Colorado’s Workers’ Compensation System Is in Desperate Need of Reform

Let me be direct: the Colorado workers’ compensation system is a terrible system for those injured on the job. I don’t say that lightly. I’ve spent decades representing injured workers across Southern Colorado, and I’ve watched this system shortchange hardworking people again and again. The benefits available to injured workers are limited, complicated, and in one critical area, permanent disability, deeply inadequate. That needs to change.

Under the Colorado Workers’ Compensation Act, an injured employee is potentially entitled to four basic benefits: medical care, temporary disability, permanent disability, and disfigurement. Three of those four are workable. The one benefit that consistently undercompensates injured workers, and the one most urgently in need of reform, is permanent disability.

The Two Types of Permanent Disability

There are two types of permanent disability under the Colorado Workers’ Compensation Act: permanent partial disability and permanent total disability. Permanent partial disability is an award of money to compensate an injured worker for a permanent loss of function or impairment to a particular body part. For example, if you permanently injure your hand, your treating physician will assign you an impairment rating, which then determines how much money you will receive.

Impairment ratings are divided into two subcategories. One is for the permanent loss of function to your toes, feet, legs, fingers, hands, arms, eyes, and hearing. These are called scheduled impairments. The other is for loss of function to any other part of your body, including the spine, brain, lungs, heart, or other internal organs. These are called whole person impairments. The amount of money you receive is calculated in a completely different manner depending on which category applies.

It should be noted that all impairments are determined using the AMA Guides to the Evaluation of Permanent Impairment, Third Edition (Revised). This is a standard that is itself decades old and widely considered outdated in the medical community.

Scheduled Impairments: Putting a Price Tag on the Human Body

Scheduled impairments are calculated by taking the value assigned to the amputation of an entire limb or part of a limb, then multiplying it by whatever percentage impairment the treating physician determines. In essence, Colorado cuts the human body into parts and assigns a dollar value to each one.

For example, if you were injured on the job on or after July 1, 2025, and your leg was completely amputated as a result, you would receive only $91,172.64. If your foot is amputated just below the ankle (a 50% scheduled impairment), your disability award would be $45,586.32. The table below illustrates the value of other scheduled impairments under C.R.S. § 8-42-107:

These amounts are shockingly low for such significant, life-altering injuries. What makes the system even more unjust is that you receive no compensation for losing your job or your ability to return to the type of work you were trained to do. Because of this, an injured worker can have his or her entire life turned upside down and receive only a fraction of what the loss is truly worth.

Consider this: a world-famous pianist earning hundreds of thousands of dollars per year who has a thumb amputated and can no longer play would receive $15,341.55. That’s it. The loss of a career, a livelihood, and a life’s work, reduced to a statutory number. That is not justice.

Whole Person Impairments: Better, But Still Inadequate

Permanent disability awards based on whole person impairments are somewhat better, but not by much. For a back injury or head injury, the treating physician determines an impairment rating. Colorado law then requires the following formula under C.R.S. § 8-42-107:

TTD Rate  x  400  x  Impairment Rating  x  Age Factor  =  Permanent Partial Disability Award

The TTD rate is two-thirds of the injured worker’s average weekly wage (AWW) at the time of the injury. For example, an injured worker with a 19% whole person impairment for a neck injury, an average weekly wage of $1,500.00, released at maximum medical improvement at age 29, would receive:

$1,000 (2/3 of $1,500) x 19% x 400 x 1.62 (age factor)  =  $123,120.00

The age factor is determined by a table set forth in C.R.S. § 8-42-107(e) and ranges from 2.0 at age 20 down to 1.0 at age 60. The younger you are, the higher the age factor, and the higher the award. The full table is below:

Using the same example but changing the worker’s age to 60, the award drops from $123,120 to $76,000, nearly $50,000 less, simply because the worker is older. A higher average weekly wage, of course, equates to a higher award. This system inherently punishes older workers and those who earn less.

The Caps: Adding Insult to Injury

To add insult to injury, Colorado imposes hard caps on the total amount of permanent partial disability an injured worker can receive under C.R.S. § 8-42-107.5. For injuries on or after July 1, 2025:

An impairment rating of 19% whole person or less: maximum combined temporary and permanent partial disability of $192,996.79

An impairment rating of 20% or more: the cap rises to $312,967.77

Here’s how the cap can devastate an award in practice. Take an injured worker with an AWW of $1,500, a 19% whole person impairment, and an age of 29, the same worker from our earlier example who would otherwise be entitled to $123,120 in permanent disability. Now assume that worker was on temporary total disability long enough to receive $130,000 in TTD benefits. That $130,000 is deducted from the $192,996.79 cap, leaving only $62,996.79 available for permanent disability, cutting the worker’s award nearly in half.

There is a peculiar cliff built into this system: if that same worker had received a 20% whole person impairment instead of 19%, the cap jumps to $312,967.77, leaving $182,967.77 available, meaning the worker receives the full $123,120 award. A single percentage point of impairment can mean a difference of more than $60,000. That is an arbitrary and unjust result.

There are nuances to permanent partial disability awards, and there are legal mechanisms to challenge an impairment rating. But the bottom line is this: the system punishes older workers and lower-wage earners, the very blue-collar workers who make up the majority of those injured on the job.

This System Must Change

Colorado’s workers’ compensation system was designed to protect workers injured on the job. But when a construction worker loses the use of his arm and receives less than $91,000, with no recognition of his lost career, his inability to return to the trade he’s known his whole life, or the long-term financial impact on his family, the system has failed its fundamental purpose.

The scheduled impairment values are too low. The whole person impairment formula undervalues the real-world impact of serious injuries. The caps create arbitrary and inequitable results. And the reliance on the AMA Guides, Third Edition Revised is a serious problem. That document is decades out of date, and it means impairment ratings themselves are built on an outdated medical foundation.

The Colorado General Assembly has taken some positive steps in recent years, including HB25-1300, which will give injured workers more say in choosing their treating physician beginning in 2028. And the Workers’ Compensation Education Association (WCEA) continues to advocate for injured workers at the legislative level. But more is needed. Meaningful reform to permanent disability, covering both the scheduled impairment values and the whole person impairment formula, is long overdue.

Injured workers in Colorado deserve better. They deserve a system that recognizes the true cost of a serious injury: not just to a body part, but to a livelihood, a family, and a future. I believe that strongly, and I’ll keep saying it.

Have You Been Injured at Work? You Need an Experienced Attorney.

Workers’ compensation is a complicated system that is genuinely difficult to navigate, and the stakes are high. The difference between a well-represented claim and an unrepresented one can be tens of thousands of dollars, or more.

Gordon Heuser has practiced workers’ compensation law in Colorado for decades and has represented thousands of injured workers in their claims, helping them get the medical treatment they need and the compensation they deserve. If you’ve been hurt on the job, don’t try to navigate this system alone.

Learn more about Gordon’s experience at heuserlaw.com/our-team/gordon-heuser, or contact Heuser & Heuser today for a free consultation. It’s just that easy.

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