Second Injury Funds

 

More than half of all injured workers have a pre-existing condition, according to one expert. When you have an employee with a permanent impairment who suffers a second injury, you are responsible for compensating only the most recent injury. Many employers fail to realize this, often spending thousands of dollars more than they need to.

 

More than 20 states have "second injury funds" that pay benefits to workers when an injury aggravates a pre-existing permanent health condition. According to Rupp’s Insurance and Risk Management Glossary Second Edition, second injury funds have the goals of fairly apportioning "liability for compensation benefits and to overcome reluctance to hire handicapped or disabled workers." Insurance carriers and self-insured employers fund second injury funds by paying an assessment, which is usually based on the percentage of workers’ compensation premium written in the state (for insurance carriers) or total benefits paid. 

Second injury funds will reimburse an employer or insurer when a worker with a pre-existing condition suffers a second injury that aggravates the pre-existing one. However, reimbursement is not automatic — an insurer or self-insured employer must apply for it. 

 

Generally, if you have a fully insured plan, your insurer will take responsibility for applying to the second injury fund for any eligible claims. The fund will either reimburse the carrier or self-insured employer for lost-time and medical benefits paid to a claimant, or take over payments to the claimant once he or she is deemed eligible for second injury fund payments. The state laws creating the fund will determine which method the second injury fund uses. 

 

To be eligible for reimbursement by a second injury fund, the second injury must be more severe than it would have been if the individual did not have a pre-existing condition. And claims must meet a threshold, such as 104 weeks of indemnity payments, before the fund applies. Second injury funds may cover claims where the pre-existing disability was not work-related. In other words, if you have an employee with a permanent partial disability, such as hearing loss, that was congenital rather than work-related, and a second injury worsened that condition, the state’s second injury fund might cover the second injury.