How Workers' Compensation and Disability Benefits Work

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Are you unable to work because of an injury or illness? If so, you may be eligible to receive workers' compensation or disability benefits.

Your eligibility and benefit amount depend on several factors, including the nature of your disability, the type of employer you work for (e.g., government vs. private sector), and where you live. Learn more in this overview of workers’ compensation, state-sponsored disability insurance, and social security disability benefits.

Workers' Compensation

Most employees who are injured or become ill on the job are covered by state workers' compensation laws. In every state, employers who meet certain criteria are required to have workers' compensation insurance. For example, in Alabama, state law requires employers to carry workers’ compensation insurance unless they have fewer than five employees or are engaged in the construction of new single-family, detached residential dwellings. Alabama also exempts companies that employ domestic workers and farm laborers, among a few other types of workers.

State law varies. To find out whether your employer is required to have workers’ compensation insurance, consult your state department of labor.  

Workers’ compensation benefits include payment for lost wages and medical bills. However, you will only be paid a portion (usually two-thirds) of your salary. The first step in filing a claim is to notify your employer. Your employer should be able to supply you with the forms needed to file a claim. If they can't, contact your state’s workers' compensation office immediately.

Disability Compensation for Federal Workers

If you work for the federal government and become sick or injured as a result of your job, you may be eligible for compensation through one of four programs:

  • The Federal Employees' Compensation Program
  • The Energy Employees Occupational Illness Compensation Program
  • The Longshore and Harbor Workers' Compensation Program
  • The Federal Black Lung Program

Some benefits are also available to dependents of federal workers who have occupation-related injuries or illnesses. To learn more, see the U.S. Department of Labor’s Workers’ Compensation hub.   

Disability Insurance

California, Hawaii, New Jersey, New York, Rhode Island, and Puerto Rico have state-sponsored disability programs. These programs are typically short-term, and the benefit amounts are low. In New York, for example, the weekly benefit amount is 50% of the employee's average weekly wage, up to $170 for a maximum of 26 weeks.

Your employer, both in these states and in the rest of the country, may also voluntarily provide additional disability coverage. So, if you are unable to work, your first step should be to inquire as to what insurance your employer provides. If you have your own disability coverage, file a claim with that insurance company as well.

If you don't have state or employer-based coverage, consider purchasing disability insurance while you're healthy. First, check with your employer to see what coverage they provide, then ask if you can purchase supplemental coverage. Calculate if the benefits you'll get will be enough to maintain your lifestyle in the event of unanticipated disability.

If they're not, consider purchasing personal disability insurance.

Social Security Disability

To qualify for benefits, you must first have worked in jobs covered by Social Security. Then you must have a medical condition that meets Social Security's definition of disability. In general, monthly cash benefits are paid to people who are unable to work for a year or more because of a disability.

According to the Social Security Administration, the following types of impairments may qualify an individual for social security disability:

  • Disorders of the musculoskeletal system.
  • Special senses and speech disabilities, including loss of vision, hearing, and speech.
  • Respiratory disorders like asthma, cystic fibrosis, and chronic pulmonary hypertension.
  • Cardiovascular impairments impacting the proper functioning of the heart or circulatory system.
  • Digestive system disorders including gastrointestinal hemorrhage, liver dysfunction, inflammatory bowel disease, and short bowel syndrome.
  • Genitourinary disorders that compromise kidney function and result in chronic kidney disease.
  • Hematological disorders including cancerous diseases like lymphoma, leukemia, multiple myeloma, and non-cancerous disorders like thrombosis and hemostasis.
  • Skin disorders like ichthyosis, bullous diseases, chronic infections of the skin or mucous membranes, dermatitis, hidradenitis suppurativa, genetic photosensitivity disorders, and burns.
  • Endocrine disorders including diseases attacking pituitary, thyroid, parathyroid, adrenal, and pancreas glands.
  • Congenital disorders that affect multiple body systems.
  • Neurological disorders like Parkinsonian syndrome, benign brain tumors, cerebral palsy, spinal cord disorders, and multiple sclerosis.
  • Mental disorders including schizophrenia spectrum, bipolar disorders, anxiety and obsessive-compulsive disorders, and autism spectrum disorders.
  • Cancers - malignant neoplastic diseases.
  • Immune system disorders including autoimmune diseases and immune deficiency disorders.

It can take three to five months for Social Security to reach a decision on your claim.

When and How to File a Claim

  • If you are injured or temporarily or permanently disabled, file a claim immediately.
  • In many cases, you will need to report the incident or file a claim by a deadline, which may be as little as 10 days.
  • Contact your state’s Workers' Compensation Board, your state Department of Labor, or the Social Security Administration if you have any questions or need help filing a claim.

Getting Legal Help

Many individuals engage a social security disability lawyer to help them navigate the complexities of the system and enhance their chances of being approved for benefits.

According to legal help site Nolo, legal fees are federally regulated, and you will generally be charged the lesser of 25% of your social security back pay (money owed to enrollees covering the time from the application date to the date of approval) or $6,000.

This is general information on workers' compensation and disability insurance. Contact your employer or your state’s workers’ compensation office for a determination on your specific circumstances.