8.3 Texas Income Benefits & Medical Benefits

8.3 Texas Income Benefits & Medical Benefits

Quick Reference: Texas workers' compensation income benefits are anchored to the Average Weekly Wage (AWW), calculated from earnings in the 13 consecutive weeks preceding injury (TLC § 408.041). Texas features Four Core Income Benefits:

1. Temporary Income Benefits (TIBs): 70% of lost wages (75% if earning <$10/hr); subject to a 7-day waiting period that is retroactively paid if disability lasts 14+ days; ends at MMI or statutory MMI at 104 weeks.
2. Impairment Income Benefits (IIBs): Begins day after MMI; pays 3 weeks per 1% of whole-body Impairment Rating (IR) at 70% of AWW; paid regardless of return to work; subject to the 90-day finality rule (TLC § 408.123).
3. Supplemental Income Benefits (SIBs): Quarterly benefit for workers with IR ≥ 15% earning <80% of pre-injury AWW who conduct a good faith job search; lifetime cap of 401 weeks.
4. Lifetime Income Benefits (LIBs): Paid for life at 75% of AWW with an automatic 3% annual COLA for 7 catastrophic conditions. Medical Benefits: Reasonable and necessary care for life with no dollar caps or co-pays.

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Calculating the Average Weekly Wage (AWW)

Every income benefit in Texas begins with determining the injured worker's Average Weekly Wage (AWW) under Texas Labor Code § 408.041.

The Standard 13-Week Lookback Rule

For an employee who worked for the employer for at least 13 consecutive weeks immediately preceding the injury, the AWW equals the total wages earned during the 13 consecutive weeks divided by 13.

$\text{AWW} = \frac{\text{Gross Wages Earned in 13 Weeks Preceding Injury}}{13}$

What Counts as "Wages"?

Under TLC § 401.011(43), wages include:

• Gross hourly pay and salary.
• Overtime compensation, bonuses, and commissions earned during the 13-week period.
• Tips reported to the IRS.
• Non-Pecuniary Wages: The reasonable monetary value of employer-provided benefits—such as health insurance premiums, employer-provided housing, or a company vehicle—MUST be included in the AWW calculation if the employer terminates or suspends those benefits during the worker's period of disability.

Special AWW Calculation Rules

1. Multiple Employment (TLC § 408.042): If the worker maintained concurrent employment at the time of injury, wages from all covered employers are aggregated to establish the AWW for calculating Temporary Income Benefits.
2. Short-Term / New Employees: If the worker was employed for fewer than 13 weeks, AWW is calculated using the wages of an employee of the same class performing similar services in the same locality, or based on the agreed-upon hourly wage and expected hours.

State Average Weekly Wage (SAWW) Caps

Under TLC § 408.047, the DWC establishes annual maximum and minimum weekly benefit limits effective October 1 of each year, indexed to the State Average Weekly Wage (SAWW). For example, the maximum weekly TIBs rate is set at 100% of SAWW, while the maximum weekly IIBs rate is capped at 70% of SAWW.

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The Four Texas Income Benefits

                      TEXAS FOUR INCOME BENEFITS ARCHITECTURE
                                         │
        ┌────────────────────────────────┼────────────────────────────────┐
        ▼                                ▼                                ▼
      TIBs                             IIBs                              SIBs
 Temporary Income Benefits        Impairment Income Benefits        Supplemental Income Benefits
 • 70% (or 75%) of lost wages    • 70% of AWW for 3 weeks per      • Quarterly post-IIBs benefit
 • 7-day waiting period;           1% of whole-body IR             • Requires IR ≥ 15%
   retroactive if ≥ 14 days      • Starts day after MMI            • Must earn <80% pre-injury AWW
 • Ceases at MMI or 104 weeks    • PAID REGARDLESS OF WORK!        • Good faith weekly job search
                                                                   • 401-week lifetime cap
                                         │
                                         ▼
                                       LIBs
                             Lifetime Income Benefits
                             • 75% of AWW for life
                             • 3% annual compound COLA
                             • 7 Catastrophic physical conditions

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1. Temporary Income Benefits (TIBs) (TLC § 408.101 – § 408.105)

TIBs provide wage replacement to an employee who suffers "disability"—defined as the inability because of a compensable injury to obtain and retain employment at pre-injury wages.

Benefit Calculation

• Standard Rate: 70% of the difference between the employee's pre-injury AWW and their post-injury weekly earnings.
• Low-Wage Exception: If the employee earned less than $10.00 per hour at the time of injury, TIBs are paid at 75% of the wage gap for the first 26 weeks, dropping to 70% thereafter.

The 7-Day Waiting Period & The 14-Day Retroactive Rule

• Waiting Period: An injured employee is not entitled to TIBs for the first 7 calendar days of disability (the "waiting period"). Disability does not have to be consecutive days.
• Accrual Date: TIBs accrue and become payable starting on the eighth (8th) day of disability.
• Retroactive Reimbursement: Under TLC § 408.082, if the employee's disability continues for fourteen (14) consecutive calendar days or longer from the onset of disability, the insurance carrier must retroactively pay TIBs for the initial 7-day waiting period.

Termination of TIBs

Under TLC § 408.102, TIBs terminate upon the earliest of:

1. The date the employee reaches Maximum Medical Improvement (MMI);
2. The expiration of 104 weeks from the eighth day of disability (known as Statutory MMI);
3. The date the employee's post-injury weekly earnings equal or exceed their pre-injury AWW.

Statutory MMI Extension for Spinal Surgery: Under TLC § 408.104, if an injured worker undergoes DWC-approved spinal surgery within 12 weeks prior to the expiration of the 104-week statutory MMI cap, the worker may petition the DWC to extend statutory MMI up to an additional 3 months.

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2. Impairment Income Benefits (IIBs) (TLC § 408.121 – § 408.129)

When an injured worker reaches Maximum Medical Improvement (MMI), TIBs terminate and the worker transitions immediately to Impairment Income Benefits (IIBs).

MMI and Impairment Rating (IR)

• MMI Definition (TLC § 401.011(30)): The earliest date after which, based on reasonable medical probability, further material recovery from or lasting improvement to an injury can no longer reasonably be anticipated (clinical MMI), or the expiration of 104 weeks (statutory MMI).
• Impairment Rating (IR): The percentage of whole-body permanent anatomical impairment determined by a certifying doctor (treating doctor, carrier RME doctor, or DWC Designated Doctor) using the AMA Guides to the Evaluation of Permanent Impairment (4th Edition).

Benefit Calculation and Duration

• Duration Formula: The employee receives three (3) weeks of IIBs for every one percent (1%) of whole-body impairment. $\text{Duration (Weeks)} = \text{Impairment Rating (\%)} \times 3$ (Examples: A 5% IR yields 15 weeks of IIBs; a 10% IR yields 30 weeks; a 15% IR yields 45 weeks; a 20% IR yields 60 weeks).
• Benefit Rate: Paid at 70% of pre-injury AWW, subject to the statutory IIBs weekly cap (70% of SAWW).
• Independence from Work Status: IIBs are paid regardless of whether the employee has returned to work or what they are earning! An employee can return to work at 100% of their pre-injury wage and continue receiving their weekly IIBs check, because IIBs compensate for permanent anatomical damage, not wage loss.

The 90-Day Finality Rule (TLC § 408.123)

The first valid certification of MMI and assigned Impairment Rating becomes final and binding on all parties if not disputed within ninety (90) calendar days of the date the written certification (form DWC-69) was received via verifiable delivery.

• Exceptions to Finality: The 90-day finality rule can be pierced only by showing: (1) clear medical misdiagnosis, (2) improper or incomplete medical treatment prior to the exam, or (3) a significant mathematical error in applying the AMA Guides.

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3. Supplemental Income Benefits (SIBs) (TLC § 408.141 – § 408.151)

Supplemental Income Benefits (SIBs) provide long-term income protection for workers who suffer severe permanent impairments that hinder their earning capacity after IIBs expire.

The Four Mandatory Statutory Prerequisites

To qualify for SIBs, the injured worker must satisfy all four statutory criteria under TLC § 408.142:

1. Impairment Rating of 15% or Higher: The worker must have received a final whole-body Impairment Rating of at least 15% (a 14% rating permanently disqualifies the worker from SIBs);
2. Wage Loss (<80% of AWW): The worker has not returned to work, or has returned to work earning less than 80% of their pre-injury Average Weekly Wage, as a direct result of the impairment;
3. Work Search Requirements (TLC § 408.1415; 28 TAC § 130.102(d)): During each week of the 13-week qualifying period, the worker satisfied at least one of the recognized work-search efforts — returning to work in a position relatively equal to their ability to work, actively participating in a vocational rehabilitation program, actively participating in work search efforts conducted through the Texas Workforce Commission (TWC), or performing documented job-application work searches;
4. No Lump-Sum Commutation: The worker did not commute (settle as a lump sum) any portion of their Impairment Income Benefits.

SIBs Administration & Caps

• Calculation: SIBs equal 80% of the difference between (80% of pre-injury AWW) and the worker's current post-injury weekly wage, capped by the statutory SIBs limit.
• Quarterly Application: SIBs are administered in quarterly increments (13-week periods). The worker must file DWC Form-52 prior to each quarter proving compliance with job-search rules during the preceding "qualifying period."
• Lifetime 401-Week Cap: Under TLC § 408.144, an employee's entitlement to income benefits (combining TIBs, IIBs, and SIBs) terminates 401 weeks after the eighth day of disability. SIBs can never exceed this 401-week lifetime ceiling.

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4. Lifetime Income Benefits (LIBs) (TLC § 408.161)

Lifetime Income Benefits (LIBs) provide the highest level of wage compensation under the Texas Workers' Compensation Act, reserved strictly for the most severe, permanent catastrophic injuries.

Benefit Provisions

• Rate: Paid at 75% of pre-injury AWW for the remainder of the injured worker's natural life.
• Annual COLA: Unlike all other Texas income benefits, LIBs increase by 3% annually on October 1 (compounded cost-of-living adjustment).
• No Work Requirement: Paid for life even if the worker manages to perform adapted work or earn income.

The Seven Enumerated Catastrophic Conditions

Under Texas Labor Code § 408.161, LIBs are payable ONLY if the compensable injury results in one of seven specific catastrophic conditions:

1. Total and permanent loss of sight in both eyes;
2. Loss of both feet at or above the ankle;
3. Loss of both hands at or above the wrist;
4. Loss of one foot at/above the ankle AND one hand at/above the wrist;
5. Permanent and total paralysis of both arms, both legs, or one arm and one leg;
6. Severe traumatic brain injury resulting in incurable permanent severe mental impairment that renders the worker permanently non-employable; or
7. Third-degree burns that cover at least 40% of the body and require grafting, or third-degree burns covering the majority of: (A) both hands; (B) one hand and one foot; or (C) one hand or one foot and the face.

Number Trap: The statutory burn threshold is 40 percent, not 44 or 45, and the alternative test is the majority of the listed body parts — not their entirety. Section 408.161(b) adds that, for every item on this list, the total and permanent loss of use of a body part counts as the loss of that body part, so an unusable but anatomically intact hand still qualifies.

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Medical Benefits under Texas Workers' Compensation

Under Texas Labor Code § 408.021, an employee who sustains a compensable injury is entitled to all health care reasonably required by the nature of the injury as and when needed. The employee is entitled to this medical care for the remainder of their life.

Key Principles of Texas Medical Benefits

• Zero Cost to Worker: There are NO deductibles, NO co-pays, and NO dollar limits on covered medical care.
• Reasonable and Necessary Standard: All medical care, surgeries, and physical therapy must be reasonable, necessary, and related to the compensable injury, governed by the DWC Medical Fee Guidelines and Disability Management Treatment Guidelines (ODG).
• Certified Workers' Compensation Health Care Networks (TIC Chapter 1305):
  • If the employer's carrier has established a TDI-certified Workers' Compensation Health Care Network and the employee lives within the network's service area, the employee must select a treating doctor from the certified network provider list.
  • The employee receives an initial choice of network doctor and may change treating doctors once within the network.
  • Out-of-network care is not covered, except for emergency care or when pre-authorized by the network.
  • Non-Network Claims: If the employer does not participate in a certified network, the worker may choose any licensed doctor in Texas who is registered with the DWC.

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Vocational Rehabilitation (TLC § 408.150)

Rehabilitation is a distinct benefit category on the Texas content outline, and it is short enough to be tested verbatim.

• Who refers. Section 408.150(a) requires the division to refer an employee to the Texas Workforce Commission with a recommendation for appropriate services if the division determines the employee "could be materially assisted by vocational rehabilitation or training in returning to employment or returning to employment more nearly approximating the employee's preinjury employment."
• Carrier's parallel option. The same subsection lets the insurance carrier provide vocational rehabilitation or training services through a private provider of vocational rehabilitation services. The carrier does not have to wait for a division referral.
• The teeth. Under § 408.150(b), an employee "who refuses services or refuses to cooperate with services provided under this section" by TWC or a private provider loses entitlement to supplemental income benefits. Refusal does not forfeit medical benefits or TIBs — the statutory penalty is aimed squarely at SIBs.

Adjuster note. Document referrals, offered services, and any refusal in writing and in the claim file. A SIBs denial grounded in § 408.150(b) stands or falls on whether the file proves the worker was actually offered services and declined or failed to cooperate.

Death & Burial Benefits (TLC § 408.181 – § 408.186)

When a compensable work injury or occupational disease results in death, the insurance carrier must pay death and burial benefits.

• Death Benefit Rate: Paid at 75% of the deceased employee's AWW, capped at the maximum SAWW rate.
• Eligible Beneficiaries:
  1. Surviving Spouse: Receives benefits for life, or until remarriage. If the surviving spouse remarries, they receive a two-year lump-sum payment of death benefits, after which spouse benefits terminate.
  2. Minor Children: Eligible children receive benefits until reaching age 18, or until age 25 if enrolled as a full-time student in an accredited educational institution.
  3. Dependent Grandchildren or Dependent Parents: Eligible only if there is no surviving spouse or eligible child.
• Burial Benefits (TLC § 408.186): The insurance carrier must pay the lesser of actual burial costs or up to $10,000 to the person who incurred the funeral expenses.

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Comprehensive Income Benefits Comparison Table

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Adjuster Claim Scenario: Comprehensive Benefit Calculations

David Garza, a master welder in Beaumont, earns $1,300.00 gross per week based on his 13 weeks preceding injury. His employer participates in a certified workers' comp network. On February 1, a pipe fitting fails, causing severe crush injuries to David's dominant right hand. David is placed on complete off-work status by his network treating doctor.

1. Calculating TIBs & The Waiting Period

• AWW: $1,300.00. (Assume the statutory TIBs maximum cap for that year is $1,100.00).
• TIBs Rate: 70% of $1,300.00 = $910.00 per week.
• Waiting Period: David misses work starting February 2. The first 7 days (Feb 2–Feb 8) are the waiting period; zero benefits are paid.
• Accrual: TIBs accrue starting on Day 8 (Feb 9). The carrier issues David's first weekly check of $910.00.
• Retroactive Reimbursement: David remains disabled past February 15 (exceeding 14 consecutive calendar days of disability). On Day 15, the carrier must retroactively pay David $910.00 for the initial 7-day waiting period.

2. MMI Certification & IIBs Calculation

• After extensive reconstructive surgeries and physical therapy, David's treating doctor certifies that David reached clinical MMI on October 15 (36 weeks after injury) and issues form DWC-69.
• The doctor assigns a 12% whole-body Impairment Rating (IR) under the AMA Guides 4th Edition.
• Transition to IIBs: TIBs terminate on October 15. IIBs begin automatically on October 16.
• Duration: 12% IR × 3 weeks = 36 weeks of IIBs.
• Rate: 70% of $1,300 = $910.00 (subject to the IIBs statutory cap, say $770.00; David receives $770.00/wk for 36 weeks).
• Return to Work: On December 1 (while still receiving IIBs), David returns to light-duty supervisory work earning $1,400 per week. The carrier CANNOT stop David's IIBs. The carrier must pay all 36 weeks of IIBs to completion.

3. SIBs Eligibility Assessment

• When David's 36 weeks of IIBs exhaust, he inquires about receiving Supplemental Income Benefits (SIBs).
• Adjuster Determination: David's Impairment Rating is 12%. Under TLC § 408.142, SIBs strictly require an Impairment Rating of 15% or higher. Because 12% < 15%, David is statutorily barred from receiving SIBs, regardless of his wage level or job search efforts.