Does a Government Shutdown Affect Work Comp?

Workers' comp is a federally mandated program in nearly every state that is designed to compensate employees who are injured or become ill on the job. Because workers' comp is a government-funded program, you may be wondering how a government shutdown can affect your workers’ compensation case.

What happens when there’s a government shutdown? Some individuals may wonder whether workers’ compensation benefits are still paid on time and whether ongoing claims are still processed.

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To put your mind at ease, we’ll be answering four of the most common questions asked about workers’ compensation and government shutdowns, including:

Does a government shutdown affect workers' compensation?
What’s happened to workers’ comp benefits during previous government shutdowns?
What can you expect if you have an open or pending workers’ comp claim?
If workers' compensation payments are disrupted, are there other alternatives to be compensated?

Due to the complex nature of workers' compensation and how a government shutdown can affect a worker's quality of life, consulting an independent insurance agent can be a wise decision. These agents can demystify what actually occurs, which actions you can take to secure your workers’ comp benefits, and much more. 

Does a government shutdown affect workers' compensation?

In essence, the cascading effects of a government shutdown at the federal level will disrupt state-level workers' comp services the longer it drags on. Much of the workers’ compensation industry and services will not be disrupted. This means that benefits will still be paid, especially automated workers’ comp-related claims processes. 

However, though Social Security benefits will continue to be paid, all nonessential services will be discontinued, which includes Social Security benefit verifications related to the federal court system. To complicate matters, the longer a government shuts down, the less efficient services are, and they will ultimately be delayed. One particular effect is that this can hold up potential approvals of workers' comp benefits until the government shutdown is resolved.

If an individual is looking to collect both workers' comp and Social Security Disability Insurance (SSDI) benefits, communication between a state’s workers' comp program and the federal entity may be limited. Things like adjusted benefit rates, policy adjustments, and more may be delayed. 

Perhaps those most affected will be federal employees, who may experience, not only delays in FECA benefits - the equivalent of workers’ comp for government employees - but also delayed paychecks while employees are furloughed. Unless your workers’ comp case or claim is handled at the federal level, a government shutdown should have a minimal impact.

What’s happened to workers’ comp benefits during previous government shutdowns?

The best way to determine the impact of a government shutdown is to look at historical examples.

First, the true impact of a government shutdown depends on the length of the shutdown and the severity of non-agreement between the political parties, leading to a stalemate. In the past several years, there have been several government shutdowns, including the most recent one that occurred on February 9, 2018, which lasted only a day. However, there have been government shutdowns that have lasted longer, such as the 8-day shutdown of January 20 to 22, 2018 and the nearly 3-week long October 1 to 17, 2013 shutdown. 

However, complications can arise, such as during the full government shutdown in 2013. In that instance, a large majority of employees of the Centers for Medicare & Medicaid (CMS) offices were furloughed. At the time, this resulted in those offices being unable to perform all agency functions, resulting in delays of payment, approvals, and more. 

Historically, workers receiving benefits will receive back pay after a government shutdown, but it remains to be seen whether that will happen during future shutdowns.

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What can you expect if you have an open or pending workers’ comp claim?

The answer to this question is to expect the unexpected, since each government shutdown varies in length and severity with regard to state-based workers’ comp claims. 

If you have a pending or open workers’ comp case or claim during a government shutdown, you might expect:

• Nonessential employees at the Department of Labor may be furloughed on temporary leave, resulting in delays in handling disputes or unresolved cases.
• An increased risk of underpayments and overpayments in workers’ comp cases that require human intervention by federal employees.
• Safety consultation services may be unavailable to help file a workers’ comp claim.

If workers' compensation payments are disrupted, are there other alternatives to be compensated?

If you’re looking for insurance that isn’t directly tied to the government if they could potentially shut down for some time, then it’s important to consider the insurance alternatives offered by various insurers. Private policies can offer alternative sources of income if you’re injured on the job and/or you are unable to work for an extended period. Some examples include:

• Life insurance
• Annuities
• Disability insurance
• Long-term care insurance
• And more

Independent insurance agents can help you strategize responses to worst-case scenarios that align with your financial strategy, your family's well-being, retirement, risk factors of your occupation, and the like.

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