This article will cover workers’ compensation vs. disability insurance.
Most importantly, we’ll dive into what different types of coverage mean for your long-term financial security. Plus, you’ll get directions to more detailed resources if you decide that you would sleep better with coverage beyond what you have now.
Let’s get started.
Table of contents
The key differences for an injured worker between a workers’ compensation case and temporary or permanent disability benefits come down to the type of insurance. Workers’ compensation benefits only pay for a work injury. Each state’s workers’ compensation laws say what does and does not qualify.
Disability insurance provides short or long-term disability benefits regardless of whether or not you suffered a job injury. In fact, disability also covers the inability to work due to a disease like cancer or arthritis. State disability benefits have trickier qualifications and high rejection rates. The same holds true for SSDI benefits.
You can use the Disability Insurance Quote tool on this page to see what disability insurance rates are for your occupation, or give us a call at (858) 703-6178 for more information.
The definition of hurt depends on whether you’re looking at insurance definitions of disabled, workers’ comp definitions of injury, or social security definitions of disabled.
Workers’ comp provides the most comprehensive definition that you were injured while on the job. You’ll need documentation of the incident.
Disability insurance (whether through your employer or privately held) has a couple of distinct definitions of disability, depending on the contract.
First, you will qualify for benefits if you “cannot perform the material and substantial duties of your occupation.”
Sometimes they add caveats like you aren’t employed elsewhere or allow for working part-time.
There is one big definition change.
Sometimes you have a definition saying “cannot perform the material and substantial duties of ANY OCCUPATION by which you are qualified for through training or experience.”
That means the insurance company can force you off claim. For the most part, insurance agents specializing in disability avoid this definition where possible, but it’s more common on group plans through an employer.
What is Workers’ Compensation?
A workers’ compensation claim pays you for work-related injuries. An injury can be anything from breaking an arm slipping on the way into the building or illnesses from unsafe work conditions.
It covers several types of benefits for employees:
- Medical bills
- Disability pay
- Pay for missed work
- Funeral costs
Each state has different rules about what and who is covered by workers’ compensation. Government websites for each state typically have the guidelines.
It’s worthwhile to note that the disability pay for injuries causing disabilities tends to be ⅔ of your income rather than the 100% pay for missed work.
What Does Disability Insurance Cover?
Disability insurance (also called paycheck protection) will provide a monthly income if you cannot do your job. Similar to the disability portion of workers’ comp, most private disability insurance policies will cover roughly 60% of your income.
It doesn’t matter if you were hurt on the job or came down with an unrelated illness.
If your doctor says you can’t do your job, you get a check every month until you recover.
The most common reasons for disability are musculoskeletal diseases and cancer. Accidents occur rarely, but they do happen. If it’s something you worry about, you’ll be covered.
If you have disability insurance in place at the time of the workers’ compensation incident, you can get payments from both.
Short-term disability means that it has both a shorter waiting period and a shorter benefit period. It covers accidents on or off the job, whereas worker’s comp only covers on-the-job issues.
- Waiting period – the time between the diagnosis of disability and benefits
- Benefit period – the length of time benefits will be paid
Most commonly, short-term disability insurance has different waiting periods for accidents and illness. You might have a 0/7 or a 7/14 day waiting period. The first number represents the waiting period for accidents, the second for illness.
The longer the waiting period, the lower your rates.
Some short-term disability benefits last for up to two years. Many have shorter benefit periods.
Long-term disability has longer waiting periods and longer benefits. Typical policies have a 90-day wait and pay benefits until age 67. You can customize it to fit your needs. Make sure to shop for different insurance companies to find the lowest insurance premium.
Long-term paycheck protection covers you in the face of unexpected illness and severe accidents.
Common Questions on Workers’ Compensation vs. Disability Insurance
Can you collect both workers’ comp and disability insurance?
Yes! They are unrelated, and neither affects the other.
Can I get disability after a workers’ comp settlement?
It depends. Disability insurance will pay out on top of any workers’ comp settlement. If you’re looking for a disability settlement from your employer, that’s a better question for an attorney.
Does health insurance cover any of this?
Health insurance has no bearing on either disability insurance benefits or workers’ compensation benefits.
What is workers’ compensation insurance?
Workers’ comp insurance is what an employer purchases to cover their state laws requirement to provide workers’ compensation to employees.
Through workers’ comp, the injured employee can receive money for weekly cash benefits, death benefits, and reimbursement for medical treatment for a work-related injury. Sometimes medical treatment centers can bill the workers’ comp insurance company directly.
It can also cover occupational disease, but you’re more likely to need the help of a workers’ compensation attorney to prove that the job caused the illness. You can generally expect temporary disability payments at two-thirds of your average weekly wage.
Disability insurance is more like paycheck insurance. The insurance carrier provides a monthly paycheck if you cannot do your job due to a medical condition – either illness or injury. It covers both permanent disability and temporary partial disability.
The federal government has social security disability benefits, but it is difficult to qualify. In short, while better than nothing, relying solely on that safety net is not a good idea.
How Abrams Insurance Solutions Can Help
At Abrams Insurance Solutions, we help people protect their families, and their hard-earned assets, by shopping the market to find the best policy at the lowest possible price.
If you have questions about how to protect your family from workplace injuries and whether it’s better to rely on workers’ compensation vs. disability insurance, so you don’t have to go without a paycheck, give us a call at (858) 703-6178. We are happy to help, and there is never any obligation to move forward.