This article was reviewed by Michael Coyle, Workers’ Compensation program manager at NEXT.
Workers’ compensation insurance can provide coverage for employees who suffer from job-related injuries or illnesses. But what happens if a worker dies on the job because of a workplace injury?
If an employee passes away due to a work-related injury or illness, workers’ compensation includes death benefits that can provide financial support for their family.
If you own a small business, it’s important to understand death benefits from workers’ compensation and the implications for your business.
What does Workers’ Compensation cover?
Workers’ compensation typically covers medical expenses, lost wages and rehabilitation for employees who are injured or become ill while performing their job duties.
Additionally, workers’ compensation may provide death benefits (sometimes referred to as survivor benefits) to the family of an employee who dies due to a work-related injury or illness.
What are death benefits?
When an employee passes away due to a work accident or illness, it can significantly impact their family, both emotionally and financially.
Death benefits from workers’ compensation exist to provide financial help during these difficult circumstances by covering various costs, such as funeral expenses, and providing financial assistance.
The amount and duration of these benefits can vary depending on the circumstances of the death and your state’s workers’ comp laws.
For example, if an employee died in a workplace accident, the benefits may be different than if the employee developed a terminal illness due to workplace exposure over time.
What’s the difference between Workers’ Comp death benefits and life insurance?
Workers’ compensation death benefits and life insurance are two forms of financial protection. In the event of an employee’s death, both policies can provide support and cover funeral expenses for the family, but they differ in several important ways.
The most significant difference between the two types of insurance — Workers’ compensation only provides financial help if the death is work-related.
Who pays for the policy. The employer purchases and pays for workers’ compensation. Any individual can buy life insurance, which can offer benefits regardless of the cause of death.
Amount of coverage. Workers’ compensation death benefits are typically limited to a specific amount determined by state laws and regulations. Life insurance policyholders can customize their coverage levels and state laws do not limit the payout.
Filing a claim. With workers’ compensation, the employer or insurance carrier typically handles the process. For life insurance, the beneficiary or their representative must file the claim and provide proof of death before the benefits are paid out.
Who is entitled to survivor benefits?
Survivor benefits from a workers’ compensation policy are typically paid to the spouse and dependent children of the deceased employee.
In some cases, other dependents, such as elderly parents, may also be eligible for benefits. The specific requirements for eligibility can vary by state and the insurance policy.
Primary Workers’ Comp beneficiaries
Typical dependents entitled to “survivor benefits” are spouses, partners and children, who may receive either a lump sum or a structured benefit package.
- Spouse: The widowed partner becomes the primary beneficiary.
- Children: Minors may claim death benefits, while older children may be eligible if they were still living at home or unemployed, although criteria vary between states.
- Live-in relatives: An elderly relative living with the deceased may be entitled to a claim.
Other Workers’ Comp beneficiaries
If there are no primary beneficiaries to receive workers’ compensation death benefits, the payout can vary depending on the state’s laws and regulations.
In some states, the insurance company may pay benefits to secondary dependents, such as dependent parents or siblings.
- Partial dependents: Adult children and relatives may qualify as partial dependents.
- Next of kin: The closest living relative of the deceased.
It’s important to note that the distribution of workers’ comp death benefits can be complex, particularly if the deceased has multiple dependents, is separated from their spouse or has other complicated circumstances.
- Separated: Spouses that are separated but not divorced are still viewed as beneficiaries and may be entitled to death benefits.
- Divorced: In most cases, the divorced partner has no right to death benefits, but an ex-spouse may partially qualify, subject to state laws.
- Unmarried partners: Death benefit payouts for unmarried partners are not common in many states.
- Stepchildren: If stepchildren were financially dependent on the deceased, they might receive compensation.
- Estranged children: If there was proof that an estranged child depended on their deceased parent financially, they might qualify for benefits.
If there are no dependents and no spouse, funeral benefits will still be paid, but no other benefits.
Small business owners should review their policy and work with their insurance company to ensure prompt payment of survivor benefits.
How NEXT handles Workers’ Comp death benefits
We understand any work related injury or death can be extremely upsetting. We’ll work with you and support you throughout the workers’ compensation claims process with a dedicated claims advocate.
If there is a work related-death at your business:
- Contact us as soon as possible. This also applies to any claim involving an injury or illness.
- Provide the employee’s name, date of birth, Social Security number, the cause of death and any other relevant details.
You’re also responsible for reporting work-related deaths to the state regulatory agencies within eight hours. We can guide you on the specific reporting requirements and help you navigate the process.
Once we receive the claim, we’ll assign a dedicated claims advocate to provide personalized support. They will work with you to review the circumstances of the death and help determine the eligibility of the surviving dependents for benefits.
We’re committed to helping you gather the necessary information and answer any questions you may have. Then, we’ll work with you and the surviving dependents to distribute the benefits.
» Here’s how to file a workers’ compensation claim
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