Author: Kimberlee | November 1, 2024
Edited by: Kimberlee and Reviewed: Kimberlee
Just about every state except Texas requires most companies to buy workers’ compensation insurance. While the fine details, like how many employees you must have in order to be required to get a policy may change from state to state, the broad strokes of coverage remain the same. Workers’ compensation insurance is a policy that employers buy to pay medical expenses and lost wages for employees who are injured while working. This guide will go into the details of coverage, how it works, and the benefits to employers seeking coverage.
Workers’ compensation insurance has several types of coverage available to most employers who buy a policy. Some details may change based on the state in which you work.
One of the primary benefits of workers’ compensation insurance is the payment of medical expenses. When employees are injured on the job, the insurance coverage pays for their immediate and long-term medical expenses associated with the injury. This includes emergency care, imaging, surgery, and rehabilitation.
Another key benefit of workers’ compensation is disability benefits. These are cash payments directly to the injured worker that replace lost wages. Workers may need to wait on a waiting period of three to seven days before disability payments kick in. These payments are usually a percentage of wages. In many states, that percentage is 66.66%.
Workers’ compensation goes beyond the initial injury. Many workers will need physical therapy or other rehabilitative services instigated to get back to work. Worker’s compensation insurance pays for this benefit.
Should an employee die as a result of their injuries, workers’ compensation will pay a death benefit to the family intended to help with the funeral costs. This benefit is often limited and may only be $2,000-$10,000, depending on the state you live in.
Like most insurance policies, a workers’ compensation policy will pay benefits when a claim is approved. In order to get the claim approved, the employer and employee must complete certain tasks.
The employer and employee must fulfill their end of the claim to get benefits paid.
Employers are responsible for rendering aid as soon as possible when an injury occurs. This means that they might call an ambulance or otherwise get the employee to emergency care to assess the wounds and render aid. In addition to rendering aid, employers must post a notice of compliance with workers’ compensation laws in employees’ view. This must also be made available to employees upon request. Once aid has been rendered, the employer must report the incident to the insurance company by completing a First Report of Injury form. Failure to do so may have legal ramifications, such as a misdemeanor or felony conviction.
Employees also have responsibilities in the workers’ compensation claim. Employees must report any accident that happens in the workplace in a timely manner. It is the employee’s responsibility to use company-mandated protective devices and equipment to reduce the chances of an injury, but when an injury occurs, they must notify their employer as soon as possible, often within one business day based on state laws. Employees must work with the employer and insurance carrier to complete the required forms necessary to process a claim. This may include doctor’s assessments and updates. Failure to do so may result in a denial of the claim and benefits.
The claim filing process begins with the completion of the First Report of Injury form, which will provide the insurance company with the necessary details about the origin of the injury. Employers should call the insurance company as soon as possible to start the claim so that medical expenses can be immediately billed to the insurance company. From there, the insurance company will interview the injured worker, any witnesses, and get doctors’ assessments of the injury and the worker’s ability to return to work. If an employee is unable to return to work immediately, this will be assessed through the doctor’s assessments, and a timeline for rehabilitation, perhaps re-training, will occur.
Both employers and employees gain benefits from the existence of a workers’ compensation insurance policy.
Employers get more than just complying with the law when they have workers’ compensation insurance.
By having a workers’ compensation insurance policy, most states prevent workers from suing employers for financial gain. The policy pays the benefits, and if the employee accepts the policy benefits, they cannot sue the employer.
When employers have a workers’ compensation policy, they have the financial protection of the policy. Without it, they would be responsible for paying the medical bills and lost wages to the employee from revenues or company assets. The insurance policy protects these assets, providing financial security.
Workers’ compensation insurance is designed to benefit employees by making sure claims get paid.
Employees are ensured that companies will provide medical coverage for any injured worker. This is paid by the insurance policy and is not negotiable.
While employees are unable to work due to their injuries, the policy will pay lost wages up to a certain percentage. This ensures that employees are able to pay day-to-day expenses while unable to work.
Workers’ compensation is required by law in most states. Texas is the only state that does not require companies to obtain workers’ compensation policies. Each state has a minimum number of employees required for the policy mandate to kick in. While most states say that at least one part-time worker is enough, others may set a minimum of three to five employees before employers are required to get policies.
There are some exceptions to what type of employees mandate a policy. Those who are self-employed are not required to get a policy. Government entities do not require a policy. In some states, family members of family-owned businesses are exempt. Domestic and household workers are also exempt, as are volunteers.
There are many options when choosing a workers’ compensation insurance policy. Some states have state-run workers’ compensation funds for companies that are new or difficult to insure. Aside from state-run funds, there are many insurance companies competing for your business. Going to the competitive market often saves companies money on premiums.
Assess your company’s needs when starting to shop for insurance and determine if you need $100,000 in coverage, $1 million in coverage, or more. Shop competitors based on the coverage amount to ensure you are getting an apples-to-apples comparison. Do your research on the company’s claims history by reading through customer reviews to ensure that you aren’t just saving premium for a company that won’t pay the claim. It can also be helpful to work with an agent who understands your business to ensure that you are getting the coverage that you need.
If you are shopping for workers’ compensation insurance, check out our guide for the best workers’ compensation insurance companies on the market. It will give you the pros and cons and break down the reviews of the companies for you.
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