Most states require employers to carry workers' compensation insurance to cover employees who incur workplace injuries or illnesses. The concept behind workers' compensation is that employees relinquish their right to sue employers if they suffer a job-related injury or illness. In return, employers agree to provide state-mandated benefits if job-related employee injuries or illnesses occur.

Typically, workers' compensation pays:

• Medical benefits for a covered injury or disease -- including medical, hospital, surgical and other related health care costs as well as physical therapy and prosthetic devices;
• Disability income benefits -- including compensation for lost wages;
• Rehabilitation benefits -- including services to help an injured worker return to productive work, such as vocational rehabilitation;
• Death benefits -- including a flat amount for burial expenses as well as partial replacement of the worker's weekly wage.