Work Cover Medical Benefits Capped: Another Reason to Take Out Income Protection

Changes to NSW Workers Compensation

Recent amendments

  • In 2012 medical benefits were capped after a period of just one year, while weekly benefit payments cut off after five years. Weekly benefits were also reduced after 13 weeks of claims.
  • These restrictions remain in place, but were joined in 2016 by further amendments to the available benefits.
  • Many people are preferring to have income protection insurance rather than depending on what they see as an inconsistent worker’s compensation scheme.

The Workers Compensation scheme in Australia, also known as WorkCover, provides benefits to employees who have been injured at work and who are unable to return to work because of those injuries. To be eligible for benefit payments, the injury must have occurred at work or during a work related activity. If not you are unable to receive any kind of benefit payments through workers compensation.

Amendments to WorkCover legislation in NSW are frequent. If you are relying on WorkCover to protect you in the event of an on-the-job injury, it might be a good idea to check what protection you have in your superannuation fund cover, as this may change over time as a result of new amendments and legislation. If you feel that it’s insufficient or unreliable, then an income protection insurance policy may provide a more consistent and safe option for your needs.

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Some of the Important Changes to NSW Workers Compensation

The following important changes have been affected in NSW workers compensation. While some of these changes are effective immediately, others will take effect over the coming 18 months.

Definition of work capacity assessmentsIf you are an injured employee who is receiving weekly payments under workers compensation, your work capacity will be regularly assessed throughout your claim. Such assessments will occur at least once in a period of two years.
Definition for journey claimsJourney claims will only be paid if it can be proved that the journey in which the injury was sustained was related to a person's regular work. This does typically not cover commuting to and from work, but only actual on-the-job travelling.
Weekly incapacity benefit paymentsIf you are totally and completely incapacitated from work, you may receive 95% of your weekly income as weekly benefit payments for the first 13 weeks. After that benefit payments will be reduced to 80% until week 130., Following that your benefit payments will depend on whether you are able to return to any kind of work at all, or if you are still heavily disabled. Weekly benefit payments will cease at retirement age, or after five years unless you are judged by your insurer as indefinitely having no work capacity.
Covered diseases and critical eventsVarious medical conditions such as stroke and a heart attack are only covered under workers compensation if their occupation increased the likelihood of it happening. If not, then workers compensation may not pay benefits.. The same is true of any other disease. You will be eligible to receive workers compensation only if your job was significantly responsible for you contracting it.
Nervous shock and death benefitsWorkers compensation in NSW will not pay out any benefits to family members of injured, ill or deceased workers. Death benefits, however, are payable as an indexed (inflation adjusted) lump sum if the job was responsible for it, as well as funeral benefits. Dependents may also be entitled to receive indexed weekly payments for limited periods.

A person receiving workers compensation must return to work as soon as possible and be actively looking to rejoin the workforce, even in a different job or at a severe pay cut. Failing to do so may incur penalties and the loss of benefits.

What makes income protection insurance different?

The restrictions on workers compensation payments mean that a lot of people are hesitant to depend on it for income protection purposes, while the frequent legislative changes can pose a problem in some circumstances. Privately held income protection insurance, by contrast, may offer some advantages:

  • You will be directly notified whenever there is a change that affects you. With WorkCover you have to keep an eye on all adjustments and work out whether or not it makes a difference to you.
  • It will pay benefits even if the injury or illness is not strictly work related, as well as if it is.
  • It may or may not offer higher benefit payments or more favourable terms.
  • You may be able to decide whether to make a claim on WorkCover or private income protection insurance. If something happens you can look at both side by side, and decide which will pay more benefits to you.
  • You may have the option of including additional cover for partners and dependents, as well as further tailoring insurance policies to suit your needs. WorkCover, by contrast, takes a one-size-fits-all approach.

Review superannuation and life insurance policies

You should know with certainty whether or not you have income protection insurance is included in your superannuation cover or bundled with a life insurance policy. If not, it is recommended that you review your policies and WorkCover to get a better idea of what you’re covered for. Both life insurance policies and superannuation funds may include income protection insurance options, but will typically have some conditions to look out for:

  • Waiting periods: This is how long you must wait before being able to claim regular income protection benefits. Privately held income protection insurance funds may offer you some flexibility here. For example, you can choose longer waiting periods for lower premiums. You will generally be unable to claim both privately held income protection and WorkCover for the same incident. The waiting period should generally depend on how long you are able to sustain yourself and your family without an income, and minimum available periods will almost always apply.
  • Maximum benefit periods: Depending on your chosen income protection insurance policy, there may be different maximum benefit periods. You are typically able to choose different options, with longer periods and higher premiums, or shorter periods and lower premiums. For example, one policy might pay a set portion of your income at the time of the accident for a maximum of five years, while others might have a two year of ten year limit.

Other income protection benefits

WorkCover rules and regulations can be get complicated, while income protection insurance offers cover 24 hours a day, seven days a week, whether or not you’re at work or doing something job-related. Even if you have pre-existing conditions, an ongoing illness or are over the retirement age of 65 you can still take out an income protection insurance policy, albeit while incurring additional costs. To be more competitive relative to standard workers compensation programs, some income protection insurance policies will offer other benefits including:

  • Additional childcare benefits, funeral cover options and payment to beneficiaries or one’s estate in the event of death at the workplace.
  • Lump sum payments for a workplace injury that results in death or total and permanent disablement
  • Top up payments for injuries suffered when travelling to or from work over and above any statutory motor vehicle accident cover
  • Policies that complement workers compensation cover, with top up payments at set periods to compliment WorkCover..

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NobleOak Income Protection
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Maurice Thach

An insurance savvy publisher for who loves finding an answer to the question "Am I covered for ________?"

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