Permanent impairment is a medical term used in legal and insurance contexts, especially for workers’ compensation and personal injury claims. It describes a stable, irreversible loss of function that remains after a patient has undergone medical treatment. The standardized methodology used by physicians ensures a consistent and objective measure of this functional loss.
Permanent Impairment vs. Disability
Permanent impairment represents a medical finding—a quantifiable loss of function in a body part or organ system. The American Medical Association (AMA) defines impairment as a significant deviation or loss of use of any body structure or function resulting from a health condition. This is a purely clinical assessment of the body’s condition, measured against the function of a healthy person.
Disability, conversely, is a legal or vocational determination focused on the practical limitations an individual faces in their daily life and ability to work. Disability status considers the medical impairment alongside factors like age, education, work experience, and the specific demands of their job. For example, a person can have a permanent impairment, such as partial loss of finger mobility, but not be considered disabled if they can still perform their job duties without restriction.
The distinction lies in who makes the determination and what it measures. A physician assesses the medical loss of function (impairment), while a legal or administrative body determines the functional and economic impact (disability). Impairment is a necessary component of permanent disability, but the rating alone does not automatically equate to a specific disability status or the inability to work.
The Maximum Medical Improvement Benchmark
The evaluation process for permanent impairment cannot begin until the injured person reaches a state known as Maximum Medical Improvement, or MMI. MMI is the point in the recovery trajectory where the patient’s condition has stabilized, and no further recovery or substantial improvement is reasonably anticipated, even with additional medical intervention or treatment. This benchmark does not necessarily mean the individual is completely healed or free of symptoms; it simply signifies that their medical condition has plateaued.
The treating physician typically makes the initial determination that MMI has been reached for the specific injury or illness. Reaching this point is a critical administrative step because it marks the end of temporary disability benefits, which are designed to cover lost wages during the healing phase. Once MMI is established, the focus shifts from treatment aimed at recovery to managing the residual, stable condition.
Following the treating physician’s declaration of MMI, the patient may be referred for an Independent Medical Examination (IME), especially in contested workers’ compensation cases. An IME doctor, often selected by the insurer, reviews all medical records and performs an examination to confirm the MMI status. This examination also allows the physician to assign a permanent impairment rating using the standardized process.
Calculating the Impairment Rating
Once a patient has reached Maximum Medical Improvement, the physician proceeds to assign a Permanent Impairment Rating (PIR), which is a numerical percentage that quantifies the functional loss. This rating serves as the objective, standardized basis for calculating potential benefits or compensation. The PIR is calculated using standardized reference texts, most commonly the American Medical Association’s Guides to the Evaluation of Permanent Impairment, often referred to as the AMA Guides.
The AMA Guides provide a detailed, evidence-based framework and set of criteria for physicians to measure and translate a specific anatomical or functional loss into a percentage. The Guides include methods for evaluating a wide range of injuries and conditions, including musculoskeletal, neurological, and internal organ system impairments. This standardized approach is designed to ensure consistency and fairness in the evaluation across different physicians and jurisdictions.
The calculation often distinguishes between a rating for a specific body part and an overall “whole person” impairment. For instance, an injury might be rated as a percentage of impairment to a hand, which is then converted using conversion tables to a lesser percentage representing the whole person impairment (WPI). The WPI percentage reflects the impact of the specific injury on the individual’s overall physical and mental functional capacity.
A rating of 10% Whole Person Impairment, for example, means the physician has determined the patient has suffered a 10% loss of total functional ability compared to a healthy individual. This final percentage is not the compensation amount itself, but the foundational number used by insurance adjusters or administrative law judges. It helps determine a lump-sum settlement or the duration and amount of long-term disability payments.