Every organization has a form of insurance for their employees that provides support when injured or sick on the job; it’s called Workers’ Compensation or “Workers’ Comp.”
Workers’ Compensation can be government-mandated or provided through company policy to the workers, which provides benefits for medical care, death, lost wages when sick or injured, and vocational rehabilitation.
Moreover, workers’ compensation protects employers as well as the employees by taking away the suing right of the employees when they agree to get benefits of workers’ compensation.
However, the policies of this program differ from state to state in the U.S. and company to company.
What are the Types of Workers’ Compensation?
Organizations can choose either Workers’ Compensation coverage or both for their employees. When a worker accepts to get workers’ compensation, they will have to agree to a “No-Fault Contract,” which will waive the suing right.
However, some U.S. states have laws that can restore the workers’ right to sue in certain circumstances. That is why many companies choose both coverage plans to dismiss the chances.
The two Workers’ Compensation Coverage Plans are:
1. Coverage Plan A
The first coverage plan mainly includes all the benefits the state has mandated for the sick or injured worker. The employer must cover the ill or wounded employee’s medical bills, salary pay while on leave, rehabilitation, and death benefits.
Coverage Plan A is a state-mandated coverage, it can vary from one state to another, and the eligibility to get the benefits can differ also. For example, Texas has no such mandated benefits or insurance program that a company needs to pay for.
2. Coverage Plan B
Coverage Plan B is only paid when an employee files a lawsuit for wrongdoing or negligence by the organization towards the employee when they have been injured on the job. Moreover, this plan only covers the benefits that exceed Coverage Plan A’s minimum requirements.
Who Manages Workers’ Compensation Programs?
The states usually manage U.S. workers’ compensation programs depending on the employees' workplace. But different divisions of the states or programs manage the various employee compensations differently.
Most people who work for private companies, state or municipal governments or both are covered by state workers' compensation programs.
On the other hand, the Office of Workers’ Compensation Programs by the U.S. Department of Labor administers and covers the compensation of state employees, such as longshoremen, energy workers, harbor workers, coal miners, and federal employees.
Moreover, the U.S. Department of Labor creates its own Workers’ Compensation Program based on state laws and legislation. The program usually defines the state employees’ benefit quantity, Premium Benefit Rates, and the place the employees will receive the benefit from. It can either be from a private insurance firm or a state agency.
However, it is always beneficial to check the laws and eligibility criteria of the state's compensation program because these can differ for various states.
Who has to Pay for Workers’ Compensation Insurance?
Employees don’t pay for the Workers’ Compensation Insurance from their payroll. It is not the same as Social Security Benefits, as the state laws mandate employers to pay the amount each month for the employee. The amount payable is issued by each state separately.
What is the Cost of Workers’ Compensation Insurance?
Organizations must pay a state-mandated amount for the Workers’ Compensation Insurance Program. The rates depend on different factors and vary from state to state. Moreover, the payable amount also depends on the employees’ payroll of the company.
Here are a few examples of some states for reference purposes.
For per $100, New York employers need to pay $29.93 for high-risk employees and 7 cents for low-risk employees.
In California, all employers must pay $33.57 each month for employees with high-risk jobs and 40 cents for low-risk employees.
The average rate for workers’ compensation in Florida is $19.40 for high-risk workers and 26 cents for low-risk workers for each $100.
What Factors Does Workers’ Compensation Insurance Depend On?
Workers’ Compensation Insurance primarily depends on some factors; however, the factors are only for premium rates rather than the standard fees.
The factors are given below:
The risk probability of the employee at the workplace
The size of the organization
The payroll figures
The total amount of prior compensation claims an organization has made
The state-mandated compensation laws
The type of insurance firm that is going to provide the program benefits
Which Employees are Exempted from Workers’ Compensation?
Organizations are only required to offer their full-time and salaried employee the benefits of Workers’ Compensation. Freelancers or contractors working under the company are not eligible for compensation.
However, as different states handle the program, the compensation laws will vary. For example, the state of Idaho doesn’t give domestic employees eligibility to apply for compensation. On the other hand, real estate agents and farmers are excluded from the compensation in Arkansas.
How can an Employee File for Workers’ Compensation?
Filing a workers’ compensation is simple; an employee can file it in a few steps when injured or gets ill during work.
First, the employee must inform their employer immediately after the injury or getting sick. If they cannot inform their employer, another employee can do it for them.
Right after, it is the employer’s duty to give the employee the required medical care by choosing their own healthcare provider.
When the employee has been given immediate care and is able to write, they must fill out a Workers’ Compensation Form and send it to their employer, and they will submit it to the insurance firm.
The next step is up to the insurance company to approve the benefits and compensate the injured or ill worker.
However, if the company denies the claim, the employee can file another appeal within a certain number of days. The deadline for filing the workers’ compensation claim depends on what state an employee is working in.