Whether you run a small business with only a few employees or manage a big company with a large workforce, workers comp coverage is an absolute necessity for your business and its employees.
But what does workers comp cover? Continue reading on below to find out.
What Is Workers Comp?
Work comp is a type of insurance coverage that employers must purchase to protect their employees from work-related illness or injuries. The benefits include salaries for lost work period, medical and more.
Workers comp insurance also provides financial benefits to the family or dependents of a deceased employee.
Must All Employers Have This Coverage?
Workers comp is managed at the state level. Every state has its own requirements, rules, and regulations on workers comp.
Most states require employers to carry workers comp coverage once they have one or more staff (excluding yourself). Some states will allow you to operate without the cover as long as you have less than five employees.
Irrespective of your state’s regulation, it’s highly recommended to ensure all your employees are covered.
How Much Does Workers Comp Cost?
Workers comp cost varies between insurance providers. There is no standard price since insurance providers are competing for customers.
Despite the differences, all providers determine premiums by the amount of the payroll you have.
They also consider the danger associated with your line of business.
What Will Happen If You Don’t Buy Workers Comp Coverage?
If your company meets the requirements for state-mandated coverage and you fail to purchase the coverage, you are subject to severe penalties. Some states will fine you for non-compliance while other states consider it a criminal offense.
In states where non-compliance is considered a criminal offense, you may end up in prison for non-compliance.
How Can You Get Workers Comp Insurance?
Most states sell this cover through standard insurance services.
However, if your company has a bad claim history, you may be required to obtain coverage via a state-managed program. In this case, you will be required to pay more than those who buy through standard providers.
This is the reason why you should strive to avoid a poor claim history.
How Does Workers Comp Work?
When your employee suffers work-related illness or injury, workers comp helps cover medical benefits and wages. This cover should give your employee access to professional care in every step of their recovery.
What Does Workers Comp Cover?
There are five key things that worker’s comp cover. They include:
1. Medical Treatment
Workers comp should the costs your employees incur for medical treatment for work-related illness or injury. This cost includes but not limited to doctor’s appointment, medications, hospital visits, therapy cares, and emergency room visits.
Workers comp has different plans. Some plans have a provider network of doctors. If your company is covered by such a plan, your employees have access to a wide selection of doctors in the network. Treatment outside this spectrum will attract a higher rate.
Procedures to Protect Employees
Some plans have a procedure to determine if a treatment is necessary or not. This will protect your patients as well as help in keeping medical costs at a manageable level.
Your employees are kept safe from the risk of unnecessary treatments. This plan may go further to demand the doctor’s approval for specific treatment. This means that the treatment will not be covered if the doctor doesn’t approve.
All plans cover ongoing care. Your employees don’t have to worry about chiropractic treatments and physical therapy. However, alternative treatment such as naturopathic, homeopathic and acupuncture treatments may not be covered.
Are medical issues that arise as an indirect result of workplace illness or Injury covered? Yes, but not always. For instance, let’s say one of your employees injures his ankle in a work-related accident. The ankle injury then affects his gait.
This eventually leads to low back problems. In such a scenario, the cover may cater to treatments for the low back problems since it’s connected to the ankle injury.
2. Inability to Work
Workers comp will cover your employee’s wages when the employee is no longer able to work due to work-related injury or illness. For example, if one of your employees injures her back while moving things on the job, and they’re not able to report to work, this cover ensures your employee receives their wages while they’re recuperating from home.
A workplace injury is divided into 4 groups:
- The Temporary Total: means the work-related injury or illness has made the employee unable to work now. However, this employee is expected to recover in the near future and resume their duties. Learn more about how temporal total disability benefits is calculated here.
- The Temporary Partial: means the work-related injury or illness is making the employee work at a reduced capacity.
- The Permanent Total: means the injured or sick employee is unable to work and is not expected to return to their duties.
- The Permanent Partial: means the injured or sick employee is able to return to their duties after recovery but they will never work at the original capacity.
Workers comp provides rehabilitation benefits to help the injured employee cope or recover from the accident. In some cases, the cover offers vocational rehabilitation benefits to help the injured employee learn new skills.
If the injury or sickness is permanent total, the employee can come back to work but assume a different role. This training is meant to open doors for a new phase to life.
4. Death and Funeral Service
In the event that an employee dies because of work-related injury or sickness, workers comp may provide benefits to the dependents of the deceased employee.
These benefits aim at covering funeral expenses. The money goes to the immediate family of the deceased employee. This money should benefit the dependents who were living with the deceased employee.
Most cover plans have a predetermined limit for funeral expenses. Often, these expenses are reviewed and the state can limit if it deems some expenses unnecessary or overly extravagant.
Protect Your Business and Employees with Workers Comp Coverage
What does workers comp cover? Knowing the answer to this question is essential to ensuring you get the most from your cover.
When buying workers comp policy, you need to consider state-specific laws and regulations. If your business operates interstate, providing this form of coverage to your employees can be a rather complex task. This is why you must choose an insurance company that understands the needs of businesses operating within your jurisdiction.
Check out our insurance category to find more blog posts on insurance.