What Is Workers’ Compensation Insurance?
Workers’ compensation insurance not only protects your business from financial loss, but it is also a requirement by the law if you have employees. Workers’ comp is a state-mandated insurance that provides medical benefits and wage replacement for employees who are injured or become ill “in the course and scope” of their job.
It covers employees regardless of who is at fault —the employee, the employer, co-workers or even customers. While it might seem like just another business expense, workers’ compensation insurance protects business owners from being sued by employees for workplace conditions that can cause an injury or illness.
Do I Need Workers’ Compensation Insurance?
One question many business owners ask is “do I need workers’ compensation insurance”? The answer is usually yes. Every state in the United States requires workers’ compensation insurance coverage except for Texas. Businesses that fail to provide workers’ compensation coverage will result in your business paying for the benefits out of pocket as well as civil or criminal penalties.
Whether you’re in the process of starting a business or growing your company, it’s crucial that your business carry workers’ compensation insurance. Having an employee naturally increases the likelihood of accidents and injuries, which increases your liability risk. Thus, having workers’ compensation insurance ensure that your employee and business are protected in the event of an accident. After all, protecting your company and your employees are protected in case an accident occurs on the job is a prudent decision.
How Worker’s Compensation Insurance Works
If you become sick or had injury at work as a result of your job, you may qualify for a workers’ compensation claim. The monthly premiums for coverage vary based on employee’s field of work and the rate assigned to each employee classification. State regulations determine the minimum and maximum weekly rate benefits and how to calculate that for payment to an injured employee.
This only applies if your employees are acutely injured, develop an injury or contract illnesses at the workplace. Injured employees receive a certain portion of their wages while they are off work for the treatment of such injury or illness, depending on state rules. In addition to the payment of medical expenses and wage replacement, workers’ compensation may also include vocational rehabilitation, compensation for permanent injuries and survivors’ benefits. Workers’ compensation can also cover an employer’s legal expenses if an employee decides to sue for damages caused by an occupational injury, illness, or accident.
Business owners and employees should take the following steps after an injury or illness:
- Visit an approved health care professional.
- Start the claim process.
- File the claim.
- Receive benefits.
Workers’ Compensation Insurance Coverage
Workers’ compensation insurance, (sometimes called workman’s comp), provides a number of benefits if you experience a work-related injury. Here is a break down of workers’ compensation coverage.
When an accident happens at a workplace, workers’ compensation provides coverage to help your employee pay for medical expenses. This can include emergency room visits, surgical procedures, medications, hospital stays, and other medical bills. Ongoing care, such as therapeutic care is also part of the coverage.
Missed wages during recovery
A serious injury can prevent an employee from returning to work. Workers’ compensation insurance provides lost wage reimbursement, within limits, for employees who have to miss work because of an occupational injury or illness.
The amount that you receive, and how much you receive, depends on the degree to which your injury affects your ability to work. If an injury keeps an employee out of work, then they may qualify for lost income benefits if they fall into one of the following categories of disability:
- Temporary total disability. benefits are paid during the period of time the employee is completely unable to work on a temporary basis due to the injury.
- Temporary partial disability. Covers an injured employee if they return to work but unable to earn them as much as they were earning prior to their injury.
- Permanent total disability. Covers an injured worker who permanently and totally lost their ability to work and earn after an injury.
- Permanent partial disability. Provides benefits to an employee that has permanent impairment because of work injury which makes him/her unable to perform at his/her full capacity.
Vocational Rehabilitation Benefits
If you’re unable to do your past job because of your medical restrictions, you have the legal right to vocational rehabilitation if you suffer an injury at work. Workers’ compensation insurance covers an injured employee’s rehabilitation in order to regain the full capacity to return to their job. Vocational rehabilitation benefits may include services such as occupational counseling, on-the-job training, and vocational retraining at an accredited learning institution.
If work-related injury or illness results in an employee’s death, “death benefits” pays for related expenses. This benefit expands a restricted amount towards memorial service costs in addition to a weekly advantage to qualified dependents.
What does workers’ compensation insurance cover?
Depending on state laws, definition of “work-related” differ, but generally they include:
- Injuries on the job
- Stress-related injuries if the job was a main contributing factor
- Occupational illnesses from workplace hazards like chemicals
- Business travel including deliveries, sales calls or meetings
- Business events like company parties or outings
- Covered natural disasters or terrorism while employees are working
- Death benefits for dependent family members for a percentage of the employee’s wages and some funeral benefits
What Injuries or Illnesses Are Not Covered By Workers’ Compensation
Typically, an injury that is work-related will be covered under workers’ compensation litigation. However, there are a few specific situations where injuries are not covered by workers’ compensation.
- Off-work injuries
- Self-inflicted injuries
- Injuries from criminal activity
- Injuries from alcohol intoxication or drug use
- Pre-existing conditions, unless exacerbated by current work
- Injuries from violation of posted or known company policies