Workers Compensation

Workers’ Compensation Insurance: An Overview

Workers’ Compensation provides benefits to workers injured on the job, including the cost of medical care, up to two-thirds of lost wages, and possibly a permanent disability. It also provides funds for funeral expenses and death benefits to dependants for employees killed from a work-related accident.

Workers’ compensation insurance is heavily regulated by the states. Individual state statutes and court decisions have shaped the handling of claims, evaluation of impairments, settlement of disputes, provision of benefits and control of costs.

Background of Workers’ Compensation Insurance

During the 19th century, the size of the country’s workforce grew exponentially. Unfortunately, workplace safety did not keep pace, and workplace accidents grew as well. At that time, the only way injured workers could obtain compensation for their injuries was to sue their employer. Many legislative proposals emerged early in the 20th century, focusing on compensating injured workers for their medical care and lost wages.

By 1949, all states had a system in place to provide compensation for injured employees. Under these systems, injuries were deemed “no fault”, and the employer was made responsible for providing compensation for the cost of medical care and lost wages. In exchange, the employee gave up his/her right to sue the employer for injuries. Currently, Texas is the only state where workers’ compensation is not mandated for all employers. Workers’ compensation insurance was initiated to indemnify the employer for these new, uncertain liabilities.

As part of the insurance package, the injured workers’ medical, rehabilitation, and lost wages are paid by the insurance carrier on behalf of the employer for as long as the worker’s injuries persist.

Unfortunately, not all injuries are completely cured. If a work-related injury results in an employee’s disability (even partially) , the disability will fall into one the following categories: temporary total, temporary partial, permanent partial or permanent total disability. The insurance carrier will pay a “permanency award” based on a series of factors proscribed by state law, including the age of the employee, the nature of the injury, and the percentage of permanence.

Workers’ compensation insurance can be purchased through by private insurers, state funds or the National Council on Compensation Insurance (NCCI).

The Employer’s Responsibilities

Employers are required to do the following to comply with Workers’ Compensation Insurance laws:

• Employers are required to provide coverage for their employees and are held liable for all injuries suffered by employees while they are on the job (with the exception of employers residing in the state of Texas).
• Pay premiums and provide the carrier with actual payroll numbers at policy expiration.
• Provide a safe work environment.
• Notify the carrier as soon as possible after an injury.
• Investigate injuries.

What you can do to manage your Workers’ Compensation Costs

There are many things that companies can do to lower their workers’ compensation costs-

• Review your insurance policy to make sure that all job classifications and payrolls are correct.
• Invest in workplace safety to avoid accidents, and improve loss experience. Actions such as providing a safe work environment, including personal protective equipment (PPE), training employees in safe work habits, and making your safety program a requirement of employment will reduce injuries.
• Utilize a managed care organization that has a relationship with your insurance company. This will help you save on medical treatment costs and will assure non-work injuries do not become work injuries.
• Create a modified duty program to allow injured employees return to work sooner. Under these programs, employees are assigned duties they can physically complete while they recover. The most successful return-to-work programs incorporate timely, quality medical care and assistance to reduce emotional stress after an accident.

These are just a few of many actions you can take to reduce workers’ compensation costs.  When it comes to Workers Compensation it is very important to work with an agency that has the experience and knowledge that can help reduce these costs.