Which type of payment is considered indemnity in workers' compensation?

Indemnity payments in workers' compensation are designed to replace lost income and provide compensation for a worker's loss of earning capacity due to a work-related injury or illness. This type of payment addresses the financial impact of a worker's inability to earn wages as a result of their condition. Therefore, lost wages and functional impairment falls directly under this category, as these payments are intended to support workers during their recovery and to make up for the economic loss they experience.

In contrast, medical expenses cover the costs of necessary treatment for the injury, rehabilitation costs focus on helping the injured worker regain functionality, and legal fees pertain to the costs associated with legal representation, none of which provide direct financial compensation for lost earnings. Each of these components plays an essential role in the overall workers' compensation system, but only lost wages and functional impairment specifically fall under the definition of indemnity payments.