Workers’ compensation insurance can help to protect your business and your employees when an employee is accidentally injured on the job. Each state has its own workers’ compensation laws for both employers and employees, so it’s important to know how the regulations affect your business.
Workers’ compensation is an insurance program that provides benefits to employees who become injured or ill while doing their job. The insurance covers the employee’s medical costs, a portion of their lost wages while they were out of work, and their rehabilitation costs so they can return to work or find a new job.
Workers’ compensation insurance also protects the employer by limiting its liability for legal claims when an employee sues the business for an illness or injury caused by work-related incidents.
Workers’ compensation covers the following expenses:
Some insurance policies do not provide workers’ compensation coverage across multiple states or when employees travel to different states. Under these circumstances, you need workers’ compensation insurance in each state where your employees work. Review the best insurance providers to see what’s available in your state.
Workers’ compensation is a no-fault system. When an employee receives compensation for their injury or illness, they give up the right to sue their employer. However, workers’ compensation will not cover your business if you purposefully harm an employee (e.g., assault, battery, fraud, defamation, emotional distress) or protect your business if your employee sues you for the following acts:
Some insurance policies do not provide workers’ compensation coverage across multiple states or when employees travel to different states. In these cases, you need workers’ compensation insurance in each state where your employees work.
As with any commercial liability insurance policy, workers’ compensation has a limit (or cap) on the amount a policy will pay out for a claim. However, workers’ compensation limits are structured differently than other types of insurance policies.
State governments determine which types of employers must carry workers’ compensation insurance, as well as the fines for not being covered, guidelines for reporting work-related injuries and medical care requirements. Workers’ compensation insurance policies provide limits on employer liability and employee benefits.
Workers’ compensation covers medical costs or death benefits that result from employee injuries that occur while the employee is doing their job or acting on your behalf. Examples include injuries or illnesses related to the following:
Different states exclude certain situations that can be covered by workers’ compensation. Here are some examples of employee actions that would not qualify for workers’ compensation:
In all applicable states, employers pay for workers’ compensation insurance. The business pays a percentage of its total payroll costs. There are no employee payroll deductions for workers’ compensation insurance.
State laws determine the details involving workers’ compensation, including how much it costs. On average, it works out to $1 per $100 of payroll. Here are some factors that affect the cost of workers’ compensation insurance:
Here are some ways employers can reduce their workers’ compensation insurance costs:
Most businesses with one or more employees require some form of insurance (except Texas, where workers’ compensation is optional). Whether your business and employees require this insurance will depend on the type of business and status of your employees. Each state has its own rules on what is covered, how it evaluates different issues, how injured employees receive medical care and which benefits an employee can receive.
The following types of employees are likely to be exempt from the workers’ compensation insurance requirement:
Businesses can purchase workers’ compensation insurance from state-funded programs or private insurance companies. Each state determines its workers’ compensation policy requirements. When you purchase a policy, provide the following information so the insurance provider can determine your coverage and costs:
When an employee becomes injured or ill on the job, the first task is to make sure the employee receives proper medical treatment. This may include calling an ambulance to take the injured or ill employee to the hospital.
The employer and employee have a limited amount of time (usually between 10 and 90 days) to submit the paperwork that’s required for the employee to receive workers’ compensation benefits. The process for filing varies from state to state. However, if the claim is not filed within the required time, the claim can be denied.
When an employee is injured, the employer must do the following:
The employer must also provide the employee with information on their rights and workers’ compensation benefits, as well as the procedure for returning to work.
After the illness or injury occurs, the employee must take the following steps:
The employer and employee have a limited amount of time (usually between 10 and 90 days) to submit the paperwork that’s required for the employee to receive workers’ compensation benefits.
A workers’ compensation claim should include the following information:
The time required to complete a workers’ compensation claim depends on state requirements, the time needed to investigate the claim and other factors. Once the employer files the claim, the insurance provider must determine whether to approve or reject the claim.
If the insurance provider approves the claim, the company will provide the affected employee with payment details. The insurance provider can deny the claim if the claim does not qualify for workers’ compensation benefits. The rest of the workers’ compensation process involves the employee, legal representation, medical professionals and insurance provider.