Virginia Workers’ Compensation Law Changes Effective July 1, 2026

Effective July 1, 2026, Virginia amended four provisions of the Workers’ Compensation Act:

• § 65.2-313: Third-party recovery credits
• § 65.2-512: Burial and transportation expenses
• § 65.2-107: Certain mental-injury claims by law-enforcement officers and firefighters
• § 65.2-1201: Funding of the Uninsured Employer’s Fund

For employers, carriers, and claims administrators, the amendment to § 65.2-313 is the most significant.

Third-Party Recovery Credits

When a claimant obtains a recovery from a responsible third party, the employer or carrier remains entitled to a credit against future workers’ compensation liability. The manner in which that credit is applied, however, has changed.

An existing medical or indemnity award may no longer be suspended, modified, or terminated solely because of the third-party recovery. Instead, the employer must continue administering the claim and apply the credit through a proportional reduction of benefits as they become payable.

In practical terms, these claims will remain active. Employers and carriers must continue making reduced indemnity payments, processing medical treatment under the award, accounting for the claimant’s proportionate attorney’s fees and costs, and tracking the remaining credit until it is exhausted.

Third-party recovery files should be reviewed to ensure that payment systems, reserves, lien calculations, and credit-tracking procedures comply with the new framework. A more detailed discussion of this change is available in our prior article addressing HB 426.

Burial Expenses

Virginia Code § 65.2-512 now increases the maximum burial-expense benefit from $10,000 to $15,000. The separate maximum of $1,000 for transportation expenses remains unchanged.

Beginning January 1, 2028, both amounts will be subject to annual inflation adjustments. Employers and carriers should update fatality-claim guidelines, system defaults, and reserve calculations accordingly.

First-Responder Mental-Injury Claims

The changes to § 65.2-107 are being implemented in stages.

From July 1 through December 31, 2026, qualifying claims remain subject to a maximum of 104 weeks of combined medical and temporary disability benefits, with benefits ending no later than four years after the qualifying event.

Beginning January 1, 2027, the statute will expressly provide that an incident or exposure occurring in the line of duty may qualify as a compensable PTSD event even when no accompanying physical injury occurred.

The amendment does not eliminate the claimant’s burden to establish a qualifying diagnosis, causation, and the remaining statutory requirements. Public employers and their claims administrators should nevertheless prepare for increased scrutiny of PTSD claims arising from nonphysical workplace events after January 1, 2027.

Uninsured Employer’s Fund

The amendment to § 65.2-1201 concerns the financing and administrative expenses of the Uninsured Employer’s Fund. It should have little direct effect on the routine handling of insured or self-insured claims.

Practical Takeaway

The principal July 1 change is the new method for applying third-party recovery credits. Employers and carriers should review affected files immediately and ensure that benefits are being reduced proportionally rather than suspended.

The burial-expense increase requires straightforward system and reserve updates. Public-sector employers should also begin preparing for the January 1, 2027 expansion of qualifying PTSD events.

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