How Does Impairment Rating (IR) Affect Workers Comp Claim?

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Impairment Rating Measures Permanent Reduced Abilities 

An Impairment Rating (IR), which is also called a physical impairment rating, is 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 to a specific body part.

Picture Of Disability Man Impairment Rating Walking On Street
Wikipedia – Zoetnet

The rating may then be used to calculate the workers’ comp benefits owed to a claimant. Impairment ratings are particularly important in determining permanent partial disability benefits.  

An adjuster’s job involves setting reserves for Permanent Partial Disability (PPD).  The rating made by the treating physician usually comes at the time of Maximum Medical Improvement (MMI).    Often, the rating coincides with a full return to work release or within a few months of the return to work. 

Two different yet controversial types of ratings exist for doctors to use today.   The most popular requirement by most states advises the physician to use the American Medical Association (AMA) guidelines.  

For example, a back injury could be rated at a 20% impairment rating to the spine or body as a whole.   In many states, the 20% multiplied by the number of weeks for a spine injury allows for that many weeks in PPD.    

20% (rating) * 300 weeks (back or spine or body as a whole) = 60 weeks.  If the injured employee’s compensation rate equals $500, the injured employee would be entitled to a benefit of $30,000 (60 * $500/wk).   States or the Federal Government usually do not tax PPD benefits.  The same can be said for most Workers comp benefits. 

Most states allow the adjuster to pay the benefits and file a form to let the Industrial Accident Board or Commission that the proper benefits have been paid to the injured employee.   The injured employee may request his/her own opinion on the impairment rating.  

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James Moore

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Mgmt Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications

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