In Colorado, workers’ compensation death benefits pay the surviving dependents of a worker who died from a job-related injury or illness two-thirds of the worker’s average weekly wage, along with up to $12,500 for funeral and burial costs. Payments go to eligible family members in ongoing installments, and the claim must be filed with the state Division of Workers’ Compensation within two years of the death.
Who Can Collect
Eligibility depends on the claimant’s relationship to the worker and how financially dependent they were. Colorado recognizes three categories of dependents, and the rules for duration and division of benefits differ for each.
A Surviving Spouse
A spouse married to the worker at the time of death receives two-thirds of the worker’s average weekly wage, up to an annually adjusted cap.1Justia. Colorado Revised Statutes Section 8-42-114 (2024) Payments continue indefinitely unless the spouse remarries, in which case the spouse receives a final lump sum equal to two years of benefits. A legally separated spouse who was not financially dependent on the worker may not qualify. If more than one person claims spousal status because of a common-law marriage dispute, a court decides.
Dependent Children
Children who were financially dependent on the worker receive benefits until age 18, or until age 21 if they’re enrolled full-time in an accredited school.1Justia. Colorado Revised Statutes Section 8-42-114 (2024) A child with a disability that prevents self-support may receive benefits indefinitely. Stepchildren and legally adopted children are treated the same as biological children. A child who was not legally adopted needs to show actual dependence on the worker’s income. When a surviving spouse and children both qualify, they share the benefit.
Other Dependents
Parents, siblings, and others who relied on the worker’s income can also qualify, but they carry a heavier burden of proof. Expect to document the support with records like shared household expenses, bank transfers, or tax filings. Someone only partially dependent on the worker may receive a proportionally smaller benefit. When multiple dependents exist across categories, a court can divide the benefits based on each person’s level of need and prior support.
How Much the Benefit Is
The weekly benefit is two-thirds of the deceased worker’s average weekly wage. That wage includes regular pay, overtime, bonuses, and other job-related compensation. If the worker held more than one job, earnings from concurrent employment count as long as they were reported for tax purposes.1Justia. Colorado Revised Statutes Section 8-42-114 (2024)
Colorado caps the weekly benefit at a maximum amount it adjusts each year. The Division of Workers’ Compensation publishes updated maximum rates annually, so check the cap for the year the death occurred. A single dependent receives the full two-thirds benefit. When multiple dependents qualify, the total is divided among them under statutory guidelines, or by an administrative law judge if the parties disagree.
Funeral and Burial Costs
Whether or not the worker leaves any dependents, the employer or its insurer must pay up to $12,500 toward funeral and burial expenses in a single lump sum within 30 days of the death.2Justia. Colorado Revised Statutes Section 8-42-123 (2024) – Funeral and Burial Expenses The payment can go directly to the funeral home or to whoever covered the costs. If no dependents survive, this payment and any compensation that accrued during the worker’s lifetime are the only benefits the estate can collect.
Deadlines and Filing
Two deadlines matter, and missing either can sink the claim.
First, written notice of the injury or death must reach the employer within four working days of the incident.3Justia. Colorado Revised Statutes Section 8-43-102 (2022) – Notice to Employer In a death case, that notice usually comes from family or a representative. The employer then reports the death to its workers’ compensation carrier, which triggers an investigation.
Second, dependents must file a formal claim for compensation with the Colorado Division of Workers’ Compensation within two years of the death.4Justia. Colorado Revised Statutes Section 8-43-103 (2021) – Notice of Injury – Time Limit Miss that window and the right to benefits is forfeited unless extraordinary circumstances justify an extension. Longer deadlines apply in limited cases involving radiation exposure, asbestos-related diseases, or certain cancers.
The claim needs a death certificate, proof of the dependent relationship, and medical evidence linking the death to a workplace injury or occupational illness. That medical link is often the hardest part. Insurers tend to challenge whether the death was truly work-related, especially for conditions like heart disease or cancer that develop over time. In contested cases, a physician’s independent opinion explaining how the employment caused or contributed to the death can decide the claim.
After the Division receives the report, the carrier has 20 days to tell dependents in writing whether it accepts or contests liability.5Justia. Colorado Revised Statutes Section 8-43-203 (2024) – Notice Concerning Liability If liability is admitted, payments begin. If it’s contested, dependents can request a hearing.
If the Insurer Denies the Claim
Disputes typically center on whether the death was work-related, who counts as a dependent, or how much the benefit should be. Dependents file an Application for Hearing with the Office of Administrative Courts, picking the office closest to where they live in Denver, Colorado Springs, or Grand Junction.6Office of Administrative Courts. Application for Hearing Instructions An administrative law judge hears evidence and issues a written decision.
A party who disagrees with the ALJ’s ruling has 20 days from the date the order is mailed to file a Petition to Review. The case then goes to the Industrial Claim Appeals Panel, which reviews the record without a new hearing and has 60 days to decide. From there, a further appeal to the Colorado Court of Appeals must be filed within 21 days, and that court generally cannot disturb the ALJ’s factual findings; its review is limited to legal errors.7Department of Labor and Employment. Workers’ Compensation Appeal Process Mediation is available at earlier stages and often resolves disputes faster than a formal hearing.
Lump Sum Instead of Weekly Payments
Benefits are usually paid in biweekly installments, often by direct deposit. If payments are delayed or the insurer misses deadlines, the Division can impose penalties. Colorado also allows a one-time lump sum settlement, but any settlement must be approved by the Division before it becomes final. Weigh the certainty of immediate cash against the long-term value of periodic payments, particularly for a surviving spouse who might collect for decades. An attorney or financial advisor can help run the numbers.
Are These Benefits Taxable
No. Workers’ compensation death benefits are fully exempt from federal income tax, and the exemption extends to survivors.8Internal Revenue Service. Publication 525 (2025), Taxable and Nontaxable Income Colorado also does not tax workers’ compensation benefits at the state level. Dependents don’t report these payments as income. Retirement plan distributions triggered by the worker’s death follow their own tax rules.
Social Security Survivor Benefits
Families eligible for workers’ compensation death benefits may also qualify for Social Security survivor benefits, and receiving one does not disqualify you from the other. The combined payments can trigger an offset: under federal rules, if workers’ compensation plus Social Security disability or survivor benefits exceed 80% of the worker’s pre-death earnings, Social Security may reduce its payments. Colorado law provides that cost-of-living increases in Social Security survivor benefits are not offset against workers’ compensation death benefits, which helps preserve the value of both over time.
Suing Someone Other Than the Employer
Workers’ compensation is the exclusive remedy against the employer, so survivors cannot sue the employer in civil court for the same work-related death.9Justia. Colorado Revised Statutes Section 8-41-102 (2021) – Liability of Employer That shield covers the employer only. If someone else caused or contributed to the death, survivors can file a wrongful death lawsuit against that third party while still collecting workers’ compensation.
Common examples include a manufacturer of defective equipment used on the job, the driver of another vehicle in a work-related traffic accident, or a property owner who maintained unsafe conditions at a job site the worker visited. Third-party lawsuits can recover damages that workers’ compensation doesn’t cover, such as pain and suffering and full lost earning capacity. If the lawsuit succeeds, the workers’ compensation insurer may have a right to reimbursement from the proceeds for benefits it already paid.
When to Hire a Lawyer
Most straightforward claims resolve without one. Legal help matters when the insurer disputes whether the death was work-related, when multiple dependents are fighting over shares, or when payments are being dragged out. These cases involve medical evidence, depositions, and administrative hearings where the insurer has experienced counsel on the other side.
Colorado requires workers’ compensation attorneys to provide a written fee agreement spelling out the arrangement.10Justia. Colorado Revised Statutes Section 8-43-403 (2023) – Attorney Fees Many work on contingency, taking a percentage of the benefits they secure rather than charging upfront, which removes the financial barrier for a family already short on income.