Compensating Workers for Permanent Partial Disabilities

This article was published in the June 2005 Social Security Bulletin. It was originally part of a policy research seminar co-hosted by the National Academy of Social Insurance and the Social Security Administration (SSA) on June 24, 2004. The seminar, titled Interaction of Workers’ Compensation and Social Security Disability Insurance, brought together experts in both workers’ compensation and disability programs to examine and emphasize the overlap between workers’ compensation and Social Security Disability Insurance. Presenters and discussants at the seminar also proposed policies to improve the coordination and management of workers’ compensation and Social Security for disabled Americans who are eligible for both programs.

There is substantial variability in how state workers’ compensation laws provide benefits to workers who have a permanent partial disability. The basic approaches used by the states can be classified into four groupings, although important differences exist within each group. Depending on the approach used, workers with similar injuries can receive substantially different amounts of benefits. Because compensating permanent partial disabilities frequently involves contention, the matters in dispute will depend on the approach used to determine benefits. The continuation of such differences in approach suggests that the states have not found a single “best practice” for determining what such benefits should be.