When should costs for health insurance should be added to the average weekly wage in Colorado?
Wages in general
Wages could include earnings from the employer, possible earnings from concurrent employment, some bonuses, the cost of continuing health insurance, and certain fringe benefits.
Inclusion of the cost of health insurance
If the claimant was enrolled in health insurance through the employer at the time of the injury, the claimant’s average weekly wage must include any additional costs the claimant incurs in continuing that coverage. If the employer continues to pay the costs for the claimant’s health insurance and the claimant does not incur any additional costs, then the average weekly wage should not be increased. However, if the employer stops paying premiums, the average weekly wage must be increased to cover the additional cost to the claimant.
If the claimant is terminated by the employer, the average weekly wage must be increased by the cost of continuing the employer’s health insurance or the cost of conversion to a similar or lesser insurance plan. This generally means that the average weekly wage is increased for the cost of COBRA. The equivalent COBRA plan should be for the same family members and same coverage as the claimant previously had with the employer, i.e. medical only for claimant only or medical, dental, and vision for claimant, spouse, and children.
The claimant is not required to actually elect the COBRA coverage and is entitled to the average weekly wage increase even if COBRA coverage is declined. However, if the claimant instead acquires health insurance through a subsequent employer or their spouse’s employer at a lower rate, the average weekly wage should be increased for this lower cost of health insurance, not increased to the higher COBRA rate. Likewise, if Claimant later becomes Medicare eligible, the average weekly wage should be modified for the cost of Medicare, not COBRA.
In most case, a claimant is usually only eligible for an increase in average weekly wage for the cost of the continuation of health insurance after termination. If a claimant is terminated following a work injury, a review should be done to see if the claimant was enrolled in health insurance and if the average weekly wage needs to be adjusted.
For further questions on this topic, please contact one of our attorneys at 720-488-9586.