A few days ago I wrote “Five reasons why office workers don’t file workers’ comp, claims for hand and wrist claims.” One of those reasons is that I think many employees use private health insurance and short-term disability to pay the cost of work injuries rather than workers’ compensation.
To understand why this hurts workers, it helps to understand the difference between workers’ compensation, short-ter, disability and private health insurance.
The difference between workers’ compensation, short-term disability and private health insurance.
With a few small exceptions, workers’ compensation is mandatory for all employers in Nebraska. Workers’ compensation includes payment for wage loss, permanent disability and medical benefits that are standard for all employers. Employers bear the cost of workers’ compensation. Finally, employees, at least in Nebraska, pay nothing for medical care under workers’ compensation. But workers’ compensation only covers expenses related to work injuries.
In contrast, private disability insurance is not required. Private disability covers income loss for occupational as well as non-occupational conditions. While health insurance coverage is mandatory for larger employers, there is a lot of variation among insurance plans. More importantly, employees generally have to foot some of the cost of private disability and health insurance coverage. Finally, under private health insurance, an employee has out of pocket expenses in the forms of co-pays and deductibles.
The seeming advantage of putting an injury on private insurance and short-term disability is convenience. Additionally, short-term disability policies sometimes pay 80 percent of lost income while workers’ compensation insurance only pays 2/3rds. Additionally, workers’ compensation benefits can undercompensate some highly paid employees.
But on closer examination, workers’ compensation is a better deal most of the time. First of all, workers’ compensation benefits are generally not taxed while short-term disability benefits are more likely to be taxed. Under workers’ compensation an employee doesn’t have to pay out of pocket for medical expenses. Out of pocket expenses for even a simple procedure covered by insurance can range into the thousands of dollars.
Workers’ compensation pays for permanent disability for hand and wrist injuries on an impairment basis for single member claims. This means the employee gets paid something if they have damage to their body, even if they can return back to their job full duty. Long-term disability policies tend not to pay out unless an employee is unable to work.
Claiming workers’ compensation after short-term disability and health insurance pay for the costs of surgery – This is permissible and is often a smart financial move for an injured worker, but attorney involvement is usually needed. In cases where an employer is forced to pay medical bills through workers’ compensation and that the client and their health insurer originally paid, the client and health insurer get reimbursed by the doctor. Out of pocket expenses are eliminated and can be paid to the employee by the provider.
In some such cases employees can get a refund from their private health insurer through the so-called the so-called common fund doctrine if the health insurer gets paid back from a workers’ compensation claim.
Employees pursuing a workers’ compensation claim when short-term disability paid can also end up ahead financially. An employee can be paid permanent disability benefits for a wrist or hand injury even if the employee is able to return back to work and has little if any functional restrictions.
But health insurers and disability insurers will attempt to claim repayment or subrogation rights under a federal law known as Employee Retirement Income Security Act (ERISA) which regulates some disability and insurance plans. ERISA is a powerful tool for insurers, but it doesn’t apply to a broad class of employers including church-affiliated employers and state and local governments.
It’s important than an attorney can get a look at the insurance plan to determine if ERISA even applies. Employees have some leverage in the way of civil fines against an insurer or employer if the plan administrator fails to provide the plan. ERISA laws generally pre-empt or overrule state laws, but since workers’ compensation laws generally regulate the business of insurance, there is an argument that ERISA may not preempt those laws. Additionally, Nebraska has a law against assignment of benefits which could help limit or eliminate repayment rights. So, in short. a lawyer has ways to push back against a private disability insurer and or health insurer claiming an ERISA lien when resolving a workers’ compensation case.
Workers’ compensation cases where private health insurance and or private disability have paid are also, for lack of a better word, messy. Part of that messiness usually involves some dispute over whether an injury was work-related. In those cases, an attorney can help negotiate unpaid medicals bills and any other repayment rights from a private disability or health insurer. Again, the result of this work is that an injured worker emerges from a work injury in better financial condition than they would have without a lawyer.