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How Workers' Compensation and Disability Benefits Differ

Learn about the differences in Colorado between workers' compensation and private short/long term disability benefits a worker may have through a group policy from the employer, a group policy through their union, or an individually purchased policy

When a person is severely hurt on the job and unable to perform their job duties due to the injury, they are entitled to certain benefits.  Which type of benefits they may be eligible for is determined by several factors, including where the injury occurred. There are two different types of financial assistance available to injured workers:

  • Workers' compensation; and
  • Private short/long term disability benefits a worker may have through their employer, union or individual plan

Determining which one you qualify for, if any, may not be as easy as you think and often requires the expertise of a workers' compensation attorney.

Workers' Comp vs. Disability Benefits

Workers' compensation only applies to work related injuries. Disability benefits cover both work related and non-work related/personal medical conditions. For a work related injury, disability insurance can still apply.  For group policies purchased through the employer, the injured worker doesn't get both for work related injuries.  There is an offset where one reduces the other.  Which one gets reduced (workers' comp or the disability benefits) depends on the terms of the disability policy. For individual and union policies, an injured worker can often "double dip" so to speak and get both, but not always. Again, it depends on the terms of the private policy.

It's worth noting that the "disability" benefits we are talking about are through private insurance and not through the Social Security Administration. Though they can also apply to workers' comp cases, Social Security Disability Benefits are completely different.

Below are some facts regarding workers' compensation and disability benefits.  Within these facts, you will see a variety of differences, as well as similarities between the two benefit types.

  • Workers' compensation provides medical benefits, wage loss benefits (called temporary disability benefits), and permanent disability benefits.  Disability policies only provide wage replacement.  The person has to get medical treatment through their health insurance, Medicaid or Medicare.

  • Workers' compensation in Colorado pays two-thirds of an injured workers average weekly wage.  Disability policies often pay less.  Workers' compensation benefits are always tax free.  Disability policies paid for by the employer usually are not (meaning they are usually taxable income).

  • For injured workers who retain some ability to work after being treated for an injury, even if they can't go back to their pre-injury employment, they are only entitled to permanent partial disability benefits which are calculated based on impairment ratings assigned by their doctor.  The impairment ratings do not take into account whether you can go back to your pre-injury job or whether you will be forced to make less.  For more seriously injured workers, they can seek permanent total disability benefits through a workers' compensation case, but they have to be completely unable to work in any employment.  Unlike the disability determinations in workers' comp cases, private disability policies do look at the person's profession.  What is considered "disabled" is different from one policy to the next, but disability policies usually pay if you lose your profession due to a medical condition.

  • Issues in workers' compensation cases are resolved through administrative hearings under an administrative system that is designed to be quicker, more efficient and less costly than the traditional judicial process.  Disagreements with a disability carrier go through the traditional judicial process (and usually through the federal courts) and can take years to resolve.

Understanding the compensation process as an injured worker can be stressful and time consuming, which is the last thing you need following a devastating injury. Contact Colorado's experienced workers compensation attorney R. Mack Babcock to discuss your case.  At The Babcock Law Firm we will guide you every step of the way and make certain you receive the compensation that you deserve.

Continue browsing our Legal Library and blog for more information about what it takes to win a workers' compensation case.

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**NOTE – this article and all content at Injurylawcolorado.com is for informational purposes only and does not constitute legal advice

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