Traumatic Injury and Loss of Income Claims: A Summary of PIP, Liability, Short Term Disability, and Long Term Disability Policies
October 16, 2009
By Adler Giersch ps
When rendered unable to work as a result of injury, whether temporarily or permanently, those with traumatic injuries are faced with the challenges of pain, limitation of activities and the financial hardships of lost income. The cumulative effect is often overwhelming and can be life-changing. Many injured people are unaware of potential resources available to cover at least some of their losses. Below is an overview of potential sources of benefits for injury victims who are unable to work temporarily or permanently.
I. Private insurance
Personal Injury Protection (PIP): If a person is injured in an automobile-related collision, there may be PIP benefits available. PIP policies in Washington include a wage loss or income continuation provision which provides some income in the event the patient cannot work. All auto insurance policies offered in Washington must satisfy requirements set by statute and regulation. The wage loss part of the PIP policy will generally provide for partial income continuation benefits, subject to the following conditions:
income from work lost starting on the 14th day after the collision;
proof that the injured insured is not able to perform his or her regular duties;
payments will end one year from the date of the collision
PIP policies require that the insured provide or allow access to health care and employment records establishing proof of claimed loss of income. Most policies will contain requirements that the insured
Cooperate with us in any manner concerning a claim or lawsuit; and
Provide any written proof of loss we may reasonably require; . . .
Additionally, the insurer will require documentation that the insured was working at the time of the accident and the details of past income. Third Party Liability Claims: If an injury and resulting disability are caused by the negligence of another party, the person with the traumatic injury will have a claim for damages against the at-fault party. “Damages” includes out-of-pocket losses such as medical expenses, lost wages or loss of earning capacity, future medial expenses, mileage costs to attend health care appointments, and pain and suffering. Payment under a negligence claim, however, is made only at the end of the entire case when settlement is reached or a verdict returned in a courtroom.
Loss of earnings, in a liability claim, is more broadly defined when compared to a PIP-wage loss claim. In a liability claim it includes “the reasonable value of earnings lost to the present time.” Washington Pattern Jury Instructions, WPI 30.08.01 (5th Ed). This covers (a) lost earnings and (b) loss of earning capacity from the time of disability to the time of closure of a claim. Loss of earning capacity is different than lost earnings. Loss of earning capacity is, “the permanent diminution of the ability to earn money.” Kelley v. Great Northern Ry. Co., 59 Wn.2d 894.
In the context of a liability-third party claim, the injured party must provide proof of loss of earnings and/or loss of earning capacity. This proof must include financial records confirming the income history. There must also be medical documentation in the form of records and a statement by a treating doctor that the patient was unable to work for a specified period of time. If a permanent loss is claimed, the doctor must state that the impairment is permanent. If this is the case, a Physical Capacities Evaluation and/or assessment by a vocational rehabilitation counselor may be necessary.
Short-Term and Long-Term Disability Policies: Many employers provide Short and/or Long-Term Disability coverage in addition to regular sick-leave pay. Many individuals, particularly those who are self-employed, purchase individual disability policies to meet their specific needs. Though generally providing similar coverage, disability policies vary widely in specifics.
There are two general types of private disability policies:
Short-Term Disability, and
These policies are often purchased together and are intended to dove-tail to provide continuity of benefits. Most Short Term Disability (STD) policies have a waiting period before benefits begin, usually a maximum of 14 days after onset of a disability. These policies then cover a portion of the wage earner’s income for a specified period, from several months but not longer than two years. Usually this period is only until the policyholder becomes eligible for benefits under a Long-Term
Disability (LTD) policy. LTD policies usually have a waiting period of a few weeks to several months. This is called the “elimination period.” A common elimination period is 90 days. Disability policies generally provide for payment of 40 to 70 percent of the policyholder’s income, tax-free. Providing less than 100% benefit is thought to give the policyholder incentive to return to work.
Many LTD policies require insureds to apply for public benefits such as Social Security and take an offset for any benefits paid under those programs.
II. Government Programs
There are both state and federal government programs for disabled persons. Eligibility requirements for different programs varies. Below are the primary programs that provide some disability income. There are many other programs that provide other benefits such as vocational rehabilitation and medical coverage. A disabled person seeking assistance should contact their local Community Services Office of the Department of Social and Health Services for assistance in determining eligibility for various programs.
General Assistance – Unemployable (GAU): State disability benefits are administered by the Department of Social and Health Services (DSHS). If a patient meets certain financial parameters and has been disabled from work for 3 months, they may be eligible for GAU benefits. These benefits are generally limited in time. At the expiration of GAU eligibility, the patient may be eligible for Social Security Disability benefits. For additional information on State programs: Contact Washington Department of Social and Health Services, www.dshs.wa.gov
Federal Programs: The Social Security Administration (SSA) administers two primary programs for persons with disabilities. Social Security Disability Insurance covers those individuals who are considered “insured” by virtue of having worked a certain period of time and paying into the social security system before becoming disabled. (Title II of the Social Security Act). Supplemental Security Income provides benefits to disabled persons based on financial need. While both share some common requirements and features, each covers somewhat different situations.
Social Security Disability Insurance (SSDI) is available to individuals who have worked a certain amount of time prior to becoming disabled. Certain disabled dependents of the insured worker may also be eligible for these benefits. Eligibility for SSDI depends on the disabled person’s status as an insured under the program and does not consider the individual’s income or resources.
Supplemental Security Income benefits (SSI) provides payments to individuals (including children under age 18) who are disabled and have limited income and resources. (Title XVI of the Social Security Act)
Medicare (federal) or Medicaid (state) benefits may be available to individuals covered by SSDI or SSI. Medicare provides medical coverage for those over age 65 or who are eligible for SSDI and have been receiving benefits for 24 months. Medicaid usually covers those eligible for SSI benefits. Eligibility rules vary from state to state. For additional information on federal programs contact: Social Security Administration, www.ssa.gov
When injured by the negligence of another, the physical, emotional and financial repercussions can be life-changing. Making one’s way through the array of potential benefit programs and eligibility requirements can be daunting. Recovery for injury from an at-fault party can significantly affect eligibility for programs and benefits. Those with traumatic injuries, who are receiving or applying for disability benefits, should consult legal counsel knowledgeable and experienced in personal injury matters for direction on the coordination and planning of benefit sources to protect their rights.
If any of your patients need a legal consultation on an issue related to their traumatic injury claim, simply have them give us a call. Consultations are complimentary and without cost.