Term Of The Day – Indemnity Benefits
The term refers to the amount paid out due to a loss or damage. In Workers Comp, Indemnity Benefits pay an employee for lost wages due to an on the job injury or illness. It covers anything that prevents a worker from returning to work either temporarily or permanently.
In the past, indemnity benefits were responsible for approximately 70% of total benefits paid on Wokrers Compensation claims. Medical benefits now are resposbile for 70% of the total benefits.
This change was due to the advancements in medical diagnoses and treatment along with the spiraling cost of treatment.
The type of benefits include:
- Temporary Total – wage replacment benefits
- Temporary Partial – benefits due to a reduction in wages
- Permanent Partial- loss of use of a body part
- Permanent Total-unable to return to gainful employment
Forecasting these types of benefits is much easier than the medical benefits. The most important consideration for claim severity is whether or not an employee can ever return to work. If an employee switches from Temporary Total to Permanent Total, the value of the claim will likely skyrocket as lifetime medical benefits will have to be a considernation.
Related: Workers Comp Indemnity Reserves Basic Definition
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