How Does Workers Compensation Intersect With Your Health Savings Account?

If you've been injured or made ill while at work, you may have already filed a workers compensation claim with your employer's insurance company. If you're fortunate (and have submitted your claim in a timely manner), you may have already started receiving workers compensation payments before your first medical bills begin to roll in. However, if your payments have been delayed (or if you need to appeal a denial of workers compensation), you may be wondering how to pay your bills. Read on and talk to a workers compensation attorney to learn more about workers compensation and how it can interact with other health-designated funds, including health savings accounts.

Will you receive enough from workers comp to pay your medical bills?

There are several components to workers comp, and they vary by state. However, one type -- medical payments -- is always covered. You shouldn't have to make any out-of-pocket payments for medical bills relating to your employment accident.

The only exception to this is if you suffered from a documented, pre-existing condition that was merely aggravated by the workplace injury. In this situation, you may only be able to recover payment for medical bills related to the "escalation" of the injury. For example, if you were regularly receiving 1 physical therapy session and 1 chiropractic treatment per week for a bad back, and then injure your back more severely at work, you may still have to pay for these two weekly appointments out of pocket.

What other funds can you receive?

In many states, workers comp will not only pay your medical bills, but a portion of your lost wages (usually approximately two-thirds of your former pay). If you worked a highly physical job and are unable to return to this job, but can perform another lower-paid job, workers comp may help pay the difference between these two positions. However, these payments are not indefinite -- if you were injured so severely that you can't return to work, at some point your case will be closed and you'll either receive a pension or a structured settlement.

Can you use funds from your health savings account (HSA) to pay for your workplace-related injuries?

If you have a high deductible health insurance plan (HDHP), you may already be putting money aside in an HSA to help cover any unforeseen medical expenses. However, if these expenses are subject to a workers comp claim, using HSA funds to help pay your medical bills may be a mistake.  Because many of the insurance agencies that distribute workers comp funds are only equipped to make direct payments to medical providers, you may find yourself unable to recover workers comp funds if your medical bills have already been paid.

In some situations, you may be able to use your HSA to pay medical bills stemming from your workplace accident, then use your workers comp funds to reimburse your HSA. This ensures that your workers comp payments fully cover your medical bills while still allowing you to make a timely payment while the workers comp case is pending. However, these situations usually require prior consent from your HSA custodian.

If you find yourself receiving late payment notices while still waiting to hear back as to whether your workers comp claim was approved, check with your physician and employer's representative to determine whether other payment arrangements can be made that will prevent you from dipping into your HSA. In most cases, a physician or other medical provider will flag your file and ensure that it is not sent to a collection agency for nonpayment when the office is promptly made aware of a pending workers comp claim.