Debt relief glossary
Workers' compensation
State-mandated no-fault insurance that pays medical costs and lost wages when you are injured at work.
Workers' compensation (workers' comp) is a state-mandated, no-fault insurance system that provides benefits to employees who suffer work-related injuries or illnesses. No-fault means you do not need to prove employer negligence to collect benefits — only that the injury occurred in the course of employment. Benefits typically include: payment of all reasonable medical costs; temporary disability payments (usually 60–67% of pre-injury average weekly wage while you cannot work); permanent disability payments once Maximum Medical Improvement (MMI) is reached; and vocational rehabilitation in some states. Most claims eventually settle via a compromise and release lump sum. Workers' comp benefits are generally tax-free under IRC § 104(a)(1).