How Does Workers Comp Work?

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Your employees or you yourself can get injured while working. And workers’ compensation insurance provides the quickest solution.

There are many explanations about what’s workers compensation and its function. That’s why we’ve made this guide so that you learn:

• What is workers’ compensation and how does it work in general

• How does workers comp work in some US states

• How to file a workers comp claim

• What to do if your workers comp claim is rejected

By the way, workers compensation insurance can be expensive. And so, you might want to read another guide we made that talks about the cost of workers compensation insurance.

What is Workers Comp Insurance?

Also called workman’s comp or workers comp, Workers compensation is a type of casualty insurance policy that’s designed to cover employers and employees against work-related injuries or diseases. 

Except for Texas, all states of the US require businesses to get workers compensation insurance through their own workmen comp laws and the Federal Employee’s Compensation Act (FECA).

How Does Workers Comp Work?

Workers compensation functions to provide benefits to employers and employees. Here’s how it works:

• Workers compensation insurance helps employees cover unexpected expenses that result from workplace injuries or diseases

• Workers compensation insurance protects employers by preventing employees from filing negligence lawsuits by virtue of the exclusive remedy principle 

Note that this is just a general explanation of the functions of workers compensation insurance. How the policy works in practice differs greatly depending on the workers comp laws of each state. 

Let’s discuss what does workers comp cover next. 

What Does Workers Compensation Cover?

Workers compensation insurance takes care of the following costs if an employee sustains a work-related injury or disease:

• Lost wages

• Medication

• Hospitalization

• Emergency medical treatment

• Lost wages

• Rehabilitation

• After-hospital visits

• Funeral expenses and allowance to dependents

Aside from asking what does workers compensation cover, you must also ask who it covers. In a nutshell, workmans comp applies to:

• Part-time employees

• Full-time employees

You, as the employer, can also choose to cover yourself through workmen comp insurance. Most insurance companies allow this since the owner is also considered an employee. You can even name directors and officers as insureds. 

What Will Happen If You Don’t Get Workers Compensation Insurance?

Compensation for workers is very important. And so, failure to get workers compensation insurance will result in:

• Imprisonment

• An accumulating fine

• Loss of exclusive remedy

• Cease-and-desist order

Who Pays for Workers Compensation Insurance?

Workers’ compensation payments fall on the shoulders of the employer. Laws in the US prohibit employers from passing the burden to employees. If the employer does otherwise, employees can file a complaint to their state’s bureau of workers compensation. 

How To File A Workers Comp Claim?

Depending on the location, you or an employee will be filing a workers comp claim. But when to file workers comp claim anyway? This entirely depends on how your state implements its workers comp system. Nonetheless, it’s recommended that you or an employee file a workman comp claim within the first week a work-related injury or disease occurred. 

In connection, the bullets below lay down the workers comp claim process in general:

• The employee creates an official report of what happened

• The employer gathers report from witnesses (if there are any)

• The employee’s medical records is furnished

• The employer and employee download workers compensation forms for the claim

• The papers are then sent to the authority who underwrote and granted workers compensation insurance

Can Insurers Reject Workman’s Comp Claims?

Insurance companies can reject workman’s comp claims for the following reasons:

• The insurance company didn’t have a thorough picture of what happened

• You failed to provide the necessary papers

• Though well documented, the occurrence falls out of the scope of your workers compensation insurance

• The employer or the employee failed to file a workers comp claim at the time prescribed by the insurer and workers comp laws 

The rejection of workers compensation claims can be disputed. Get a qualified workers comp attorney and send a complaint to your state's bureau of workers compensation. .

Now that you know how do workmans comp claims work, let’s discuss how you can apply for the policy. 

Getting Workers Compensation Insurance

So how to apply for workers comp? Here are how you get workers compensation insurance for your business:

• Get it from a private commercial insurance company authorized to sell insurance in your state

• If you’re in a monopolistic state, get covered by the state department that manages and sells the workers comp for businesses

• Request authorities to allow you to self insure

• Qualify for the state’s assigned risk pool 

How Does Workers Compensation Work In Different US States?

Understanding workers compensation is better done if you know what is workers compensation and how does it work in some US state. 

The coverage of workers compensation insurance varies based on location because each state legislated their workman compensation law differently. 

That said, we’ll give you a quick overview of how workers comp works in different states in this section.

How Does Workmen’s Comp Work In Ohio?

Overview

Ohio workers compensation insurance was implemented in 1912. As one of the monopolistic states, Ohio recommends businesses to get workers compensation insurance from its Bureau of Workers Compensation. Note that businesses can also request the BWC to grant permission for self-insurance. 

When Does Coverage Kick In?

Workers compensation Ohio covers costs if an employee:

• Gets injured because of work

• Sustains a disease because of work

• Dies while dispensing his or her duties at work

When To Get Workers Compensation Insurance In Ohio?

You need to get workers compensation insurance in Ohio as soon as an employee starts his first day of work. In connection, this are the most common entities authorities require to get worker compensation insurance:

• Independent and sub-contractors with one or more employees

• Corporations with multiple owner/officers

• Ohio businesses that hire employees from other states for 90 days or more 

• Employers of domestic helpers

• Businesses not classified as exceptions and have one or more employees

Who Are Not Required To Get Worker’s Comp In Ohio?

Ohio’s workers compensation act exempts the following from getting workers compensation insurance for employees:

• Sole proprietor

• Partnerships

• LLCs acting as a sole proprietorship

• LLCs acting as a partnership

• Family farms

• Corporations with no employees

• Ordained and associate ministers of religious organizations

What is Covered By Workers Compensation Insurance In Ohio?

In Ohio, workmen’s compensation insurance takes care of the following:

• Lost wages (up to 72% of the average wage)

• Medical benefits (hospitalization, medication, and treatment)

• Death benefits

How Does Workman Comp Work In Maryland?

Overview 

Workers compensation insurance was implemented in 1902. Businesses in the state can get coverage from private insurers. 

Maryland’s Workers Compensation Commission sees to it that employers satisfy the requirements and insurance companies provide timely and adequate coverage.

When Does Coverage Kick In?

Workers compensation Maryland can be claimed when an employee sustains a work-related injury or disease by accident.  Maryland is very vocal in saying that workers comp coverage isn’t guaranteed just because an employee got injured or sick on the job. 

What is Covered By Workers Compensation Insurance In Maryland?

Workers compensation insurance in Maryland provides the following benefits:

• Temporary partial disability benefits (50% of the average weekly wage)

• Permanent total disability benefits if an employee loses arms, legs, hands, and eyes or a combination of these body parts

• Permanent partial disability benefits ($50 weekly compensation)

• Medical/hospitalization benefits

• Wage benefits

• Vocational retraining benefits 

When To Get Workers Compensation Insurance In Maryland? 

Maryland requires businesses with one or more full-time and part-time employees to get workman’s compensation insurance. 

Who Are Not Required To Get Workers Compensation Insurance In Maryland?

Businesses in Maryland that are eligible for IC-16 Exclusion Form filing can operate without workers compensation insurance. Here are some examples of such businesses:

• Business who only have corporate officers as employees

• LLCs who only operate with members who decided to forego workers’ compensation insurance

• Sole proprietors, individuals, and partnerships who operate a class F vehicle and without any employees

How Does Workers’ Comp Work In Texas?

Overview

Texas is the only state in the US where employers can’t be penalized for failing to get worker’s compensation insurance. 

The State of Texas manages its own workers compensation insurance programs. Texas allows businesses to get workmen compensation in two ways-self-insurance and private insurers. 

When Does Coverage Kick In?

Workers compensation in Texas provides coverage when an employee sustains an occupational injury or disease. However, the policy doesn’t grant help all the time. Claiming workers compensation insurance can’t be done if:

• The work-related injury or disease is self-inflicted

• The injury or disease was sustained due to negligence or intoxication

• The employee sustained an injury or disease while off from work due to a work-related injury or disease

• Was working but intentionally injured by someone else (e.g. fistfight, etc.)

• Was injured to an a hurricane, storm, flood, tornado, and other acts of God (an exception applies to workers who face this perils by virtue of their jobs)

What is Covered By Workers Compensation Insurance In Texas?

Texas workers compensation insurance grants these benefits to an employee who sustained a work-related injury or disease:

• Temporary income benefits

• Impairment income benefits

• Supplement income benefits

• Lifetime income benefits

• Medical benefits 

• Burial benefits

• Death benefits 

When To Get Workers Compensation Insurance In Texas?

Texas doesn’t state when employers must get workers comp insurance. But note that failure to get one means losing the exclusive remedy granted by the state to business owners. This is why most businesses get workmens comp in Texas even if no stiff fines are in place. 

How Does Workmans Comp Work In Alabama?

Overview

Alabama workmans compensation insurance grants benefits to employees and employers. The policy ensures that employees receive money if they become sick or injured. On the other hand, employers with workmen’s compensation insurance enjoy immunity from employee lawsuits.

When Does Coverage Kick In?

Alabama workers compensation insurance provides coverage if these conditions are met:

• The employee covered is working for a business who is required by Alabama workers’ comp insurance laws to get insured

• The injury or disease must be accidental in nature

• The injury happened while the covered employee is at work or doing work

What is Covered By Workers Compensation Insurance In Alabama?

Workmans comp for businesses in Alabama is designed to provide the following to the employee:

• Weekly compensation benefits

• Death benefits 

• Hospital, medical, and surgical treatment benefits

When To Get Workers Compensation Insurance In Alabama?

Alabama requires businesses with five or less employees to get workers compensation insurance. Officers are considered as employees and must also be covered by the policy. 

Who Are Not Required To Get Workers Compensation Insurance In Alabama?

Workers compensation insurance in Alabama isn’t required for businesses or entities that classify as a:

• Domestic employer

• Farm employee

• Casual employee

How Does Worker Comp Work In Alaska?

Overview

The Alaska Workers Compensation Act requires businesses to get workers compensation insurance. 

Alaska doesn’t have a state fund for workers compensation insurance. Businesses must strive to get covered by private commercial insurance companies. Those who can’t get covered can get covered through Alaska’s assigned risk pool managed by the National Council On Compensation Insurance. 

The Alaska Division of Workers Compensation oversees the implementation of workers compensation rules and regulation in the state. 

When Does Coverage Kick In?

Alaska workmans comp insurance grants benefits when an employee sustains an occupational disease caused by work conditions on or after November 7, 2005. 

What is Covered By Alaska’s Workmen Compensation Insurance?

The workers compensation insurance in Alaska is designed to provide these benefits to an employee who sustained a work-related injury:

• Disability and impairment benefits

• Death benefits

• Medical benefits

• Reemployment benefits

When To Get Workers Compensation Insurance In Alaska?

Employers having one or more employees are required to get workers compensation in Alaska unless their business is one of the exceptions. 

Who Are Not Required To Get Workers Compensation Insurance In Alaska?

These are entities and businesses exempted from getting workers compensation insurance in Alaska:

• Partnerships

• Sole proprietors

• Limited liability companies

• Non-profits

• Baby sitters

• Non-commercial cleaning businesses

• Sports officials

• Independent entertainers

• Commercial fishers

• Taxi drivers

• Hockey teams (only applies if members have health insurance)

• Real estate licensees

• Transportation network company drivers

How Does Workman’s Comp Work In Arizona?

Overview

Workers compensation insurance in Arizona is a no-fault system wherein an employee can receive medical and compensation benefits regardless of he or she’s the one to blame for sustaining a work-related injury or disease. 

The Industrial Commission of Arizona oversees the implementation and management of workers compensation insurance in the Lone Star State. 

When Does Coverage Kick In?

Arizona worker compensation insurance takes effect when an employee sustains a work-related injury due to an accident, the employer's negligence, or his own negligence. 

What is Covered By Arizona Workers Compensation Insurance?

These are the benefits provided by Arizona’s workers compensation insurance:

• Permanent impairment benefits

• Temporary impairment benefits

• Death benefits

• Coverage for lost wages

When Do You Need To Get Workers Compensation Insurance In Arizona?

Businesses in Arizona must get workers compensation insurance as soon as there are one or more employees. The workers compensation act of Arizona defines employees as part-time, full-time, minors, foreigners, and family members working for a business. 

Who Are Not Required To Get Workers Compensation Insurance In Arizona?

Arizona doesn’t require workers compensation insurance from the following:

• Sole proprietors with no employees

• Businesses working with independent contractors

• Businesses that work with casual employees

• Independent contractors

How Does Workman Comp Work In Arkansas?

Overview

Arkansas workers compensation insurance is a coverage paid by the employer on behalf of employees. In the state, employees are responsible for filing a workers comp claim. The Arkansas Workers Compensation Commission oversees the implementation of workers compensation insurance in the state. 

When Does Coverage Kick In?

To understand how workers compensation works in Arkansas, you must remember that the policy only covers work-related accidents. Workers compensation insurance in Arkansas doesn’t cover injuries due to self-harm, malice, or negligence. 

What is Covered By Arkansas Workers Compensation Insurance?

Another thing to know about how worker compensation works in Arkansas is that it only provides these benefits:

• Medical benefits

• Payment for lost wages

• Rehabilitation services

• Total disability benefits

Who Are Not Required To Get Workers Compensation Insurance In Arkansas?

Arkansas exempts these businesses or entities from getting workers compensation insurance:

• Railroad and maritime workers

• Farms

• Domestic helpers

• Non-profit organizations

• Religious organizations

• Charitable organizations

• Relief organizations

How Much is Workers Compensation Insurance?

Employers pay $101 per month or $1,212 per year for workers compensation insurance having a $100,000 coverage. Factors that affect premiums are:

• Location

• Size

• Business history

• Claims history

• Number of employees

• Revenues

• Payroll

In addition, here’s a table showing how much workers comp insurance cost from the best companies: