Understanding Your Wage Compensation
Posted on: 18 June 2018
If you get hurt at work you may know that your employer pays for insurance to cover this situation. With workers' compensation insurance on board, your medical bills will be paid in full as long as the treatment is due to your injury or illness. There is another form of benefit that helps you financially in addition to the medical expense payment, so read on to learn more.
Lost wages while sick
When your medical illness is bad enough, your workers' comp doctor may order you to stay home from work. Your job is safe as long as you are covered by the workers' comp plan and it will be up to the doctor to decide when you are cleared to return to your job. While you are home getting better you are entitled to be paid some of your former salary.
The actual amount varies a bit from state to state, but you can expect to be paid approximately 66.6% of the gross amount you were getting before you were hurt. This money will come to you each week and won't be in the same form as your salary. If you are used to being paid via direct deposit, for example, you may now be getting paper checks in the mail.
Compensation and not income
It's important that you consider these payments as entirely separate from your usual pay. The funds you get do not have any deductions from them, such as social security and federal taxes, so you will get the full amount. This means that none of the money goes toward your social security retirement earnings, your company pension plan or any money you've been sending to a retirement fund like a 401(k).
Additionally, this money will not need to be reported on your income taxes because it is not considered income, it's considered compensation. In some cases, you will need to make arrangements to pay your health insurance, automatic savings deductions, and other salary-based deductions separately. Be sure to speak with your human resources representative about this because you want to ensure you do not lose your health coverage while you are out of work and hurt. It should also be noted that if you have had wage garnishments on your salary in the past, this deduction is suspended until you return to earning your regular salary.
Being out of work can put stress on your finances, particularly when your injury is taking a long time to heal. Speak to a workers' comp attorney if you suspect the carrier is dragging their heels about offering you a lump sum settlement.
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