Glossary
Permanent partial disability, defined
A workers compensation benefit paid when an injured employee has recovered as far as treatment allows but is left with a lasting impairment that does not prevent all work. It compensates the loss of function or earning capacity itself, separately from medical bills and from wages lost during recovery.
In practice
Each state sets its own method, and the four differ. Scheduled injuries, such as the loss or loss of use of a finger, hand, arm or eye, are paid for a set number of weeks fixed by a schedule; unscheduled injuries, such as a back, are paid on an impairment rating a physician assigns, or on the difference between pre-injury and post-injury earning capacity, depending on the state. The benefit usually begins after maximum medical improvement is reached and the rating is issued, and it can be paid weekly or, where the state allows, as a lump sum. For the employer the cost lands in the claim reserve and, through the experience modification rate, in future premiums, which is why the rating and the return-to-work plan both matter. The analysis explains the state's method before a claim happens, not after.
A worked example
Suppose a warehouse employee in Arizona crushes two fingers and, after surgery and therapy, keeps the fingers but loses most of their grip. The treating physician rates the impairment; suppose the schedule for that loss works out to a benefit of $18,000 paid over a fixed number of weeks. The employee returns to a different job at full pay and still receives the benefit, because it compensates the impairment rather than lost earnings. Hypothetical figures.
Applies to: Workers' Compensation Insurance