Workers' Compensation Benefit Levels: Comparison between Texas and Other States
The purpose of this report is to provide the Texas Legislature and other interested parties with current, easily digestible information about how workers' compensation benefits in Texas compare with the other states in the nation. Comparisons provided here are based on state workers' compensation laws in place on January 1, 1996, as compiled by the U.S. Department of Labor and reported in State Workers' Compensation Laws (January 1996). Where applicable, the benefit levels currently in place in Texas are compared to recommendations made by the Texas Joint Select Committee on Workers' Compensation Insurance in 1988, and the National Commission on State Workmen's Compensation Laws in 1972.
Current Structure of Workers' Compensation Benefits in Texas
The Texas workers' compensation system provides an injured worker with three primary types of benefits:
- medical benefits;
- income benefits;
- death benefits.
Medical benefits are payments made to health care providers (e.g., primary care physicians, chiropractors, physical therapists) for services related to an on-the-job injury.
Income benefits are paid to injured workers during the period of convalescence and for permanent impairments which are caused by the work-related injury or illness. The Texas Workers' Compensation Act of 1989 established four types of income benefits payable under the law:
- Temporary Income Benefits (TIBs) -- paid during the period of temporary disability while the worker is recovering from an on-the-job injury.
- Impairment Income Benefits (IIBs) -- paid to injured workers for permanent impairments (based on Guides developed by the American Medical Association).
- Supplemental Income Benefits (SIBs) -- paid to injured workers for wage loss after all IIBs have been exhausted.
- Lifetime Income Benefits (LIBs) -- paid for the life of the injured worker for specific catastrophic injuries (e.g., total and permanent loss of sight in both eyes, total and permanent loss of use of both feet at or above the ankle).
The terminology used to describe workers' compensation benefits in Texas differs from that of most other states. For example, in most states, a claim that involves an injury resulting in lost time from work but no permanent impairment is classified as a temporary total disability (TTD) claim, and receives TTD benefits. In Texas, such a claim would be described in terms of the benefit type it receives, namely, the Temporary Income Benefit (TIB).
In most states, a claim that involves an injury that leaves the worker with a permanent disability is known as a permanent partial disability (PPD) claim. In Texas, a claim involving a permanent condition receives an Impairment Income Benefit (IIB). If the injury is severe -- resulting in a permanent impairment rating of 15 percent or higher -- the Texas worker is also eligible for Supplemental Income Benefits (SIBs). Thus it is problematic to make a direct comparison between the Texas IIB and PPD claims in other states. While it is possible for an injured Texas worker to receive only IIBs in cases of permanent impairment but little lost time from worker (e.g., a severed digit on a finger or toe), these situations do not occur frequently.
Scope of the Report
Although the report covers several relevant points of comparison between Texas and other states, its primary focus is on issues related to temporary disability claims. There are two key reasons for this focus: 1) the temporary disability claim is the most common type of claim in the workers' compensation system; and 2) PPD claims, as we've noted, are not directly comparable to the Texas IIB. In addition, interstate comparisons of PPD benefits are quite complicated due to the wide variety of technical provisions inherent in each state's workers' compensation statute and the variety of methods used by the various states to calculate impairment ratings and determine PPD awards.
1. It is possible to have a temporary partial disability phase following an injury, in which the worker is employed part time or otherwise for reduced wages. In Texas, temporary income benefits include payments for both temporary total and temporary partial disability claims.
2. Temporary income benefit payments accounted for 56 percent of the incurred indemnity losses in Texas for 1991 claims in the Detailed Claim Information (DCI) database, 57 percent of the paid indemnity losses for 1992 DCI claims, and 51 percent of the paid indemnity losses for 1993 DCI claims. To be included in the DCI database, an indemnity claim database collected and maintained by the Texas Department of Insurance, a claim must be from a private insurance policy and have incurred losses of $5,000 or more. These percentages are conservative because only claims with incurred losses of $5,000 or more are considered. If it were possible to include less expensive indemnity claims under $5,000 (which probably did not involve a permanent impairment and only received temporary income benefits), it is likely that the percentages would increase to some degree.
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Last updated: 11/21/2013