Your state’s workers’ compensation laws or your company’s workers’ comp policy may seem like it’s written in another language. We’ve defined the most commonly used workers’ comp and insurance terms to help you navigate the insurance industry’s lingo.
Accepted claim: A workers’ compensation claim in which the claims administrator agrees that the worker’s injury or illness is covered by workers’ compensation. Even if a claim is accepted, however, there may be delays or other problems. Also called: admitted claim.
Agreed medical evaluation (AME): A doctor who is selected by agreement between the injured workers’ attorney and the claims administrator to conduct a medical examination and prepare a medical-legal report to help resolve a dispute. Also see: qualified medical evaluator (QME).
Alternative work: If the treating physician reports that the injured worker will probably never be able to return to the usual and customary occupation that was held at the time of injury, the employer has the option of offering an alternative position. The new position must be at least 12 months in duration and must pay at least 85% of the wages and benefits that were being paid at the time of injury. It also must be within a reasonable commuting distance of where the injured worker lived at the time of the injury.
American Medical Association (AMA): A national physician’s group that publishes a set of guidelines called “Guides to the Evaluation of Permanent Impairment.”
Americans with Disabilities Act (ADA): A federal law that prohibits discrimination against people with disabilities.
AOE/COE (Arising Out of Employment/in the Course of Employment: Caused by a worker’s job and occurring while working. An injury or illness must be AOE/COE to be covered by workers’ compensation.
Appeals board: A group of seven commissioners who review and reconsider decisions of workers’ compensation administrative law judges. Also called the Reconsideration Unit. See: Workers’ Compensation Appeals Board.
Applicant: The party (usually the employee) who opens a case at the local Workers’ Compensation Appeals Board (WCAB) office by applying for adjudication of the claim.
Applicants’ attorney (A/A): A lawyer who represents injured workers in their workers’ compensation cases.
Application for adjudication of a claim (application or app): A form the employer files to open a case at the local Workers’ Compensation Appeals Board (WCAB) office if there is a disagreement with the insurance company about the claim.
Apportionment: A way of figuring out how much of a permanent disability is due to a worker’s work injury and how much is due to other disabilities.
Auditor: Person who conducts the audit. This can be an employee of the insurance company, an employee of the contract company that has been hired by the insurance company to do the audits, or an independent contractor. It’s unusual for the same auditor to do the audit each year.
Average weekly wage (AWW): Used to determine the employee’s rate of temporary total or partial disability or permanent total disability. It’s usually determined by dividing the employee’s total wages for the previous year by 52.
Benefit notice: A required letter or form sent to an injured employee by the insurance company to inform them about the benefits they may be entitled to receive. Also called: notice.
Benefit review conference (BRC): Some states offer BRCs to help resolve issues and disputes resulting from on-the-job injuries. BRCs vary by state but typically involve an informal mediation conference administered by a neutral hearing officer or ombudsman. If a dispute is resolved at a BRC, an agreement may be written and signed by the injured employee and a representative of the employer (or the employer’s insurance carrier or third-party administrator).
Benefit structure: Defines what injured workers are entitled to receive when they sustain an injury “arising out of and in the course of” their employment.
Carve-out: Carve-out programs allow employers and unions to create their own alternatives for workers’ compensation benefit delivery and dispute resolution under a collective bargaining agreement.
Case manager (CM): Case managers are sometimes assigned by third-party administrators or workers’ comp carriers to monitor and assist with the coordination of medical aspects of workers’ comp claims. CMs are generally nurses or social workers.
Claim adjuster: A person who handles workers’ compensation claims for employers. Some claim administrators work directly for large employers that handle their own claims. Also known as: claim administrator or claim examiner.
Classification codes: Codes assigned to specific classes of work types (like construction or custodian). These codes are used to describe the work being insured and the premium collected for that insurance, so an insurer needs to assign the correct classification code to the work being done. Sometimes it’s appropriate to assign one classification code to part of a person’s work and a different classification code to another part of a person’s work.
Commutation: An order by a workers’ compensation judge for a lump sum payment of part or all of a permanent disability award.
Compensation: Something (such as money) given or received as payment for loss or injury.
Compromise and release (C&R): A type of settlement where the worker receives a lump sum payment including permanent disability amount and the estimated future medical care costs. A settlement like this must be approved by a workers’ compensation judge.
Cumulative injury (CT): An injury caused by repeated events or repeated exposures at work. For example, injuring a wrist while doing the same motion over and over or loss of hearing due to constant loud noise.
Date of injury (DOI): If the injury was caused by one event (a specific injury), this is the date of the event. If the injury was caused by repeated exposures (a cumulative injury), this is the date that the worker knew or should have known that the injury was caused by work.
Death benefits: Money paid to qualified surviving dependents of a worker who dies from a work-related illness or injury. These benefits are paid usually at the same weekly rate as the maximum benefits in effect at the time of injury/illness. The maximum benefits will vary depending on the number of total and/or partial dependents.
Declaration of readiness (DOR or DR): A form used to request a hearing before a workers’ compensation judge when the participant is ready to resolve a dispute.
Defendant: The party (often the company or insurance company) opposing an applicant in a dispute over benefits or services.
Delay letter: A letter sent by the claims administrator to the injured worker that explains why payments are delayed, what information is needed before payments will be sent, and when a decision will be made about the payments.
Denied claim: A workers’ compensation claim in which the claims administrator believes that the worker’s injury or illness is not covered by workers’ compensation and has notified the worker of this decision.
Disability rater: An employee of the state workers’ compensation department who rates an injured worker’s permanent disability after reviewing medical reports or medical-legal reports that describe the worker’s condition.
Disability: A physical or mental impairment that limits life activities.
Dispute: A disagreement about the worker’s entitlement to payments, services, or other rights and benefits.
Duty description: A word or short phrase that describes the work actually done by an employee, rather than a title.
Ergonomics: The study of how to improve the function between the physical demands of the workplace and the employees who perform the work. That means considering the variability between workers when selecting, designing, or modifying equipment, tools, work tasks and the work environment.
Essential functions: Duties considered crucial to a job. When considering a worker for alternative work, the worker must have physical and mental qualifications to fulfill the job’s essential functions.
Ex parte communication: A private communication with a judge regarding a disputed matter without the other party being present or copied with correspondence.
Experience modification factor: A calculation that applies to policies with more than $5,000 in premium. Insurance carriers compare individual employers with other employers within the classification based upon the frequency of accidents and severity of injuries.
Family and Medical Leave Act (FMLA): A federal law that provides certain employees with serious health problems or who need to care for a child or other family member with up to 12 weeks of unpaid, job-protected leave per year. It also requires that group health benefits be maintained during the leave.
Final order: Any order, decision, or award made by a workers’ compensation judge that has not been appealed in a timely way.
Findings & award (F&A): A written decision by a workers’ compensation administrative law judge about a case, including payments and future care that must be provided. The F&A becomes a final order unless appealed.
First report of injury (FROI): Following an on-the-job injury, employers are usually required to file an FROI with the state administrative agency that oversees workers’ comp.
Fraud: Any knowingly false or fraudulent statement to obtain or deny workers’ compensation benefits.
Functional capacity evaluation (FCE): A series of tests administered to a workers’ comp claimant by a physical therapist or other healthcare professional. They can be beneficial in determining an injured worker’s capabilities and restrictions. FCE evaluators can review job descriptions and decide if the injured employee can perform certain jobs. After a claimant undergoes an FCE, the evaluator typically provides a detailed report on the results, including the claimant’s capabilities and restrictions.
Future earning capacity (FEC): A person’s ability to earn as much as he did before sustaining injuries following an injury. FEC is calculated using a multiplier that increases the disability rating based on the amount of wage loss a type of injury causes on average when compared to other types of injuries.
Future medicals (future meds): Employers are typically responsible for payment of medical expenses associated with their employees’ on-the-job injuries. Medical benefits are often lifetime benefits if the medical expenses are related to the underlying job injury. In some states, the employee’s right to future meds can be terminated when the employee and employer agree to the terms and a judge or appropriate administrative authority approves the agreement.
Hearings: Legal proceedings in which a workers’ compensation judge discusses the issues in a case or receives information to decide about a dispute or a proposed settlement.
Impairment rating (IR): A medical assessment of a claimant’s injury represented by a percentage value. A physician may assign an IR to the body as a whole or a specific body part. The rating may then be used to calculate the workers’ comp benefits owed to a claimant. Impairment ratings are especially important in determining permanent partial disability benefits.
In pro per: An injured worker not represented by an attorney.
Independent contractor: Anyone who performs services for a fixed price. The individual works using his/her own means and methods without submitting himself to another’s control. The “employer” of a contractor would not pay FICA or Social Security taxes for this individual. He or she is not a paid employee.
Independent medical evaluator (IME): A physician selected by the judge or by the adjuster to determine the cause of the medical condition, the permanent impairment of the injury, and/or the permanent limitations, if any, that the worker has sustained.
IRS Form 941: Used by the federal Internal Revenue Service to report income on employees. It is turned in to the IRS quarterly and is a good source of information for the workers’ compensation premium audit because it should be very accurate and comprehensive. Generally, it should not be the only documentation of employee compensation for audit purposes.
IRS Form 944: Serves the same purpose as the IRS Form 941, but is turned in annually, rather than quarterly. An employer would usually use only Form 941 or Form 944, not both.
Lien: A right or claim for payment against a workers’ compensation case. A lien claimant, such as a medical provider, can file a form with the local Workers’ Compensation Appeals Board to request payment of money owed in a workers’ compensation case.
Life expectancy (LE): Sometimes a factor in determining the value of benefits owed to an injured employee, particularly in claims for permanent total disability.
Mail audit (voluntary audit): This type of audit relies on the employer to send compensation information on employees to the insurance carrier. Employers don’t need to work with an auditor to do this type of audit.
Mandatory settlement conference (MSC): A required conference to discuss settlement before a trial.
Maximum medical improvement (MMI) report: A medical report written by a treating physician that describes the injured worker’s medical condition when it has stabilized. Typically, a claimant must reach MMI to resolve a workers’ comp claim. After MMI is assigned, the payment of temporary workers’ comp benefits may be suspended.
Medical care: All medical treatment necessary to cure or relieve the effects of a work-related injury or illness. This includes physician services, hospitalization, physical restoration, dental care, prescriptions, X-rays, laboratory services, and all other necessary/reasonable care ordered by the treating doctor(s). Injured workers are entitled to receive all medical care reasonably required to cure or relieve the effects of the injury, with no deductible or co-payments by the injured worker. Also called medical treatment.
Medical-legal report: A report written by a doctor that describes an injured worker’s medical condition.
Medicare set-aside agreement (MSA): When a workers’ comp case is settled to include the closing of future meds and the claimant is a Medicare beneficiary or is expected to become one soon, money for projected medical expenses associated with the injury may be “set aside” in a bank account as part of the settlement. These funds are used solely to pay for medical expenses related to the injury that would otherwise be paid by the employer.
Modified job: If the treating physician reports that the injured worker will never be able to return to the same job duties that they had at the time they were injured, the employer is permitted to offer the injured worker a modified job instead of vocational rehabilitation benefits. It must last at least 12 months and pay the same wages and benefits as the job at the time of the injury. Also known as: modified work.
Objective factors: Measurements, direct observations, and test results that a treating physician, a QME, or an AME describes as contributing to an injured worker’s permanent disability.
Penalty: A fine charged to an employer or claims administrator and paid to the injured worker. It can refer to an automatic 10% penalty for a delay in one payment or a substantial penalty for unreasonable delays in one or more payments.
Permanent alternate position: If the treating physician reports that the injured worker will never be able to return to the same job duties that they had at the time they were injured, the employer is permitted to offer the injured worker an alternate position job instead of vocational rehabilitation benefits. The new position must last at least 12 months, and pay at least 85% of the wages that the injured worker was making at the time of the injury.
Permanent and stationary (P&S) report: A medical report written by a treating physician that describes the injured worker’s medical condition when it has stabilized.
Permanent disability (PD) benefits: Money paid if an injury or illness results in a permanent impairment that reduces the injured worker’s ability to compete in the open labor market. The amount the employee will receive depends on the extent of the disability and is set by law.
Permanent disability (PD) rating: A percentage that estimates how much a job injury permanently limits the kinds of work an employee can do. It’s based on medical condition, date of injury, age when injured, occupation when injured, how much of the disability is caused by the job, and the employee’s diminished future earning capacity. It determines the number of weeks a worker is entitled to permanent disability benefits.
Permanent partial disability (PPD): When a worker has been assigned MMI and can return to employment but has some loss of function or residual problems as a result of an on-the-job injury, he is entitled to PPD benefits. PPD may vary depending on the body part that is injured.
Permanent total disability (PTD): PTD benefits are payable to employees who are never able to return to gainful employment. An employee who is determined to be permanently and totally disabled because of an on-the-job injury is entitled to PTD benefits. In many states, PTD benefits are payable for the life of the injured employee.
Physical therapy (PT): The treatment of a physical injury with therapeutic exercise. It can help get an injured employee back to work.
Policy term: The dates covered by the policy, which usually include one full year extending from the effective date to the expiration date one year later.
Primary treating physician (PTP): The doctor who is responsible for managing the overall care of the injured worker and who writes medical reports that affect the worker’s benefits.
Proof of service: A form used to show that documents have been sent to specific parties.
Qualified injured worker (QIW): An injured worker who probably will never be able to return to his or her usual job and working conditions, and who probably could find a suitable job after receiving vocational rehabilitation services.
Qualified medical evaluator (QME): A doctor who is selected by either the injured worker, the worker’s attorney, of the claims administrator to conduct a medical examination and prepare a medical-legal report to help resolve a dispute.
Qualified rehabilitation representative (QRR): A person trained and able to evaluate, counsel, and place disabled workers in new jobs. Also called a rehabilitation counselor.
Reconsideration (recon): A legal process for appealing a decision made by a workers’ compensation administrative law judge.
Serious and willful misconduct (S&W): A petition filed if an employee’s injury is caused by the employer’s serious and willful misconduct.
Settlement: An agreement between the injured worker and the claims administrator about the worker’s compensation payments and future medical care that will be provided to the worker. Settlements must be reviewed by a workers’ compensation administrative law judge to determine whether they are adequate.
Social Security disability insurance (SSDI): SSDI benefits are payable to disabled individuals through the U.S. Social Security Administration. Many state workers’ compensation statutes have specific provisions that dictate whether an injured employee may receive both workers’ compensation benefits and SSDI benefits at the same time. Generally, if both benefits are appropriate for the same individual, a complex calculation will be performed to “offset” the benefits so that the individual does not receive more money than they are entitled to from both programs.
Specific injury (SP): An injury that was caused by one event at work. Examples include a back injury from a fall, a chemical burn, or getting hurt in a car accident while making deliveries.
State disability insurance (SDI): Provides short-term benefits to eligible workers who suffer a loss of wages when they are unable to work due to a non-work-related illness or injury, or a medically disabling condition from pregnancy or childbirth. Workers with job injuries may apply for SDI when workers’ compensation payments are delayed or denied.
Stipulation with award: A settlement of a case where the parties agree on the terms of an award. This is the document the judge signs to make the award final.
Stipulations with request for award (stips): A settlement in which the parties agree on the terms of an award. It may include future medical treatment. Payment takes place over time. This document is provided to the judge for final review.
Subjective factors: The amount of pain and other symptoms reported by an injured worker, which cannot be directly measured or observed, that a doctor describes as contributing to the worker’s permanent disability.
Subpoena duces tecum (SDT): A document that requires records to be sent to the requester.
Subpoena: A document that requires a witness to appear at a hearing.
Temporary disability (TD): Paid if a physician verifies that an injured employee cannot work because of work-related illness or injury. TD benefits are not paid for the first three days of work missed unless the employee is off more than 14 days or hospitalized. The amount of TD compensation is determined by law and is two-thirds of the employee’s wages. Payments must be made every two weeks for as long as the employee is eligible. TD benefits stop when the employee returns to work or the treating physician releases the employee for work or says that the injury has reached a point of maximum improvement.
Temporary partial disability (TPD) benefits: Payments workers get if they can do some work while recovering. Typically, TPD benefits are payable at two-thirds of the difference between what the employee earned at the time of the injury and his current earnings.
Temporary total disability (TTD): Payments to a worker who cannot work at all while recovering. Benefits are generally paid weekly at the rate of two-thirds of the employee’s AWW, subject to a maximum or minimum rate.
Third-party administrator (TPA): An organization that processes claims on an employer’s behalf. A large company may be self-insured for workers’ comp claims but may outsource the administration of its claims to a TPA.
Transportation reimbursement: Paid by the insurance carrier or employer for the reasonable cost of transportation incurred while obtaining medical care and rehabilitation.
Utilization review (UR): The process used by insurance companies to decide whether to authorize and pay for treatment recommended by a treating physician or another doctor.
Vocational & return to work counselor (VRTWC): This person or entity helps employees with a permanent disability develop a return-to-work strategy.
Vocational rehabilitation (VR): Once a physician determines that an injured worker is medically eligible and unable to return to his or her previous type of work, the employer and worker jointly select a rehabilitation counselor who will determine whether vocational rehabilitation is feasible, and if appropriate, develop a rehabilitation plan to return the injured worker to suitable, gainful employment. Vocational rehabilitation may involve transferable skills assessments, educational courses, job search assistance, and many other vocational aids. The benefits are paid if it is unlikely a worker will be able to return to the usual job before his/her injury and the employer does not offer other work. Also known as occupational rehabilitation.
Vocational rehabilitation maintenance allowance (VRMA) benefits: Paid while the employee is participating in vocational rehabilitation. VRMA is paid every two weeks for as long as the employee is eligible.
Work restrictions: A doctor’s description of clear and specific limits on what an injured worker can and can’t do, usually designed to protect the worker from further injury.
Workers’ compensation audit: A review of the compensation paid during the policy term to determine whether the exposure used to determine the original premium was accurate. If during the policy term, the actual exposure changed from the original estimate of what it would be, then an adjustment to the premium would be made at the time of the audit. If there was more exposure than the estimate indicated, then more premium will be charged. If there was less exposure than the estimate, the premium will be refunded.
Workers’ compensation insurance: Insurance that provides compensation to a worker when the worker cannot continue to work. It’s based on the compensation that the worker was receiving before becoming unable to work.
Workers’ compensation appeals board (WCAB): Hears disagreements over workers’ compensation benefits.
Workers’ compensation rate (WC rate): Typically two-thirds of the employee’s AWW. The WC rate is often used to calculate an injured employee’s temporary or permanent benefits. Also known as the comp rate or worker’s comp rate.
Wrongful termination (WT): A termination of an employee in retaliation for filing a workers’ comp claim. An employee who believes his employer violated these laws may file a claim. Also known as: retaliatory discharge (RD).
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