Overview of Texas Workers' Compensation Income Benefits: Here's What You Need to Know
If you've been hurt on the job and your employer subscribes to workers' compensation coverage, you're probably eligible to receive several different types of WC benefits. On this page, we're going to focus on one of the most important types of benefits, and that is the category known as Income Benefits.
Questions Answered on This Page:
- How do Texas workers' comp income benefits work?
- Who is eligible to receive income benefits under Texas workers' comp?
- How much are my income benefits worth?
So before we get started, here's a couple of things you need to know about Income Benefits:
- There are four types of Income Benefits (Temporary Income Benefits, Impairment Income Benefits, Supplemental Income Benefits, and Lifetime Income Benefits)
- They are all designed to cover lost wages at various stages of your claim, meaning that each category of Income Benefits provides a wage supplement for a different part of your recovery process
- There is a cap on how much you can be compensated within these benefits called the State Weekly Average Wage; your Income Benefits will never be more than that amount
- There are steps to follow to make sure you get compensated the right amount of Income Benefits
Four Different Types of Worker's Compensation Income Benefits
There is line after line in the Texas Labor Code that describes these benefits in detail. Rather than walk you through the needlessly complex text of the law, we'll summarize it for you.
As mentioned, there are four types of Income Benefits:
- The first type is called Temporary Income Benefits. TIBs are money you are paid to cover your lost wages in the beginning of your case... up to the point that your doctor says you're all better. This point is called Maximum Medical Improvement.
- The second type is called Impairment Income Benefits. Once you reach MMI, you stop receiving TIBs and become eligible to receive pay IIBs. These moneys are paid proportionate to the severity of your injury, which is also called your Impairment Rating.
- The third type is called Supplemental Income Benefits. Once your workers' comp claim is more or less complete and you rejoin the workforce, SIBs are paid to fill the gap between what you earned prior to your injury and the lesser amount you now earn, assuming that your injury keeps you from earning the way you once did.
- The fourth type is called Lifetime Income Benefits. LIBs are paid only if you have suffered certain major injuries.
Now, there's a lot more to it than what is written above. Each type of Income Benefit has its own loopholes and fine print, and, frankly, every attempt that we've seen to explain these benefits in plain English has only added more confusion. To fix this problem, we have painstakingly read through the statutes and created the table below to tell you when each type of Income Benefit begins and ends, the formula used to determine the value of payments, how often the payments are made, and we even provide examples. Before you delve into it, the main thing you need to understand is that all of the benefits are formulaic and none of them are particularly generous.
1. Temporary Income Benefits
What it Does: These benefits compensate you for a portion of your lost wages during the beginning phase of your case.
Payments Begin: On your 8th missed day of work.
Payments End: When you reach MMI, when you become well enough to earn your Average Weekly Wage, or 104 weeks after the first day of receiving benefits.
Amount You Are Paid: 70% of lost wages*, not to exceed an amount equal to the ($861 per week*).
Formula: .7(Lost wages) = $ the amount you receive per week or $861 per week, whichever is lower.
- If your Average Weekly Wage is $500 and you cannot work at all, then your TIB pay would be found by multiplying .7($500) = $350. Since $350 is less than $861, you would receive $350 per week until you’ve reached Maximum Medical Improvement.
- If your Average Weekly Wage is $1,500 and you cannot work at all, then your TIB pay would be found by multiplying .7($1,500) = $1,050. But, since $1,050 is more than $861, you would receive $861 per week until you’ve reached Maximum Medical Improvement.
- If you Average Weekly Wage is $450 and you now perform light duty work which allows you to earn $200 per week, then your TIB pay would be found by subtractng $450 – $200 = $250 in lost wages. You would then multiply .7($250) = $175.
Therefore, you would earn $200 per week doing light duty work and workers’ comp would pay you an additional $175 for a total of $375 per week until you reach Maximum Medical Improvement.
2. Impairment Income Benefits
What it Does: These benefits provide “extra” compensation when you have an injury that results in permanent disability (i.e., you cannot make a full recovery).
Payments Begin: The day after you have been issued an Impairment Rating.
Payments End: These benefits are discontinued after the calculated total has been paid in full.
Amount You Are Paid: 3 weeks worth of 70% of your Average Weekly Wage for every one percent of impairment, not to exceed an amount equal to 70% of the State Average Weekly Wage ($860 per week).
Formula: .7(Average Weekly Wage) x (3 x Impairment Rating) = $ the amount you receive in total or .7($861) x (3 x Impairment Rating), whichever is lower.
If your Average Weekly Wage is $600 and you are issued an Impairment Rating of 10%, your IIB pay would be calculated by multiplying .7($600) x (3 x 10) = $12,600.2) If your Average Weekly Wage is $1,200 and you are issued an Impairment Rating of 10%, your IIB pay would be calculated by multiplying .7($1,200) x (3 x 10) = $25,200. But since $25,200 is more than .7($861) x (3 x 10) = $18,081, the amount calculated based on State Average Weekly Wage, you would be paid for the lesser amount of $18,081.
Paid: In a lump sum or in weekly payments until the total calculated value is paid out. Be advised: if you get paid these benefits in a lump sum, you will lose the right to file for Supplemental Income Benefits.
3. Supplemental Income Benefits
What it Does: These benefits help fill the gap between what you were earning prior to your injury and what you earn now if you are working at a lower-paying job.
Payments Begin: There is no chronological starting point, it’s more a matter of meeting certain criteria. You can begin receiving SIBs when and if: You did not receive your Impairment Income Benefits as a lump sum payment, you are 15% or more impaired, you can’t work because of your injury or you have found new work but you’re earning less than 80% of your Average Weekly Wage, and if you can prove that you’re actively seeking employment. That said, the earliest you’re eligible to receive these benefits is after you are fully paid for your Impairment Income Benefits.
Payments End: These benefits are discontinued at any point that you fail to comply with the process of searching for new work. However, provided that you continue to meet the eligibility requirements, you can receive these benefits for a period of 401 weeks after your injury. Now, it’s important to note that that does not mean that you get 401 weeks of pay. Again, these benefits won’t begin until your case has already been ongoing for a while, so the 401 week figure is the cutoff point, not an indication of the amount that you are to be paid.
Amount You Are Paid: 80% of the difference between 80% of your Average Weekly Wage and what you earn now.
Formula: 4.34821(.8[ (.8 x Average Weekly Wage) – current weekly wages]) = $ the amount you receive in monthly payments.
- If your Average Weekly Wage is $600 and you found a new job paying $100 a week, your SIB pay would be calculated by multiplying .8($600) – $100, which equals $380, and then multiplying that by .8 which equals $304, your weekly pay amount. Since SIBs are paid monthly, you would then multiply this amount by 4.34821, the average number of months in a year, for a total of $1,321.86, your monthly pay for SIBs.
- If your Average Weekly Wage is $500 and you cannot find a new job because of your injury, you SIB pay would be calculated by multiplying .8($500) – $0, which equals $400, and then multiplying that by .8, which equals $320, your weekly pay amount. Since SIBs are paid monthly, you would then multiply this amount by 4.34821, the average number of months in a year, for a total of $1,391.43, your monthly pay for SIBs.
Paid: Monthly (but you must reapply for them every three months).
4. Lifetime Income Benefits
What it Does: Provides long-term compensation if you have suffered certain catastrophic injuries.
Payments Begin: This benefit does not come into effect for most workers, and it does not begin at any specific point in time. Rather, you begin receiving LIBs once it is determined that you meet the eligibility criteria. The eligibility criteria, generally speaking, is that you have suffered a catastrophic injuries to several important parts of your body.
Payments End: You receive LIBs for the rest of your life.
Amount You Are Paid: 75% of your Average Weekly Wage, not to exceed an amount equal to the State Average Weekly Wage ($860 per week).
Formula: .75(Average Weekly Wage) = $ the amount you receive per week or $861 per week, whichever is lower, plus a 3% yearly adjustment for inflation.
Examples: If you lost both hands in an accident and your Weekly Average Wage was $650, your LIB payments would be calculated by multiplying .75($650) = $487.50 that you would be paid weekly for the rest of your life.
*Lost wages are the difference between your Average Weekly Wage and what you earn now.
**$861 is the State Average Weekly Wage for 2015. The whole idea behind workers' comp benefits is that you will never be paid more in benefits than this amount. In other words, if you earned more than the average Texan earns in a week, that doesn't matter. You can now only earn as much as the average Texan earns per week.
You've been reading now about one abbreviation that affects them all: the MMI. The Maximum Medical Improvement (MMI) is a process of the workers' comp insurance carrier, and it's a goal at getting you back to your best wellbeing, maybe even back to what you were before the accident. Everyone will eventually obtain MMI. This means getting you as fully recovered as possible and getting you back to work. The truth is, there may be discrepancy between your MMI and your original health. This discrepancy becomes a percentage on which future benefits can be based on, and this is called your Impairment Rating. (Read about Impairment Rating on this page).
As we'll mention on other pages on our site, the best analogy is like MMI is a graduation and the Impairment Rating is the diploma. Once you get to graduation, then you get a diploma. Look at our entire page dedicated to MMI here, as we know this seems confusing at first read.
Limitations to Injured Worker Compensation in Income Benefits
Now, it makes sense for you to understand the limitations that come along with the benefits.
- Most importantly, you should know that there are two numbers that determine what Income Benefits compensation you receive. First, your own Average Weekly Wage is used to calculate some of these benefits or if you're a part-time worker, you'll be subject to the Part-Time Average Weekly Wage.Secondly, if you don't have ample work history or you earn a lot more money than the average person, you're subject instead to the State Average Weekly Wage.Either way, all formulas use one of these two averages to determine your compensation. No benefit payment will ever surpass the state-wide amount though. Think about this for a second: what if you used to make more than the State Average Weekly Wage before your injury? You can probably guess that after your injury, you'll definitely be earning less than you used to.
- Another realistic limitation is the how long you can actually receive WC benefits. This is a maximum total of 401 weeks. That payment limitation can be read about more here on the 401 Max Pay Out WC page.
- Another limitation within to this system is that if you can go back to work on the eighth day after your injury--meaning you miss only one week of work--then you get no workers' comp benefits. This is referred to as the Seven Day Grace Period. So, if your injury is minor and you're only out for a week, you're paid nothing and your employer doesn't owe you anything. Your employer's carrier doesn't have to pay you until your 8th day off the job. Read more about it by visiting our Seven Day Grace Period webpage.
A System of Steps: Workers' Compensation Income Benefits
It's no secret that when lawmakers set up the current workers' compensation legislation, they created a system of steps. From injury to final compensation of benefits, there is a law for every part of the process. Admittedly, it really is a lot to learn--and its even more difficult when you don't know where to begin.
We tell you all of this just to say, we know the way this part of the Texas Labor Code works. Call us with any questions you may have that we didn't answer here. Our lawyers are available to talk anytime: (855) 326-0000.
Other articles about worker's compensation that may be helpful to you: