COORDINATING BENEFITS CAN SPEED INJURED EMPLOYEES' RETURN TO WORKPosted On: Mar. 2, 1997 12:00 AM CST
Companies can encourage injured employees to return to work if they integrate benefits to avoid providing employees duplicate or excessive compensation while off work.
However, benefit managers should make sure they are aware of all collateral source benefits available to injured employees before they can determine appropriate offsets.
Injured employees' mandatory and optional benefits, which vary by state and employees' duration of disability, may include:
Most states require companies, or their workers compensation insurers, to compensate injured employees' lost wages by paying 66 2/3% of gross wages, up to state-specific maximum amounts, on a tax-free basis.
However, a few states take a newer approach and base wage-loss compensation on employees' spendable income, which reflects the impact of taxes. For example, Alaska, Iowa and Michigan each base injured workers' compensation on 80% of spendable earnings, according to a 1996 U.S. Chamber of Commerce report.
This newer method is intended to create more incentive for injured workers to return to work.
Salary and wage continuation.
"Some companies pay 100% of salary in lieu of having an employee collect workers compensation for injuries of short duration," said Rebecca S. Bruce, president and chief executive officer of Aon Management Institute, a consulting firm based in Glastonbury, Conn. "In some states, it has been argued that to the extent this is a replacement for workers' compensation benefits, it is non-taxable," she added. In such cases, a company may have to adjust the earnings to prevent injured employees from receiving excessive payments.
State disability insurance.
Several jurisdictions require employees receive state disability insurance, which typically begins paying benefits after they are off work seven days, said Jack Bredehorn, president of VPA Inc., a third-party administrator based in Calabasas, Calif.
Those jurisdictions are California, Hawaii, New Jersey, New York, Rhode Island and Puerto Rico.
Occupational injury pay supplements.
Some companies pay supplemental benefits to make up the difference between employees' compensation benefits and regular earnings, with some thinking that's the right thing to do for employees and some compelled by contract to make the payments.
Standard disability coverages.
Short-term disability payments usually are two-thirds of salary for six days to six months, Aon's Ms. Bruce said.
Long-term disability payments usually begin after six months and may last two years or more.
Rehabilitation and retraining benefits.
Depending on the state, these mandatory benefits typically would help employees with counseling about the appropriateness of physical therapy or to seek education to improve the marketability of their skills.
Most jurisdictions ban employees from collecting both workers comp wage-loss benefits and unemployment benefits.
Social Security disability benefits.
Some states allow workers comp benefits, excluding medical and legal expenses, to be offset by Social Security disability benefits, according to Aon's Ms. Bruce.
In addition, she said 21 states permit Social Security to be the primary source of disability benefits for injured workers: Alaska, Arkansas, California, Colorado, Florida, Lou-isiana, Maine, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nevada, New Jersey, New York, North Dakota, Ohio, Oregon, Utah, Washington and Wisconsin.
"However, because it is often difficult for an individual to qualify for disability benefits under Social Security, some employers hire someone to represent the employee before the Social Security Administration," she said.
Other benefit payouts.
Companies may want to consider offsetting sick and retirement benefits by workers comp payouts. They may also want to evaluate the appropriateness of offsets for other coverages, including disability retirement, as well as disability life insurance or accidental death and dismemberment coverages.
Third-party liability settlements.
Employees occasionally are injured in situations in which a third party is liable, the employee sues and wins damages. For example, a salesman on a business trip who is injured because a wheel fell off his car may be able to successfully sue the auto maker.
"The workers compensation insurer could subrogate their claim seeking reimbursement, but may not do so," Aon's Ms. Bruce said.
"In these cases, the employee (the plaintiff) has a reason to build up damages, by not returning to work promptly. The longer the employee stays out of work, the more he makes," she said.
In a related scenario, an employee receiving workers comp because of a job-related driving accident may also be able to collect from an auto insurer.
Companies may want to evaluate the appropriateness of allowing injured employees who are off work to continue using travel passes, merchandise discounts and tuition reimbursement programs.
Loan protection coverage.
Companies also should be aware of the impact of loan protection insurance coverage, which can be purchased individually or provided by a company credit union, on injured employees' willingness to return to work. The policies typically provide funds to pay mortgages and credit card debts.