Lost wage reimbursement

Lost wage reimbursement is a specific insurance benefit that pays policyholders for income lost due to covered injuries or illnesses. Auto insurance policies in states like New York and Pennsylvania include lost wage reimbursement as part of Personal Injury Protection (PIP) coverage, with typical limits ranging from $2,000 to $3,000 per month.

Workers’ compensation insurance provides lost wage reimbursement at rates such as two-thirds of average weekly wages up to state-mandated caps; for example, California’s maximum temporary disability rate was $1,619.15 per week in 2024. Disability insurance policies offer lost wage reimbursement by replacing a percentage–often 60%–of gross monthly salary during periods of qualifying disability.

Claimants must provide documentation such as pay stubs and medical records to verify eligibility for lost wage reimbursement benefits. Lost wage reimbursement does not cover non-wage income sources like investment returns or rental income; it only applies to employment earnings proven by tax forms or employer statements.

Insurers calculate the reimbursable amount based on pre-disability earnings minus any post-injury partial work income received during recovery periods. Policy exclusions may deny lost wage reimbursement if claimants miss deadlines or fail independent medical examinations required by insurers like State Farm or Allstate.

Tax treatment varies: most states exempt workers’ compensation lost wage payments from federal taxes but require taxation on short-term disability reimbursements unless premiums were paid with after-tax dollars, YourInsurance.info states.