Unless you have been very close with someone else who had to file a disability claim, you probably have little to no familiarity with the process. Even then, your experience will be limited by the specifics of your loved one’s situation. Some of the most common questions center on the difference between workers’ compensation and long-term disability insurance (LTD), especially since many LTD policies are group plans offered as employee benefits. An on-the-job injury long-term disability may be covered under workers’ compensation, LTD, or both. LTD benefits and workplace injury claims are not the same, but they can overlap. What this potential overlap means for you, if you are filing for disability, is that coordinating LTD with workers’ compensation is likely to require developing a deeper understanding of how each type of disability coverage works.
Is Workers’ Comp the Same as LTD?
There are at least four different types of disability for which someone may qualify when they have to leave the workforce due to illness or injury. However, people who have never had to file a disability claim have usually also never had a reason to learn what these types are and when they would apply. These four common types of disability coverage are:
- Social Security Disability Insurance (SSDI)
- Workers’ compensation (worker’s comp or workman’s comp)
- Short-term disability insurance (STD)
- Long-term disability insurance (LTD)
Some of the most common points of confusion come from coordinating LTD with workers’ compensation. These are two separate types of insurance that follow different rules, but sometimes both can apply to the same situation. A quick breakdown of all four types may help you to see how the pieces can fit together.
Worker’s Compensation (Workers’ Comp)
Most employers in the United States are required to carry workers’ compensation insurance. Individual states set specific guidelines that employers must follow within their borders, so there will be some variation in the laws governing workers’ comp requirements from one place to another, but generally speaking there are a few types of coverage that are fairly reliable:
- Medical expenses
- Temporary disability
- Permanent disability
Both temporary disability and permanent disability can be either partial or total. One of the interesting things about the partial vs. total split is that permanent workers’ compensation wage replacement for an on-the-job injury long-term disability can be partial, rated at a percentage of the amount the same individual would receive if he or she could not return to work at all. An important difference between LTD benefits and workplace injury claims is that LTD benefits are not usually offered on a partial or pro-rated basis. Another difference is that all types of workers’ compensation benefits are limited to coverage for work-related injuries and illnesses, whereas a much wider range of conditions qualify for LTD.
Short-Term Disability Insurance (STD)
STD is a type of private insurance policy that provides partial wage replacement benefits when an individual is unable to work for a period of time, usually weeks to months. Usually short-term disability does not provide coverage for disability due to work-related injuries. In other words, you might be eligible for STD benefits, or temporary disability workers’ compensation benefits, but usually not both at the same time.
Social Security Disability Insurance (SSDI)
Social Security disability can provide benefits regardless of what caused the individual’s disability. Unlike workers’ compensation or LTD, SSDI does not calculate an individual’s total benefit eligibility as a percentage of his or her income prior to leaving the workforce. SSDI calculations do consider the applicant’s work history and the amount he or she has paid into the Social Security system via taxes over time. Guidance from the Social Security Administration (SSA) suggests that most people will need to have worked and paid Social Security taxes on their earnings for at least five out of the past 10 years to qualify for SSDI benefits.
SSDI does not provide benefits for short-term disability, so STD policies do not overlap with SSDI. Social Security disability benefits are not normally received alongside benefits for temporary workers’ compensation, for the same reason. However, individuals on permanent workers’ comp disability may be eligible for SSDI in some circumstances, and most long-term disability insurance plans actually require policyholders to file for SSDI as well to qualify for LTD benefits. What this may mean for individuals coordinating LTD with workers’ compensation is that they often need to factor an application for SSDI benefits into their approach to pursuing on-the-job injury long-term disability coverage.
Long-Term Disability Insurance (LTD)
Long-term disability insurance plans may be purchased individually, by workers concerned about their long-term earning potential. Individuals who are self-employed often find LTD an attractive option, particularly if they are the primary income earners for their families. However, LTD plans may also be offered through employers, who generally negotiate group rates and policy terms. Individuals on those plans who become disabled due to work injuries may end up balancing LTD benefits and workplace injury claims.
Usually, you will not find yourself coordinating LTD with workers’ compensation benefits unless your work injuries are considered eligible for permanent total, rather than permanent partial, disability. In some instances, however, an “own occupation” LTD policy may offer coverage for conditions that are considered eligible only for partial permanent wage replacement under your state’s workers’ compensation laws.
How Does Long-Term Disability Work With Workers’ Compensation?
If you are trying to put together LTD benefits and workplace injury claims, there are a few points to keep in mind that may make coordinating LTD with workers’ compensation a little easier. Always check the terms of your LTD policy and the workers’ compensation laws in your state to be sure about what applies in your situation.
Coordinating LTD With Workers’ Compensation – Medical Coverage
As a general rule, you will need your own health insurance with both LTD benefits and workplace injury claims. LTD will not cover any medical costs, with one notable exception: Many LTD policies will cover the independent medical examination (IME) most of them require before approving benefits. Workers’ compensation does cover medical expenses, but only those directly related to the work injury.
LTD and Workplace Injury Claims – Offset Clauses
Most LTD policies will require you to file for SSDI. If your SSDI application is approved, the insurance company may subtract the amount you receive from Social Security from your benefit payment each month.
There is greater variability in whether LTD policies offer coverage for disabilities due to work-related illness or injury. Some LTD plans exclude coverage for an on-the-job injury long-term disability, while others may handle permanent workers’ comp disability according to the same “offset” rules they use with SSDI benefits. Always check the terms of your policy to be sure. Workers’ compensation will not normally be affected by qualifying for LTD benefits, but effectively coordinating LTD with workers’ compensation may mean accounting for an offset provision, rather than simply adding the separate totals of your LTD benefits and workplace injury claims.
Tips for Coordinating LTD With Workers’ Compensation
Some of the most effective strategies for coordinating LTD with workers’ compensation are likely to center on how you manage the qualifying and renewal processes. Both LTD benefits and workplace injury claims typically impose significant requirements for documentation of medical evidence. Both types also tend to involve a significant administrative burden in terms of maintenance filings, many of which require regular medical assessments to confirm continued disability. While IME requirements set by separate insurance providers may differ, for other types of medical evidence you may be able to consolidate the documentation process by making it a habit to always request duplicates of medical records you anticipate filing for either type of on-the-job injury long-term disability claim. If your state’s workers’ comp requirements and your LTD policy terms allow you to choose your own healthcare provider, you may also be able to save time by looking ahead at upcoming deadlines for renewal or disability assessments and scheduling your medical visits to fit the timelines LTD benefits and workplace injury claims with a single set of appointments. The goal in coordinating LTD with workers’ compensation is to find a balance and a rhythm that will work for you.
