Can you claim income protection while on WorkCover?
Yes, you can claim income protection insurance while you are on WorkCover.
The question is though, is it a good idea?
If you are receiving weekly payments from WorkCover, and the income protection relates to your work-related compensable injury, then your weekly payment amount will be reduced as the income protection amount will be taken into account when calculating any payment due to you.
What is income protection insurance?
Income protection is extra insurance that you have either through your superannuation fund or through an extra policy that you took out yourself.
Some superannuation policies automatically provide income protection insurance, but for the most part you will need to apply for this extra insurance yourself.
You can also take out income protection insurance through a private insurer or broker.
You should seek financial advice about what if any policy product is right for you.
The differences between income protection and weekly payments are explained in detail here.
Receiving income protection when no entitlement to WorkCover weekly payments
If you are in the situation of receiving medical and like expenses from WorkCover, but you are not in receipt of weekly payments, then you could claim income protection payments.
There would be no affect on your medical and like expenses, or on your ability to pursue an impairment claim or common law claim.
This could be due to for example, your entitlement to weekly payments having been terminated at 130 weeks, or that your WorkCover injuries do not currently incapacitate you for work.
Receiving income protection when receiving WorkCover weekly payments
Many income protection policies will also have an “offset” clause which would mean if you were receiving WorkCover payments, any income protection amount would be reduced by the amount of weekly payments received.
How this is going to work depends on the wording of the income protection policy, which will vary from policy to policy.
It may be that if the injuries/conditions are different, there may be no offset.
WorkCover will also offset amounts received from income protection if it’s being paid in relation to the WorkCover injuries.
So effectively each benefit offsets the other benefit.
There is an exception to this – in the circumstances where you could claim income protection for an injury or condition unrelated to your WorkCover matter.
The circumstances where this would apply and would be of benefit to a worker would be very limited.
You would need to:
- Have income protection insurance
- Have the income protection claim accepted for a non-work related injury or condition,
- Be entitled to a higher rate of income protection than you receive in weekly payments, so you can actually receive a payment from the income protection insurer, or the policy wording not offset the WorkCover payments if they are for a different injury/condition.
This could also risk the potential of “wasted” weekly payment or income protection, where only a small extra benefit is received due to offsets (referred to above and below), when if you waiting until your entitlement to weekly payments had finished, you could receive the full income protection benefit.
You may need financial and legal advice in relation to these issues.
What happens to my WorkCover payments if I take income protection payments?
If you are able to receive both, what you will receive from WorkCover depends on what the combined amount payable from those sources is.
WorkCover requires it to not exceed what WorkCover calls the “supplemental pension limit”.
The supplemental pension limit is equal to 100% of your preinjury average weekly earnings including overtime and shift allowances.
For every $1 that your combined income (from the income protection policy and weekly payments from WorkCover) exceeds the supplemental pension limit, your weekly payments will be reduced by $1.
Here’s an example of how this works:
You receive a sum of $450.40 weekly through an income protection policy for an unrelated injury.
Let’s say your pre-injury average weekly earnings were $1,000 per week.
18 months post injury, your weekly payments have been reduced to $700 per week due to the payment rate being 80% and loss of overtime and shift allowances.
The two payments combined equal $1,150.40.
As your pre-injury earnings were $1,000, the combined amount of $1,150.40 will need to be reduced to $1,000 to not exceed the supplemental pension limit.
You would continue to receive $450.40 from the income protection insurer, but your weekly payment amount from WorkCover would be reduced by $150.40.
It is possible to claim income protection while on WorkCover, but it is usually only worth doing if you are not receiving weekly payments from the WorkCover insurer.