For unscheduled conditions, the approaches used can be categorized into four methods:
Impairment-Based Approach. The most common approach can be categorized as impairment based. About 19 states use this approach to compensate for an unscheduled permanent partial disability. In approximately 14 of those states, the worker with an unscheduled permanent partial disability receives a benefit based entirely on the degree of impairment. Any future earnings losses of the worker are not considered.
Loss-of-Earning-Capacity Approach. Roughly 13 states use this approach to determine the permanent partial disability benefit for an unscheduled impairment. This approach links the benefit to the worker's ability to earn or to compete in the labor market, that is, it involves a forecast of the economic impact that the impairment will have on the worker.
Wage-Loss Approach. In the 10 or so states that use this method, benefits are paid for the actual or ongoing losses that a worker incurs. In some states, the permanent partial disability benefit begins after it has been determined that maximum medical improvement has been achieved. In states that use this approach, permanent disability benefits can simply be the extension of temporary disability benefits until the disabled worker returns to employment.
Bifurcated Approach. In nine jurisdictions, the benefit for a permanent disability depends on the worker's employment status at the time that the worker's condition is assessed, after the condition has stabilized. If the worker has returned to employment with earnings at or near the preinjury level, the benefit is based on the degree of impairment. If the worker has not returned to employment, or has returned but at lower wages than before the injury, the benefit is based on the degree of lost earning capacity. http://www.ssa.gov/policy/docs/ssb/v65n4/v65n4p16.html