How to Calculate PPD for Workers' Compensation Benefits

December 9, 2024

Calculating Permanent Partial Disability (PPD) benefits for workers’ compensation can be a complex but essential process for injured employees seeking fair compensation for their injuries. Workers’ compensation benefits are designed to help employees manage the financial impact of a workplace injury, covering medical expenses, lost wages, and in some cases, ongoing compensation for partial disabilities that may impact future work through a workers’ compensation claim. PPD, specifically, applies to cases where an employee has reached maximum medical improvement (MMI) but still experiences a lasting impairment.

In this blog, we’ll guide you through the key steps in calculating Permanent Partial Disability (PPD) benefits for workers’ compensation, and explain how partnering with an experienced Atlanta workers’ comp lawyer can help ensure you receive the full benefits you deserve.

Definition and Eligibility

Permanent Partial Disability (PPD) refers to a condition where an injured worker has sustained a lasting impairment to an injured body that partially limits their ability to perform work-related tasks. This type of disability does not prevent the individual from working altogether, but it may hinder their capacity to perform specific job functions. PPD benefits aim to compensate workers for the loss of earning potential due to their injury.

Differentiating PPD from Temporary Total Disability (TTD) and Permanent Total Disability (PTD)

It’s important to distinguish PPD from other types of disability benefits. Temporary Total Disability (TTD) is for workers who are completely unable to work for a limited time due to their injury. This benefit typically lasts until the worker reaches maximum medical improvement (MMI) and can return to work. On the other hand, Permanent Total Disability (PTD) applies to workers who are totally disabled and unable to return to any form of employment due to their injuries.

Medical Evaluation and Impairment Rating

When calculating Permanent Partial Disability (PPD), a medical evaluation is essential. This evaluation assesses the extent of the injury and determines how it affects the worker’s ability to perform their job, ultimately leading to a disability rating.

Role of the American Medical Association’s Guides

The American Medical Association (AMA) provides guidelines that help doctors evaluate injuries and assign impairment ratings. These guides are crucial for establishing a standardized approach to measuring permanent impairments. They outline specific criteria for various injuries, ensuring that evaluations are consistent across different cases. This consistency is vital for determining fair compensation for injured workers through an accurate PPD rating.

Determining the Permanent Impairment Rating

Once the medical evaluation is complete, the next step is to determine the permanent impairment rating. This rating reflects the severity of the injury and its impact on the worker’s daily life and job performance. Doctors use the AMA guides to assign a percentage to the impairment of the injured body part, which plays a significant role in calculating PPD benefits.

For example, if a worker suffers a knee injury, the doctor will assess the extent of the damage and how it affects mobility. If the impairment rating is set at 20%, this percentage will be used in benefit calculations. Understanding this rating is crucial, as it directly influences the amount of compensation the injured worker may receive.

Scheduled vs. Unscheduled Injuries

When dealing with Permanent Partial Disability (PPD) claims, it’s important to understand the distinction between scheduled and unscheduled injuries. This classification significantly affects the calculation of benefits and the overall compensation an injured worker may receive for a particular body part.

Scheduled Losses and Predetermined Compensation

Scheduled injuries refer to specific body parts listed in state workers’ compensation laws. Common scheduled injuries include the loss of fingers, toes, hands, arms, feet, and legs, each representing an injured body part. Each state has a predetermined compensation rate for these injuries, which simplifies the calculation process. For example, if an employee loses a finger, the state law may specify a set number of weeks of compensation for that loss.

This approach provides clarity and predictability for injured workers. They can quickly determine the benefits they are entitled to based on the specific body part affected. The compensation is typically calculated using the injured worker’s average weekly wage multiplied by the number of weeks designated for that specific injury.

Unscheduled Losses and Overall Impairment Impact

Unscheduled injuries, on the other hand, do not have a predetermined list of body parts and are often associated with more complex impairments. These injuries can include damage to the back, neck, or other injured body part that do not fit neatly into the scheduled categories. For these injuries, the calculation of PPD benefits can be less straightforward.

Calculation Steps

Calculating Permanent Partial Disability (PPD) benefits involves several key steps. It is important to note that TPD benefits must cease before PPD benefits are initiated. Understanding these steps is essential for injured workers to accurately assess their potential compensation.

Determining the Average Weekly Wage

The first step in the calculation process is determining the average weekly wage (AWW). This figure represents the injured worker’s typical earnings before the injury occurred. To calculate the AWW, consider the following:

Review Pay Stubs: Look at the employee’s pay stubs from the past 52 weeks. This provides a clear picture of their earnings.
Include Overtime and Bonuses: If applicable, include any overtime pay or bonuses received during this period. These factors can significantly impact the total average.
Calculate the Total Earnings: Add up all earnings and divide by the number of weeks worked. This will yield the average weekly wage.

Applying Impairment Ratings to Wages or Scheduled Weeks

Once the average weekly wage is determined, the next step is to apply the impairment rating to this figure. The impairment rating is usually provided by a medical professional and reflects the extent of the worker’s permanent disability.

Multiply AWW by Impairment Rating: For an impairment-based calculation, multiply the average weekly wage by the percentage of impairment. For example, if the AWW is $800 and the impairment rating is 20%, the calculation would be $800 x 0.20 = $160.
Scheduled Weeks: For injuries listed in the state’s schedule of injuries, use the predetermined number of weeks assigned to that specific injury. Multiply the weekly benefit by the number of scheduled weeks.

Using Multipliers Based on Employment Status

In some cases, multipliers may be applied based on the worker’s employment status at the time of the injury. This can include factors such as:

Full-Time vs. Part-Time Employment: Full-time workers may have different multipliers than part-time workers, reflecting their overall earning potential.
Job Market Conditions: If the job market is particularly favorable for the worker’s occupation, a higher multiplier may be justified.

Example Calculations

Calculating Permanent Partial Disability (PPD) benefits can seem overwhelming, but breaking it down into clear examples helps clarify the process. Here are a few illustrative scenarios that demonstrate how PPD benefits are calculated based on different approaches.

Example 1: Impairment-Based Approach

Let’s say an injured worker has an average weekly wage of $800 and receives a permanent impairment rating of 20%. If the state has a PPD rate of $300 per week for each percentage of impairment, the calculation would look like this:

PPD Rate: $300
Impairment Rating: 20%
Calculation: $300 x 20 = $6,000 total PPD benefit.

This worker would receive a lump sum of $6,000.

Example 2: Loss-of-Earning-Capacity Approach

Consider a worker who, due to their injury, can only earn 60% of their previous income. If their previous average weekly wage was $1,000, their post-injury earning capacity is $600. The difference is $400 per week. If the PPD is rated at 15%, the calculation is as follows:

Weekly Loss: $400
Duration: 100 weeks (state-specific maximum)
Calculation: $400 x 100 = $40,000 total PPD benefit.

This worker would receive $40,000 over the duration of their benefits.

Example 3: Scheduled vs. Unscheduled Injuries

For a scheduled injury, such as the loss of a finger, let’s assume the state compensates $2,000 per week for 10 weeks for that specific injury. If the worker loses their index finger, they would receive:

Compensation per Week: $2,000
Weeks Scheduled: 10
Calculation: $2,000 x 10 = $20,000 total PPD benefit.

For an unscheduled injury, which might involve a more general impairment rating, the calculation would vary based on the overall impairment rating and the worker’s average weekly wage.

Example 4: Bifurcated Approach

In this scenario, a worker has a 30% impairment rating, with half of that being for a scheduled injury and half for an unscheduled injury. If the scheduled part pays $200 per week for 20 weeks, and the unscheduled part pays $300 per week for 30 weeks, the calculations would be:

Scheduled Injury: $200 x 20 = $4,000
Unscheduled Injury: $300 x 30 = $9,000
Total PPD Benefit: $4,000 + $9,000 = $13,000.

These examples illustrate how various methods can lead to different PPD benefit calculations. Each case is unique, and understanding these calculations is vital for injured workers to receive the compensation they are entitled to. Always consider consulting a qualified attorney for personalized guidance based on specific circumstances and state regulations.

Seek Guidance From an Experienced Workers’ Compensation Attorney!

If you or a loved one is dealing with a workplace injury and needs help securing the benefits you deserve, reach out to our team at Workers’ Compensation Lawyers Atlanta. Our experienced attorneys are here to guide you through every step of the claims process and ensure you receive full and fair compensation.

How to Calculate PPD for Workers’ Compensation Benefits