What Is Differential Claim Insurance?


A claim is the basic action taken by an insurance policy holder who wants to claim insurance benefits for health treatment, lost employment or any other type of expense covered by the insurance policy. When these claims must be adjusted based on an individual's earnings, or when a claim runs afoul of policy rules, claim differentials must be worked out. Differential claims on insurance are most often used for wage decreases due to disability and treatment from non-covered physicians.

Wage Differential Claims

A wage differential claim is filed by a worker or on a worker's behalf to protect a his interest if he has lost wages because of disability. In many states, workers receiving disability must submit to regular doctor visits to determine if the they are still physical disabled. Sometimes, the doctor clears a disabled worker to work, but not in the field of prior employment, as is sometimes the case with construction or some engineering fields. Filing a wage differential claim makes you eligible for state aid to supplement a loss in wages as well as free career training to help with workforce reentry.


Eligibility requirements for workers filing a wage differential claim on their disability insurance vary from state to state. In Illinois, for example, a worker must prove a permanent physical impairment preventing her from returning to her previous line of work as well as demonstrate a reduction in wages because of the impairment. The wage differential awarded is designed to make up for wages lost and, in Illinois, is paid on a tax-free basis for the duration of the worker's life. In any state, a worker will have to submit to a court hearing as part of the wage differential claim filing process.

Employer Insurance Differentials

Employers and businesses in America are required by state and federal law to obtain a number of different types of business insurance, including disability and unemployment. When employee claims on a company's insurance policies exceed the policy's premium, some states require employers to pay a premium differential to make up for this difference. For instance, the New York State Insurance Fund -- the agency in charge of state disability insurance -- charges a premium differential to employers whose disability claims exceed their annual premium level. As of January 2010, the NYSIF disability premiums were $0.14 per employee for each $100 earned in payroll.

Nonparticipating Providers

Claim differentials are an important issue when receiving treatment covered by your health insurance from a provider that isn't covered by your policy, also known as a nonparticipating provider. Some health insurance policies have claim differentials in place specifically for policy holders who wish to receive treatment from doctors and physicians outside of their policy. Some insurance providers, such as Blue Cross Blue Shield (BCBS), will process a differential claim for covered procedures performed by a nonparticipating provider that is less than the allowable claim for participating providers, which is 10 percent less for BCBS claims.

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