Because workers’ compensation pays for medical expenses from on-the-job accidents and work-related injuries, it protects both the employer and the employee. In fact, most states require workers’ compensation for certain employer groups. In addition, as insurance agents we strongly recommend all employers carry this coverage (regardless of the number of employees) as an obvious protection against liability.
Yet, workers’ compensation can be costly for small- and even medium-sized businesses. Therefore, laws enacted in the late 1980s allow the use of “preferred providers” to curb medical care costs and promote a quicker return-to-work process, with increased emphasis on fraud detection and better price points among workers’ compensation insurers. Even so, the coverage and price of workers’ compensation policies still vary greatly.
With this mind, it pays to shop around for workers’ compensation packages that fit your needs, and your budget. Also, check with your state’s labor department for its definition of an “employee” as it may include a full-time, 40-hour-per-week person, as well as someone who only works three hours a week. Obviously, such variances will affect your needs and your cost for the plan.
Each state has its own workers’ compensation requirements, including a list of illnesses and injuries that qualify for legitimate claims. The state also mandates the level of benefits you must provide for employees. These rules will typically address the amount of coverage required for each employee and the percentage of the employee’s salary that you must pay. A good idea is to review this list and keep it accessible for future reference for you and your employees. These initiatives will prevent the filing of uncovered claims and serve to minimize misunderstandings.
Workers’ compensation policies may pay medical benefits, disability income benefits, rehabilitation benefits, and death benefits. These policies may also utilize a managed care program that sends injured or ill employees to a doctor in your insurance company’s network, further protecting the employer while minimizing costly confusion.
As with all insurance plans, too much workers’ compensation coverage is certainly better than too little. In addition, many workers’ compensation insurance policies provide liability insurance to cover you and your business in the event the family of an employee who is killed in the workplace sues an employer. This option should also be closely examined when striving for maximum coverage.