what is workers compensation 
workers compensation also known as workers comp provides benefits to workers who become injured or ill on the job due to a work related accident workers comp covers medical costs healthcare benefits income for lost wages educational retraining and disability pay workers compensation is a state government mandated program but the required benefits vary from state to state texas is the only state that does not require employers to maintain workers compensation insurance 1understanding workers compensationformerly known as workman s comp workers compensation provides benefits to those who have suffered due to work related accidents injuries and illness workers comp helps employees while out of work by providing several types of benefits that can include private insurance companies pay for most workers compensation programs from premiums paid by individual employers each state has a workers compensation board a state agency that oversees the program and intervenes in disputes 5federal workers compensation programs also exist covering federal and energy employees as well as longshore and harbor workers another federal program the black lung program handles death and disability benefits for coal miners and their dependents 6employers cannot require employees to pay for the cost of workers compensation 7workers compensation benefitsrequirements for workers compensation vary from state to state and some states do not cover all employees for example some states exclude small businesses from the mandate for coverage while others have different requirements for various industries the national federation of independent business nfib maintains a summary of each state s worker compensation requirements 8workers compensation pays for lost wages to an employee but at a reduced amount meaning less than your total salary typically programs pay about two thirds of the worker s gross pay 9in many cases the worker cannot return to work due to the injury called temporary total disability and gets compensated while recovering the worker returns to the job following a period of rehabilitation or therapy however some workers get compensated for longer periods if they suffer some type of permanent disability whether partial or full disability 10workers compensation benefits are not usually taxable at the state or federal level compensating for much of the lost income 11 however you may pay taxes on your workers compensation benefits if you also receive income from the social security disability or supplemental security income programs most compensation plans offer coverage of medical expenses only related to injuries incurred as a direct result of employment for example a construction worker could claim compensation for an injury suffered in a fall from scaffolding but not for an injury incurred while driving to the job site in other situations workers can receive the equivalent of sick pay while on medical leave if an employee dies due to a work related incident the worker s dependents receive the workers compensation payments recipients waive the right to sueby agreeing to receive workers compensation workers give up their right to sue their employer for negligence this concession helps protect both the workers and employers workers give up further recourse in exchange for guaranteed compensation while employers consent to a degree of liability while avoiding the potentially greater cost of a negligence lawsuit workers compensation is available only to employees injured on the job it is not the same as disability insurance or unemployment benefits special considerationsan employer may dispute a workers compensation claim since disputes can arise over whether the employer is liable for an injury or illness in that case the workers compensation board can help resolve disputes workers compensation payments are susceptible to insurance fraud an employee may falsely report that their injury was sustained on the job exaggerate the severity of an injury or invent an injury the national insurance crime board asserts that there are organized criminal conspiracies of crooked physicians attorneys and patients who submit false claims to medical insurance companies for workers compensation and other benefits 12in most states only regular employees are eligible for workers compensation independent contractors are not that was one of the main points of contention in the debate over a california ballot measure that sought to extend employee benefits to drivers for ride sharing apps like uber and lyft like the so called gig economy the issue of workers compensation and other benefits for contract workers isn t going away since gig workers have increased from 2012 to 2021 by nearly 5 million and represent 3 of the workforce 13access to workers compensation benefits is a key issue for participants in the gig economy contractors and freelancers are rarely eligible types of workers compensationin the u s individual states handle workers compensation rules the u s department of labor houses an office of workers compensation programs still it is responsible only for covering federal employees longshoremen and harbor workers energy employees and coal miners 14the lack of federal standards for workers compensation has resulted in extremely varied policies for the same kinds of injuries from state to state identical injuries can receive radically different kinds of compensation depending on where a worker resides a paper by the occupational safety and health administration osha flatly calls workers compensation a broken system it estimates that 50 of the costs of workplace injury and illness are borne by the individuals who suffer them low wage and immigrant workers often don t even apply for benefits 15workers compensation coverage a vs coverage bthere are two types of workers compensation coverage coverage a and coverage b coverage a includes all of the state mandated benefits that an injured or ill employee is entitled to receive from the employer s insurance 16 it covers salary replacement payments as well as medical care rehabilitation and death benefits as necessary all states except texas have such benefits although they vary widely from state to state and many states exclude some employees from eligibility coverage b pays benefits that exceed the minimums required by coverage a they usually are paid only as the result of a successful lawsuit brought by the employee for negligence or other misconduct by the employer workers who accept workers compensation generally waive the right to sue their employers agreeing to a no fault contract however state legislation and court rulings in a number of states have restored the employees right to sue in various strictly defined circumstances thus an employer may opt to purchase a policy that combines coverage a and coverage b who pays workers compensation insurance premiums the employer pays workers compensation insurance premiums in other words there is no payroll deduction like there is with social security benefits the employer must pay workers compensation benefits as established by individual state laws 