NYC Insurance Blog

What is the Difference Between Workers’ Compensation and Disability Insurance?

The main difference between workers' comp and disability insurance is the type of injuries and illnesses they cover. Workers' comp covers injuries and illnesses sustained from workplace accidents or exposures. Therefore, workers' compensation covers an employee's financial needs until medical professionals determine they are fit to work again/return to work. On the other hand, disability insurance pays a portion of your earnings if an injury or illness impedes you from working. Although it is easy to confuse the two, they are not at odds with each other. Workers' comp and disability insurance provide financial help to employees when they cannot work due to injuries or illnesses. Workers' comp offers protection against injuries or illnesses that happened on the job, while disability insurance extends coverage outside of the workplace.

Workers' Compensation Insurance

Workers' compensation only pays out when an employee is injured at work or is diagnosed with a work-related illness. In the United States, most states require employers to purchase workers' comp insurance. A workers' comp should cover the following:

• Medical expenses for emergency and ongoing treatment 
• Lost income while recuperating
• Rehabilitation services

In most cases, injured or ill employees only miss work temporarily because they eventually start working again, even if they have sustained some form or type of permanent injury. If workers' compensation is required by state law, employers risk incurring heavy fines from state regulators and lawsuits from their employees. Give us a call today, to learn more about getting Worker's Compensation. 

Claims Reporting

Employees with a workers' comp claim must report the workplace-related injury or illness to the employer as soon as possible. Besides purchasing workers' comp insurance, employers have additional obligations to inform their employees of their legal rights. An employer can achieve this by posting workplace health & safety notices to educate and inform workers. Also, in case of an injury, the employer should give the employee a claim form within 24 hours and arrange medical assistance via worker's comp insurance. Although disability insurance claims are initiated through the employer, the insurance company pays the benefits. 

Understanding Disability Insurance

Disability insurance claims are not paid through your employer unless you pursue a lawsuit. If you receive disability insurance benefits, you can use them however you like, although they are primarily used to cover your medical bills and living expenses. There are two types of disability insurance, short-term and long-term disability, with benefits provided for days, weeks, months, or even for life, depending on the type of claim. Disability insurance types:

• Short-term disability – short-term disability pays benefits for short periods, typically 3 to 6 months. Since short-term disability insurance is expensive to purchase as an individual; as a result, most employers offer it as a company-paid benefit to their employees. 
• Long-term disability – long term disability insurance is intended to offer benefits for a longer period, typically 2 – 10 years or even until you reach retirement age, depending on your policy. Long-term and short-term disability insurances provide flexibility in the amount of coverage beneficiaries can choose to suit their needs. Short-term disability guarantees a greater percentage of your income, up to 70% for shorter periods, while long-term disability often pays benefits equal to 40 – 70% of your salary for a longer period.

What Do these Insurance Plans Cover?

Both workers' comp and disability insurance do not pay their employees full salary while off work. Typically, workers' comp pays partial wages and medical bills, with each coverage varying depending on the insurer and state's regulations. However, workers' comp usually provides additional payments if an employee is permanently impaired or dies at work. Disability insurance also pays a fraction of the employee's salary, roughly 50 – 60%.

Remember, if your employer or insurer disputes whether you ought to receive workers' comp, the state may grant you disability insurance benefits until the matter is resolved. However, if you win the claim, the state will get a reimbursement from your employer or insurer. 

How do You Get Disability Insurance?

Normally, employers offer disability insurance to their employees for free (no cost) or at a discounted cost. Therefore, it is essential to check with your employer to know if they offer a disability insurance policy. However, if you are self-employed or the employer does not offer disability insurance, you can consider an individual disability policy as the ideal choice. Give us a Call Today for a Free Quote!