How Workers’ Compensation Works: What All Employers Need to Know
Did you know that workers’ compensation now covers over 140 million employees in the US? Or that in 2017, the total paid out workers’ compensation benefits amounted to $62 billion?
There were, after all, 2.8 million workplace injuries and diseases that occurred in the US in 2017. In 2018, this number remained unchanged.
These stats show how workers’ compensation benefits both employees and employers. Now, the big question is, how does it work and what benefits does it provide?
We’ll tell you exactly how workers’ compensation works and why your business needs it, so be sure to read on!
How Workers’ Compensation Works: The Basics
Workers’ compensation is a type of insurance that covers employees who get ill or injured at work. So long as a work-related activity leads to the illness or injury, workers’ comp should cover it.
The goal of workers’ comp is to help ill or injured employees get access to prompt and quality health care. It covers medical and hospital costs that arise from occupational hazards. It also provides coverage for their rehabilitation as well as pay them for lost wages.
Note that the illness or injury doesn’t even have to have occurred in the actual workplace. Let’s say a worker slips, trips, or falls during a mandatory company event outside of the office. Workers’ comp should still cover any injury they sustain, as the event is work-related.
Workers’ comp isn’t just for your employees though — it also protects your business. In exchange for the coverage it provides, workers waive their right to sue you (the employer). As such, this insurance safeguards you from most potential lawsuits involving work hazards.
Keep in mind that there are at least 37 lawsuits filed against the average US company. Nine in 10 of the country’s corporations also face some type of litigation at any given time.
If you forego workers’ comp, you’re putting your business at risk of such lawsuits. Litigation costs are very expensive, costing small businesses over $100 billion each year.
Workers Comp Employer Obligations: Is Your Business Required to Have It?
Most likely yes, unless your business is in Texas. Texas is the only state that doesn’t require employers to purchase workers’ comp.
Most states require workers’ comp even for businesses that only have one employee. An example is California — businesses that only employ a sole worker here must have workers’ comp.
Employers Responsibilities Under Workers’ Comp Laws
As the employer, it’s your responsibility to purchase and pay for workers’ compensation. If a worker gets injured at work, your workers’ compensation carrier pays out the benefits.
You must also post notices containing information about workers’ comp at the workplace. These documents should also include details about the workers’ comp insurance provider.
Your state may also require you to provide ill or injured workers some claims documents. In some states, for instance, workers need to fill out a state workers’ comp board report. This form usually comes from the employer.
Your insurer may also require you to provide some paperwork to claims filers. This may include a claim form that they need to provide their treating doctor.
Selecting a Treating Doctor Under Workers’ Comp
Speaking of treating doctors, does the employer or the worker get to choose?
In some states, such as Florida, employers can choose the initial treating doctor. In these states, workers have to see these selected doctors first to comply with the workers’ comp law. After this, employees have the right (usually a one-time leeway) to choose a second doctor.
In other states, like New Jersey, employers have the right to choose all treating doctors. This applies to the initial and subsequent treating physicians. The only time that a worker can see any doctor is during emergency situations.
That said, if your business operates in any of these states, it’s best to go with a local option. This way, your injured or ill workers won’t have to travel far for quality healthcare services. It’s also easier to get in touch with a local health service provider than one that’s too far from your business.
Your Workers’ Responsibilities
From 2013 to 2017, the denial rate for workers’ compensation claims jumped to 7%. Two in three of these denied claims were then later approved, only to cost insurers more.
Many workers’ comp claims get denied due to missing the claims filing deadline. There are two types of deadlines to abide by — one for the accident report, the other for the claim itself.
That said, it’s the responsibility of your workers to let you know as soon as they get ill or injured at work. This again depends on your state, but most require reporting within seven to 30 days. Some states, like Arizona and Kentucky, have an “as soon as possible” deadline.
The other deadline is your state’s statute of limitations. This is the time given to workers to file an actual workers’ comp claim.
Most states impose one to two-year deadlines for their statute of limitations. Vermont and West Virginia, however, only allow workers up to six months to file a claim.
The statute of limitations usually starts from the day the injury happened. For occupational diseases, the deadline often begins on the day of the diagnosis.
Missing any of these deadlines may result in a worker’s claim becoming invalid.
Protect Your Workers’ Health and Your Business With Workers’ Comp Coverage
There you have it, the most important facts about how workers’ compensation works. With workers’ comp, employees can get treatment for their illnesses or injuries at no cost to them. On the other hand, you, as the employer, don’t have to pay for their medical or hospital bills.
The bottom line is, workers’ compensation benefits everyone. Even if your state doesn’t require you to have it, it’s still a coverage you should consider investing in.
Ready for more guides on how to run a business and make it prosper? Feel free to check out our other posts in the Business section then!