It’s hard to say which type of business insurance is most important for your business. They all cover specific things and keep your business protected in different ways. But there is one type of commercial insurance that you are most likely required by law to have if you have employees: workers’ compensation.
This type of policy covers you and your employee if they are hurt while working, or sick because of workplace conditions. Workers’ comp in nearly every state covers medical expenses, disability, rehabilitation, and death benefits. And while there is some uniformity in regard to the benefits available to injured workers across the country. There is considerable variation in the amounts and methods each state distributes. If you want to find out more about how workers’ comp works in your state, check out our state-by-state guide. Then talk to an EZ agent about what you need.
First, though, read on to find out more about how workers’ comp covers these four benefits (medical expenses, disability, rehabilitation, and death). So, you know exactly what to expect from your policy.
Medical Expenses
At its core, workers’ compensation covers medical expenses incurred by employees who get sick or hurt on the job. It will cover most medical expenses for most legitimate claims. Including bills that come from visits to the doctor, inpatient care, skilled nursing care, medication, diagnostic imaging, physiotherapy. And the cost of long-term supports like walkers and wheelchairs.
In some states, though, there’s no coverage for “alternative” therapies like biofeedback and massage. And it’s possible that one state may cover a treatment while another won’t. Additionally, in some states there are limits on certain treatments. For instance, the law might allow no more than twenty-four visits to a chiropractor or physical therapist.
In most cases, workers’ comp does not have spending caps, deductibles, or copayments. And workers will be eligible for benefits until they have made a full recovery from their injury.
Managed Care
A managed care organization (MCO) is a healthcare provider or group of healthcare providers that has a contract with an insurer or self-insured employer to provide managed healthcare services to enrolled workers. In many states, benefits through a managed care plan can be provided by employers or workers’ compensation insurers to get injured workers the care they need. In fact, insurers in some states legally have to offer this option to businesses.
Managed care plans are governed by a wide range of statutes. Typically, a plan will include some combination of the following:
Provider Networks – A network of medical professionals who have agreed to provide discounted services to members of an insurance pool or employee group. In some states, injured workers will have to receive care from in-network providers.
Utilization Management – This type of management is intended to ensure that the type of medical care that is provided to workers is necessary, appropriate, and efficient with regard to costs. Before carrying out particular medical procedures, providers might be have to get prior approval from the insurance company.
Pharmacy Benefits Manager – An administrator of a program that purchases prescription drugs whose job it is to limit spending. A pharmacy benefit manager (PBM) is responsible for establishing formularies, negotiating discounts with drug manufacturers, forming contractual relationships with pharmacies, and paying claims for prescription drugs.
Medical Care Management – This type of management provides supervising care to make sure that injured workers get the appropriate treatment they need. So, that they can get back to work as quickly as possible.
Disability
Disability benefits compensate an employee for a portion of the wages they lose while they are unable to work as a result of an injury on the job. For instance, if a construction worker breaks their leg in an accident. It is highly unlikely that they will be able to return to work until they have fully recovered. Because of the amount of time this will take, they will require financial assistance during this time when they cannot work.
“Disability” as it relates to workers’ comp has four distinct categories:
Temporary Total Disability (TTD) – To receive TTD benefits, your employee must have been injured so severe that they will not be able to return to work at all for a long time. For example, if a worker sustains an injury to their back and is subsequently unable to perform any duties for six weeks, but will then return to their regular responsibilities.
Temporary Partial Disability (TPD) – Your employee has a relatively minor injury that has only temporarily rendered them partially disabled. For instance, a worker breaks their arm while they are on the job and must work reduced hours. They’re able to still work just not to their full capacity.
Permanent Total Disability (PTD) – If your employee has an injury that will not heal and will be unable to generate income in the future by performing the kind of work they were doing at the time of the injury.
Permanent Partial Disability (PPD) – The injury your worker suffers might affect them permanently, like an injury that causes hearing loss, but they might still be able to work. The injury, though, might prevent them from earning as much income as they did before their injury.
Disability Payments
The severity of a worker’s disability will determine how much money they will receive from workers’ compensation benefits. In general, your employee’s average weekly pay prior to the injury is the basis for the calculation of benefits. This amount, though, might be subject to minimum and maximum limits, depending on your state. There will be a waiting period before benefits are provided, which is typically one week. If the disability lasts less than that period of time, your employee will not be eligible for benefits.
Typically, disability benefits are as follows:
Temporary Total Disability – With TTD, benefits will be paid while your employee is recovering. Typically, these benefits are calculated as a certain percentage of the worker’s average weekly wage. For example, if a worker whose normal weekly wage is $1,000 is unable to work due to a broken leg for a period of two months. They will get a total of $667 weekly over the course of the eight weeks.
Temporary Partial Disability – With TPD benefits, your worker will typically receive their normal pay in addition to a percentage of the difference between their normal pay and their reduced pay. This is the case when the worker receives compensation for work that they are able to perform. For instance, a worker who sustains an injury to their leg is unable to perform their regular job duties because those duties require them to stand. They typically make $1,000 a week. During the two months that it takes for their leg to heal, they are responsible for performing administrative work. This job only pays $500 each week. So, there is a difference of $500 per week between their regular pay and their current pay. They will earn $500 per week plus $333 (66.66% of $500). For a total of $833 per week while they are unable to perform their normal duties.
Permanent Total Disability – A worker who is totally and permanently disabled will typically receive compensation equal to 66.66% (or some other specified percentage) of their previous average weekly wage for the rest of their life. When an employee reaches the official retirement age in some states, the benefits they have been receiving will end.
Permanent Partial Disability – A permanent partial disability may be classified as either “scheduled” or “non-scheduled” in some states. Injuries on the schedule typically involve a specific limb, organ, or part of the body. A worker who suffers a permanent injury to a body part in the schedule can receive disability payments for a specific period of time. If an employee loses a finger on the job, for instance. They may be eligible for 45 weeks of disability pay at 66.66% of their regular wage.
Disability benefits for employees with a permanent partial injury not on a schedule are determined in accordance with applicable state law. Benefits may be calculated in accordance with the worker’s degree of impairment, loss of earning capacity, wages lost. Or some other factor, depending on the state.
Rehabilitation
The part of workers’ compensation that covers rehabilitation helps if something catastrophic happens to an employee that prevents them from working and requires long-term treatment for recovery. For example, if an employee has a history of mental breakdowns, such as after prolonged exposure to toxic stress. They may not be able to work for a time. But rehabilitation and therapy during this time may help them recover. Although they may no longer be able to return to your place of work.
Rehabilitation can also include a service called Transferable Skills Analysis, which can help the employee in these situations. The goal of this program is to assist participants in securing gainful employment that puts their acquired skills to use. Their benefits cover the cost of a case manager who will assist them in their job search.
Death
If an employee dies on the job, his or her dependents will receive workers’ comp death benefits. This protection is in place to help families deal with the monetary fallout of a loved one’s death. This type of coverage will help the deceased’s loved ones pay for funeral expenses. And help replace the income they would have otherwise received.
It’s important to be aware of the laws and regulations in your state before purchasing workers’ compensation insurance. It’s also vital that you stay well-informed on your insurance policies. So, that you can communicate effectively with your staff in the event of an accident.
Working With EZ
EZ.Insure knows that in order to succeed, businesses must have all the information possible. That’s why we’re here to answer all of your questions about the commercial insurance policies you need! But don’t worry, we know that your time and money are valuable. So, you won’t pay anything for our services. And you won’t have to worry about being inundated with calls from your agent as they answer your questions, help you compare plans, and sign you up when you’re ready. To start, either enter your zip code into the box below or call 877-670-3538 to speak with an agent. Thanks to EZ.Insure, getting insurance is a breeze.
Owning your own business can be a liability landmine. Just one mistake can mean the end of the business that you’ve invested so much time and money in. The biggest mistake you can make is not having the right commercial insurance coverage. EZ knows you worked hard to start your business, and we want to help you keep it going strong. We can guide you through some of the common mistakes business owners make, and the ways we can keep you protected against them.
A cyber attack can leave you feeling violated, scared, and confused, and it can also ruin your reputation.
Not Protecting Your Business Online
So much of our business is conducted online these days, and not having cyber liability insurance is one of the biggest mistakes you can make. Not only are there a lot of scammers out there working hard to get your financial information, but anyone with access to your company’s accounts – including employees – can steal information and create data breaches. A cyber attack can leave you feeling violated, scared, and confused, and it can also ruin your reputation. If customers’ data is breached, then you will lose their trust, their business, and any future business.
Malware is one of the biggest threats when it comes to cyber security. In 2018, malware cost companies upwards of $2 million, which was an increase of over 10% from the previous year. To keep your business protected from this threat, EZ.Insure offers cyber liability policies that cover:
Lost or damaged electronic data
Computer operations interruption
Privacy & Notification to customers and other affected parties
Lawsuits (in certain types of policy)
Not Protecting Your Workplace
Another major mistake business owners make is not taking into account all of the things that can go wrong at their place of business. Accidents and natural disasters happen. Customers or employees can get hurt at your business, meaning you could end up being sued. A storm could come along and rip through your building. If you are not insured against all likelihoods, not only could you lose your business, but you could go bankrupt, as well.
We’re a business, too, and we get how scary the thought of losing everything can be. That’s why we’ll compare quotes for you on the most important types of commercial liability insurance, like:
General Liability – protects you against lawsuits claiming bodily injury or property damage. It also provides coverage for personal and advertising injury like libel or slander.
Property Liability– protects everything in your business from risks such as fire or theft. There are commercial insurance packages available that will bundle liability and property coverage.
Workers Comp– covers medical expenses and lost wages for an employee who is injured at work. This type of coverage is required by individual states.
Not Delivering on Your Promises
Finally, don’t make the mistake of assuming every customer is going to be satisfied with you and your business. Sometimes you try to offer the best possible service or advice to your customers, but you just fail to deliver. If you break a contract, give advice that leads to loss, or don’t complete a project, for example, then you could end up facing a lawsuit. To protect yourself and your business from these types of claims, you need to have professional liability insurance.
Whether you are starting up a business, or already have one and are looking into commercial insurance, then EZ’s got you covered. We will compare quotes of all the types of insurance policies that your business needs, and will help you choose the best ones for you. Let us help you protect the business that you worked so hard to build. To get free commercial insurance quotes, enter your zip code in the bar above or to speak to an agent call 888-615-4893.
Do you know everything you need to know about Worker’s Compensation? It’s not a subject many people discuss at the dinner table, but it’s incredibly important to have when running a business in case someone is injured. A small thing like a loose nail or an unstable walkway could spell trouble.
It’s easy to be happy when you know you’re covered!
Before an accident happens, it’s imperative for a business owner to understand the terms of Worker’s Compensation coverage, how to qualify as an employee, what it covers, and what it will cost you.
What Is “Worker’s Comp?”
This agreement states that as long as an employee receives wage replacement and medical benefits, the employee will not sue the company for negligence. Meaning, if you’re injured on site due to something workplace related, you’ll be covered for the amount of work you miss plus hospital bills. But, you cannot sue the company specifically for failing to take proper care. This protects employers and employees.
It’s state-mandated, and the particulars change based on your location. EZ.Insure’s agents are familiar with this information, local or not, so by calling us, you’re saving some time.
Good news is, safety regulations are solid nowadays.
Your employee may have questions for you during this time. EZ.Insure will give you the knowledge to answer securely.
How Can Your Employee Qualify?
For an injured employee, there are only four checkboxes to qualify:
You must be employed by the company.
Your illness/ injury must be work-related.
Your case must fall in state guidelines.
The employer must have Worker’s Compensation insurance.
What Is / Is Not Covered by Worker’s Compensation?
Workers Compensation insurance covers most workplace injuries, but you may be refused assistance if your injuries are self-inflicted, occurred during a crime, or if your actions during your sustained injury violated company policy. For example, if your employee happened to sustain an injury while robbing you, rest assured their injury most likely won’t be covered.
The injured employee doesn’t need to be injured “on-site” to be covered. Worker’s compensation can also come into place when your injury is sustained, and it’s job-related. This could be if your company plans a trip overseas for a meeting, and your employee happens to break a limb during the outing.
When it comes to your medical expenses, you’ll find support with diagnosis and treatment. Depending on your state, it can also provide disability payments, rehabilitation, or retraining.
This should provide ample cushion for your employees to recover and return to work.
What Are the Costs?
The average cost of a worker’s compensation claim is $38,000 (from 2005). This is a combined total of both the medical side and loss in productivity. That’s a down payment for a house or a mid-size car.
For a company, the average cost per $100 in employee wage ranges from $0.75 to $2.74. It doesn’t seem that bad, but this does depend on the state. If you’re looking into getting this for your company, contact your local office to get specific information.
Do Worker’s Compensation Costs Change Per Business Type?
Depending on what your company does is how much you’ll be quoted for worker’s compensation.
Depending on your company, the money outflow is going to fluctuate. For example, in the office building, your cost per $100 goes down to about $0.12. It doesn’t sound that bad, but it’s because injuries happen less often in this environment.
If you’re a painter or a landscaper, this average jumps up to $7-9/$100. You’ll have to take a look into the work you’re doing, and how it may affect an employee. Your business needs a strong hand with inside knowledge to provide you with the best quality insurance.
EZ.Insure has the experience to help you excel. Your agent will answer any questions you have, compare different plans for you, and even sign you up when you’re ready, free of charge and without having to worry about being hounded by endless calls. To get started simply enter your zip code in the bar above, or you can speak to an agent by emailing [email protected], or calling 888-350-1890. EZ.Insure makes the entire process easy, and quick.
No matter what type of business you own, if you have employees, you’ll need workers’ compensation insurance. Workers’ compensation, also known as “workers’ comp,” is a legally required type of insurance policy that pays benefits to your employees in the event that they are injured on the job. It functions as a disability insurance fund, providing monetary compensation, healthcare benefits, or both, to employees. Workers’ compensation guidelines vary by state, so check out our workers’ compensation state pages to find out how your state handles workers’ comp regulations.
The majority of workers’ compensation policies are funded by premiums the insurance carrier collects from you as the business owner. When disagreements arise, the Workers’ Compensation Board, the state entity that manages the program, steps in to handle them.
There are different types of workers’ comp, depending on your industry, with some policies administered by the government in special cases. For example, government employees, longshore and harbor workers, and energy workers are all covered by federal workers’ compensation programs. And for coal miners and their families, the Black Lung Program administers death and disability benefits.
Benefits of Workers’ Compensation
Workers’ compensation benefits may include a portion of lost wages for the time your employee was unable to work. Reimbursement for medical services and occupational therapy may also be paid to your injured employee.
Salary Replacement
In most cases, a workers’ compensation applicant will get some replacement for their lost wages. But it will usually be less than their full pay. The majority of policies cover roughly two-thirds of the beneficiary’s gross pay. Although the payout is often not taxable at the state or federal levels, recipients who receive money from the Supplemental Security Income or Social Security Disability programs may have to pay taxes on those benefits.
Medical Expenses
Workers’ compensation insurance also offers coverage for medical costs associated with an illness or accidents sustained at work. This may include trips to the hospital, surgeries, and medication. In the case of workplace-related illnesses or injuries that are so serious that they require multiple treatments, workers’ comp will cover ongoing care. It will also cover repetitive injuries that manifest over time.
It’s important to note that the majority of workers’ compensation policies only cover medical costs for injuries sustained directly as a result of working. A construction worker, for instance, could seek reimbursement for injuries sustained in a fall from scaffolding, but not for those sustained while traveling to the job site.
Disability Coverage
Some workplace accidents could be severe enough to render your employee permanently or temporarily disabled. In this case, your disabled employee may be eligible for benefits under your workers’ compensation policy to assist with paying their medical expenses and to partially make up for lost wages.
Survivor Benefits
Workers’ compensation can help pay for funeral costs, as well as pay survivor benefits to your employee’s dependents if your employee passes away as a result of a work-related incident.
Types of Workers’ Compensation
Each state is responsible for enforcing workers’ comp laws. There are no federal standards for this type of insurance, so depending on your location, the same injuries may result in radically different types of compensation.
But, when it comes to policy types, there are two types of workers’ compensation policies you can buy for your staff:
Coverage A – This type of policy includes all of the basic state-mandated benefits that an injured or ill employee is entitled to. In addition to salary replacement payments, it also includes any necessary medical treatment, rehabilitation, and death benefits. These benefits are available in every state, with the exception of Texas. Although the payouts vary greatly from state-to-state and are not always available to all employees.
Coverage B – This type of policy provides benefits over the basic minimum required, as offered by Coverage A. With coverage B though, employees are typically only compensated following the employee’s successful lawsuit alleging negligence or other wrongdoing.
In most states employees forfeit their right to hold their employer accountable for negligence by agreeing to receive workers’ compensation. The goal of this wage agreement is to safeguard both employees and employers. In exchange for assurance of payment, workers forgo additional recourse, and employers accept some liability in order to avoid the possibly higher costs of a negligence action.
Even though employees who receive workers’ compensation typically consent to a “no-fault” contract by giving up their right to sue their employers, state legislation and court decisions in certain jurisdictions have restored employees’ abilities to file lawsuits in a number of strictly limited situations. So, depending on where your business is located, you may decide to buy insurance that combines Coverage A and Coverage B.
Who Is Covered by Workers’ Compensation Insurance?
Who must be covered by workers’ compensation insurance depends on a number of factors—the size of your company, and the types of employees you have. For example, in some states, a company must have a certain minimum number of workers before it is required to have workers’ compensation insurance. And, while regulations vary by state, in the majority of states, all full-time employees are required to be covered by workers’ compensation insurance. Workers’ compensation regulations for independent contractors, temporary employees, and interns vary by state.
The industry you work in also makes a difference. For example, in certain states, coverage for workers’ compensation is not necessary for:
Farmhands
Insurance agents
Family members under a certain age
Casual workers
Business owners and partners
Real estate agents
Additionally, employees of the federal government are not protected by state-mandated workers’ compensation insurance. They are instead covered by federal workers’ compensation.
You should be familiar with the workers’ compensation regulations in your state, because these exceptions do not apply in every state.
The Cost of Workers’ Compensation
Workers’ comp insurance premiums are generally set based on every $100 of your company’s payroll. Even so, it’s difficult to pinpoint an exact price without evaluating the different factors for your specific company. On average you can expect to pay anywhere from $0.60 to $2.27 per every $100 on your payroll.
To understand how the cost of your workers’ compensation insurance will be determined, you need to understand a few basic components of the equation:
Payroll
Every workers’ compensation insurance rate is calculated by dividing your payroll by $100. That means the more employees you have, the higher your rate will be. It’s important to keep in mind, though, that you’ll need coverage in some states as soon as you have a single employee, while in others you won’t need it unless you have three or more employees.
Depending on the regulations of your state, you might have employees who do not have to have coverage. For instance, you are probably not required to obtain workers’ compensation for yourself as the business owner. The same often holds true for company executives and limited liability company (LLC) members.
Workers’ Compensation Industry Classification
Certain industries pose higher risks than others. For example, someone working on oil rigs have a substantially higher risk of serious injury than an office worker. Workers in some professions, including contracting and building, run an increased risk. Which drives up the cost of insurance for those people.
States provide a class code for each type of industry. And each code is then given a base rate based on its risk for injury. 38 states employ class codes that were created by the NCCI. Others make use of independent rating agencies, while some have developed their own systems.
Employee Modification Rate
The EMR is a multiplier that represents the history of your claims. Your state workers’ compensation board or its ratings bureau compares your prior workers’ compensation claims to those of businesses in your industry to determine your EMR. Businesses with lower EMRs often pay less for their workers’ compensation insurance, with the typical range of EMRs being 0.75 to 1.25.
Workers’ compensation insurance premiums vary from state-to-state because state laws regulate coverage. The cost of workers’ compensation will most certainly be higher in a state that provides higher or more payments to injured workers, or in a state with a lot of high-risk industries.
Several states though, give employers discounts if they take steps to increase safety and decrease claims. For instance, many state governments offer discounts for setting up safety committees, fall prevention programs, and drug-free workplaces.
Insurance Carriers
While most of the above factors are out of your control, you can still find the best price for your business by shopping around among different insurance carriers. Although this isn’t a universal rule, some workers’ compensation insurance carriers charge higher premiums than others.
The Calculations
The basic formula for estimating workers’ compensation costs takes into account your industry, past claims, and total payroll. The basic formula is your annual employee payroll divided by 100. That sum is then multiplied by the workers comp insurance rate. That total is the estimated cost of your workers compensation premiums.
There are many moving parts in the precise formulas that insurers use to compute your workers’ compensation premium, and the methods they use to do so can differ from one insurer to another. Additionally, these formulas are based on your state-specific workers’ compensation regulations.
You should also take into account that there will be an option to pay your premium annually or monthly. This decision can also affect your price.
You should also consider any adjustments that might be made to your payroll during the year, including changes in your number of employees, your business class code, and your workers’ compensation rate, in order to choose the appropriate payment method for your company.
How to Save on Workers’ Compensation Insurance
The best way to make sure you can get affordable workers’ compensation insurance rates is to reduce the number and cost of your workers’ compensation claims.
You won’t have many options for cost-cutting when an employee submits a claim. To avoid having to pay large premiums in the future, you must put your plans in place as soon as possible.
You should think about implementing the following steps, which could be beneficial to both your company and your employees:
Return to Work Programs
Return to work programs help you get your employees back to work as soon as they are healthy enough.
A return-to-work program might help an employee ease back into their old responsibilities gradually, rather than having to wait until they’re fully recover to handle them. Until they are able to return to their regular tasks, the employee may perform light or modified work.
As part of this program, your employee can receive new training in a different skill set in order to earn their regular pay, instead of the lower rate provided as part of their workers’ compensation claim.
The advantage of this program is that you save money on wages given to any temporary workers you would have had to recruit to cover for your injured employee while they were recovering.
Work Safety Initiatives
The easiest way to reduce the price of workers’ compensation insurance is to avoid work-related illnesses and injuries as much as possible.
To motivate your employees to maintain a safe workplace and lower injury risks, be proactive about encouraging workplace safety measures. Here are some actions you can take to encourage a safer workplace:
Conduct regular safety training – Reaffirm best practices for conduct and safety, and keep on top of employee training for things like equipment usage.
Create a welcoming environment with an open door policy – It should be easy for your employees to approach you with questions about their safety. Remind them to visit you if they want to discuss workplace safety. Pay attention to their concerns, then take appropriate steps to reduce the risks and guarantee the safety of your staff.
Be open and honest about workers’ compensation benefits – When you hire new employees, you should tell them about your company’s policies on workers’ compensation. To remind current employees how workers’ compensation works if they are hurt on the job, arrange an employee benefits refresher.
Your team will feel more at ease and valued if you communicate openly and honestly about the policies you have in place to safeguard and promote their safety.
FAQs
Who pays workers’ compensation premiums?
By law, you as the employer pay the workers’ compensation premium. You can not deduct workers’ compensation payments through your employee’s paycheck.
Who is exempt from workers’ compensation?
Most of the time, only your employees can get workers’ compensation. Contractors or freelancers are almost never included in your plan. Aside from that each state makes its own laws. Arkansas, for example, does not require farm workers or real estate agents to have workers’ compensation.
How many employees do I need to get workers’ compensation insurance?
Every state has different requirements for workers’ compensation. Some states have you get coverage with even 1 employee while others require 3 or more.
Keep in mind that workers’ compensation insurance exists to safeguard both your company and your employees. EZ’s experienced representatives are here to answer any additional questions you may have about the specifics of workers’ compensation in your state or industry. Call 877-670-3538 to be directly connected to one of our agents who can help answer any questions you may have.
