomes a priority. This is necessary in order to ensure financial stability during the time that the injury prevents employment.

To make sure that a disability does not present your employee with otherwise avoidable financial hardship, as well as to prevent expensive settlements and litigation for your own sake, it’s essential that both parties understand the basic facts about these types of insurance claims.

1. Workers’ compensation benefits and state disability benefits are not the same.

To someone who has never been on either end of the claims process, it may seem as though these two types benefits serve the same purpose. Indeed, there are some limited circumstances under which the two may overlap, but this is not generally the case.

Workers’ compensation insurance is a type of coverage that most states require employers to carry. This insurance pays out benefits to employees for injuries that they sustain while on the job for which employers would otherwise be liable. This might include a deli worker who injures his hand on a slicing machine or a janitor who slips on a wet floor.

State disability insurance, on the other hand, pays out benefits to people who are injured outside of work whose injuries temporarily prevent the ability to work. Both are paid with the intention of helping to make up for lost income.

2. In some cases, state disability is paid in lieu of workers’ compensation.

This is sometimes possible if the amount of money that state disability pays out would be higher than the amount that workers’ compensation pays out. In this instance, the injured employee would be eligible for the higher state disability benefits for every day that he or she qualifies for workers’ compensation.  

3. State disability insurance often pays employees during the waiting period for workers’ compensation.

Sometimes, there is a period of time during which an employer or the employer’s insurance company are disputing or confirming a workers’ compensation claim. During this time, state disability insurance may pay benefits to an injured employee in order to help him or her avoid financial hardship.

If the dispute is resolved with the determination that workers’ compensation insurance will pay out the claim, the state will request the return of any funds that it paid during the waiting period.

4. Both are temporary.

Workers’ compensation benefits and state disability benefits are paid out only temporarily, with workers’ compensation paying only until a condition is resolved or until it becomes permanent. At that point, state disability insurance will pay benefits for up to 52 weeks, after which point any permanent disability might entitle a person to receive social security disability benefits.

5. Social Security Disability Insurance (SSDI) pays benefits to those eligible for lifetime benefits and/or medical care.

After 52 weeks, state disability benefits will cease and those who are permanently disabled may qualify for SSDI. In some cases, if the injured party expects to be disabled for more than one year, workers’ compensation and SSDI benefits may be paid simultaneously for a period of time.

Both types of insurance may also pay benefits simultaneously if the claimant has a terminal illness. In either case in which both benefits are paid at the same time; however, the amount paid by SSDI may be reduced in part depending on the wages earned by the claimant.

6. It is not lawful for an employer to discriminate against a job applicant who has previously filed a claim.

Laws vary from state to state about what information about previous claims is available to employers, and it’s wise for an employer to consult with an attorney prior to hiring or denying employment to anyone based on suspected fraudulent past claims.

It is important for employers and job applicants alike to note, however, that the Americans with Disabilities Act protects “applicants against discrimination based on previously filed workers’ comp claims.”