Assignment 9 - Workers’ Compensation

Question 1

provide cash benefits, medical care and rehabilitation services to workers who experience work-related injuries.

Answer 1

Workers’ compensation programs

Question 2

Prior to the enactment of workers’ compensation statutes, a ____ was the only remedy an employee injured at work had against the employer.

Answer 2

negligence suit (a form of tort or civil remedy). They were mostly unsuccessful

Question 3

All workers’ compensation statutes incorporate the “workers’ compensation principle” which has two elements:

Answer 3

1. Workers’ compensation is a no-fault system
2. statutory benefits provided by the program are the employer’s only liability to the employee for the workplace injury. (employee cannot bring tort suits)

Question 4

The U.S. Supreme Court’s narrow interpretation in the early 20th century of the commerce clause is the reason for:

Answer 4

states controlling workers’ compensation programs.

Question 5

Gaps in workers’ compensation coverage occur because some states exempt (3):

Answer 5

• (a) employers with a limited number of employees (e.g., three or less);
• (b) certain industries, such as state and local government and agriculture; and
• (c) certain occupations, such as household workers.

Question 6

What is the four-step test in most state workers’ compensation laws that eligible workers must meet to receive benefits?

Answer 6

• (1) there must be a personal injury, which in some jurisdictions is interpreted to exclude mental illness;
• (2) that results from an accident, which is interpreted in some states to exclude injuries that develop over a long period of time, as opposed to those injuries resulting from a traumatic incident;
• (3) that must arise out of employment, which means the source of the injury must be related to the job; and
• (4) that must occur during the course of employment

Question 7

What are the unique characteristics of medical coverage provided by workers’ compensation (1)

Answer 7

employees pay no portion of the premium for workers’ compensation insurance, and there are no deductibles or coinsurance provisions requiring employees to share the expense of medical care.

Question 8

The five types of workers’ compensation cash benefits are:

Answer 8

1. Temporary total disability benefits:
2. Temporary partial disability benefits
3. Permanent partial disability benefits
4. Permanent total disability benefits
5. Death benefits

Question 9

These benefits are the most complicated, controversial and expensive type of workers’ compensation benefit. They are paid to a worker who has a permanent consequence of his or her work-related injury or disease that is not totally disabling, for example, the loss of a hand. (The approaches used to calculate benefits due are discussed in the next question.)

Answer 9

Permanent partial disability benefits

Question 10

These benefits are paid to someone who is still recovering from a work-related injury or disease and who is able to return to work but has limitations. The weekly benefit in most jurisdictions is two-thirds of the difference between the worker’s pre-injury wage and the worker’s current earnings, subject to a statutory maximum.

Answer 10

Temporary partial disability benefits:

Question 11

What are the two general approaches used to determine permanent partial disability benefits?

Answer 11

scheduled and nonscheduled.

Question 12

Employers provide workers’ compensation insurance by one of three mechanisms:

Answer 12

• (1) by purchasing insurance from a private insurance carrier
• (2) by purchasing insurance from a state workers’ compensation fund
• (3) by qualifying as a self-insurer and paying its ownemployees directly.

Question 13

Nationally, about 50% of all benefits are paid by ______ , about 25% by state and federal funds and about 25% by _____.

Answer 13

• private insurance carriers
• self-insuring employers

Question 14

The two components of manual rates are

Answer 14

pure premiums and an expense loading.

Question 15

Few employers pay manual premium rates because of several ____.

Answer 15

modifications

Question 16

Most workers’ compensation insurance is provided in the ______ market. However, because the employers that cannot purchase policies in this market still must have insurance, all states that do not have state funds have established ______.

Answer 16

• voluntary insurance
• assigned-risk plans

Question 17

Some theories postulate that a workers’ compensation program leads to reduced incentives for workers to ___ and emplyers to ____

Although the results of some studies have been inconclusive, there is some evidence that _____ has had a positive impact on safety and that the presence of workers’ compensation changes worker behavior in a positive way.

Answer 17

• avoid injuries
• reduces employer incentives to prevent accidents
• experience rating

Question 18

• In administering workers’ compensation benefits, most states use what is known as the _______, in which the employer is obligated to begin payment as soon as the worker is injured and the employer accepts liability.
• Other states use the ______, where the employers have no obligation to begin payments until an agreement is reached with the employee concerning the amount due, a system likely to involve delays in many cases.

Answer 18

• direct payment system
• agreement system

Question 19

Key function of a state administrative agency is ______ of disputes between workers and employers or insurance carriers. In most agencies, the initial level of decision is made by an administrative law judge (ALJ) or an official with similar duties.

Answer 19

• adjudication

Question 20

is the legal process by which an arbiter or judge reviews evidence and argumentation including legal reasoning set forth by opposing parties or litigants to come to a decision which determines rights and obligations between the parties involved.

Answer 20

Adjudication

Question 21

(regarding administration of workers’ compensation)

In many states, cases are closed by private agreements of the parties. They are generally known as ______

Answer 21

compromise-and-release agreements

Question 22

What (2) factors have been cited for contributing to the high costs of workers’ compensation benefits in the late 1980s and early 1990s?

Answer 22

• relatively high inflation rate for general health care costs
• increases in cash payments.

Question 23

In addition to these five developments, another development of the 1990s that contributed to the decline of workers’ compensation costs was the

1. the statutory level of cash benefits was reduced in a number of jurisdictions
2. eligibility for workers’ compensation benefits was narrowed because of changes in compensability rules
3. health care delivery system in workers’ compensation was transformed in many states
4. increasing use of disability management by employers and carriers
5. the exclusive remedy doctrine, which precludes workers from bringing tort suits against their employers as a result of workplace injuries

Answer 23

significant drop in the work-related injury rate

Question 24

In recent decades, what (3) changes have occurred in the workers’ compensation insurance market?

Answer 24

• emergence of several new competitive state funds
• deregulation of the markets in which private carriers operate
• rise and fall of the share of premiums accounted for by the residual market