2.8% of workers in the United States get non-fatal injuries at work. The amount of money per settlement can sometimes render businesses bankrupt. Paying expensive premiums does not always work out for most businesses.
Your employees’ safety comes first, and you must always keep them in mind. states and self-insured workers compensation insurance can save you a great deal.
Paying workers comp insurance premiums to an insurance company may not work well on a budget. It is the main reason many are looking for alternative means. One of the things that you can do is to go for workers compensation self insurance.
You can opt for a self-insured workers comp if your state allows it. It is estimated that 6,000 employers already use the self-insurance method for their workers. Workers can also get insurance on their behalf. Self-insurance in most states is highly regulated. One must follow strict requirements to get permissions to self insure.
Apart from the benefits of self insurance workers compensation, there can be also drawbacks as well. Below are the advantages and disadvantages:
|Cuts insurance costs by using a certified claims expert to help with claims||Poor risk assessment can leave the businesses vulnerable to large payouts|
|Helps businesses take risk analysis of their ventures||There are no management teams for the funds set aside|
|Self-insurance lasts longer than insurance plans||-|
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There are states that allow employers to self-insure workers comp if they meet specific requirement. But note that this doesn’t apply to all as there are also those that don’t allow for self insured retention workers compensation but require all to get workers comp from the state.
These states have funds employers can use. Employers must only get covered the state agencies that oversee the management of workers comp policies.
Some states also use a risk pool for high-risk businesses like construction and roofing. There is also group self insurance workers compensation for people that want coverage for less.
Below are definitive discussions if you are wondering what the requirements of states and self insured workers compensation insurance:
In Alaska, employers can apply for self-insured status through the Alaska Division of Workers' Compensation. The process involves submitting an application and supporting documentation, including financial statements and proof of insurance coverage.
The application fee is $1,000 and there is an annual fee of $5,000 for self-insured employers. Employers must also maintain a security deposit, which is calculated based on their workers' compensation liabilities. Once approved, self-insured employers must continue to meet ongoing financial and regulatory requirements to maintain their status.
Every business in Alabama with 5 or more employees must have worker’s compensation insurance. They can buy from private insurers or become self-insured.
The al self insured workers comp fund has its requirements. Only companies with a positive income of about $5 million and above over the last three years are eligible. Also, the business must have an asset-liability ratio of one or more.
In Arizona, employers can apply for self-insured status through the Industrial Commission of Arizona (ICA). The employer must provide evidence of financial stability and ability to pay any workers' compensation claims that may arise. This includes submitting financial statements, a surety bond, and a letter of credit.
Additionally, the employer must have a minimum of five years' experience in their industry and have maintained workers' compensation insurance for at least three years prior to applying for self-insured status. The application must be submitted to the ICA along with a non-refundable application fee of $1,000. Once approved, the employer must submit annual reports and pay a self-insured assessment fee.
Must have an annual payroll of at least $2,000,000
Have at least 300 employees
Must have been in business in the state for 5 years and above
Must have assets worth $50,000,000
Individuals must meet the following
Pay an appointment tax
Pay special fund tax
Complete and fund a full medical report
Get an administrative fund tax. It should be no more than 3% of what an employer would pay in premiums for insurance
If a company meets the requirements above, they can ask for a form they must fill out as proof of self-insurance.
Filing for self-insurance in Arkansas is allowed for employees or groups. The application fee is $100, and it is non-refundable.
Employers seeking a self-insurance worker’s comp must meet the following set rules.
3 calendar years in business according to the local business laws
Acceptable credit rating for the past 3 years before the application
Certified, independently audited financial statements
CA self insured workers compensation requires a third-party administrator as per the state law.
Employers in Colorado can apply for permission to self-insure from the Colorado Division of Workers' Compensation. A company must have the following:
At least 300 employees
A parent company with assets valued at a minimum of $100 million
Must be operated for at least 5 years
The company can apply online through the state website. They must pay a renewable annual fee.
Employers in Connecticut can apply for permission to self-insure from the Connecticut Workers' Compensation Commission. To qualify, the employer must have a net worth of at least $10 million and meet other financial and operational requirements. Large companies must have a large pool of wealth and a decent debt and credit rating. The application is via a state agency using the relevant documentation.
Employers in Delaware can apply for permission to self-insure from the Delaware Department of Labor. To qualify, the employer must have a net worth of at least $500,000 and meet other financial and operational requirements. The state allows group insurance for workers comp in the state. There are set regulations for this.
An employer can receive the green light for self-insurance of they apply to the Division of Workers Compensation in Florida. The application requires the following.
A net worth of $ 5 million
Supporting documents showing financial statements for the last five years
Show they can handle claims
Comply with the worker’s compensation regulations
After submission, if they meet requirements, they will get a certification to show they are self-insured.
Employers in Georgia can apply for permission to enjoy self insurance from the Georgia State Agency. To qualify, the employer must have
A net worth of at least $25 million
A minimum of 1,000 employees
Can payout a minimum of $500,000 per occurrence and $1 million aggregate
Must comply with state laws
One can apply by providing documentation of proof for review by the state board. Georgia self insured employers workers compensation is under the self insurers guaranty trust fund.
Employers can contact the Hawaii Department of Labor and Industrial Relations to file. They must provide the following:
Basic information about the company and any third-parties that will be part of the self-insured program
Financial statements prepared according to GAAP
A net worth of at least $5 million
The state authority will conduct an inspection of the business before approval for self insured workers comp. Once approved, the company gets a self-insurance certificate.
Employers in Idaho can apply for permission to self-insure from the Idaho Department of Insurance.
A net worth of at least $5 million
A minimum of 500 minimum employees in Idaho
The recent year’s financial statements
Must show compliance with state laws
Illinois has a Self-Insurance Plus system that allows citizens to apply for workers’ compensation online. They only have to submit the requirements with their application and wait for the state to approve or decline.
Employers in Illinois can apply for permission to self-insure from the Illinois Workers' Compensation Commission. To qualify, the employer must have a net worth of at least $500,000. Additionally, they must have a favorable record of income and debt to earnings ratio.
They charge an application fee of $500 and it is non-refundable.
Indiana allows self-insurance for workers’ compensation. An employer must have a minimum wealth of $500,000. The state will require a financial statement generated for past three years of operation. Additionally, they have to check whether you are compliant with the state laws on employee safety.
In Iowa, businesses can self-insure for workers' compensation by filing an application with the Iowa Workers' Compensation Commissioner. The application must include a financial statement, a plan for claims administration, and evidence of excess insurance coverage.
The financial statement must show that the company has a net worth of at least $500,000, and the excess insurance coverage must be at least $500,000 per occurrence and $1 million aggregate. The application fee is $1,000, and the renewal fee is $500 per year. Businesses must also submit an annual report to the commissioner. Once the application is approved, the business can self-insure for workers' compensation.
The Kansas Department of Labor approves the applications for self-insurance. Companies with over 100 employees in Kansas are eligible. They must meet all other requirements including getting a third party to help them run the insurance scheme. The state of Kansas requires businesses to have a net worth of $500,000 and above before approval.
In Kentucky, businesses can apply to become self-insured for workers' compensation through the Department of Workers' Claims. The application process involves submitting various forms, including a financial statement, actuarial study, and a business plan that demonstrates the company's ability to administer a self-insured program.
The financial statement must demonstrate the company's financial strength and capacity to pay claims, including proof of net worth and liquidity. The actuarial study must demonstrate the company's ability to manage risk and ensure adequate reserves for potential claims.
The business plan must outline the company's proposed self-insured program, including the procedures for handling claims, safety and loss prevention measures, and how the program will be managed and monitored. Additionally, the company must demonstrate that they have sufficient personnel and resources to manage the program.
Once the application is received, the Department of Workers' Claims will review the application and supporting documentation. If approved, the company will be granted a certificate of authority to self-insure for workers' compensation in Kentucky.
Companies in Louisiana can get insurance depending on their type and size. The companies must provide proper identification documents as proof. They must also share financial history for the recent 3 years.
Louisiana requires companies to deposit at least $100,000 as surety bond for the fund. It takes 90 days to process the application. Additional requirements include a report by a certified CPA who will also be auditing the fund annually.
The state of Maine allows self insurance for employers. They have set regulations that must be strictly followed by the companies. The set amount of contributions must be surrendered to the board as the law requires.
For a company to file for self insurance, they must show proof of income. They must have made $10 million for the past five years. Everything is subject to investigation by the board.
Employers in Maryland can apply for permission to self-insure from the Maryland Workers' Compensation Commission. Applicants have to pay an annual fee of $25, $1,000 annual fraud fee and $500 as examination fee. To qualify, the employer must have a net worth of at least $1 million.
The Massachusetts Department of Industrial Accidents presides over self insurance for companies. The company must make a bond deposit of $1 million or more. A Company or business entity should have at least $750,000 in annual standard or premium. Other requirements include most current annual financial reports and the credit rating for the last two years. A company should have at least 300 employees.
Sole proprietors can get self insurance if they have more than 3 employees. Companies can follow the set regulations by downloading application forms online. Notably the requirements are mostly no different from any other state.
Employers in Minnesota can apply for permission to self-insure from the Minnesota Department of Commerce. To qualify, the employer must have a net worth of at least $500,000 and meet other financial and operational requirements.
Self-insurance is allowed in Mississippi, but the requirements vary depending on the size and type of the employer. Employers can contact the Mississippi Workers' Compensation Commission for more information.
The state of Mississippi provides support for employers through several boards of trustees that manage the insurance. They ensure the costs are low and manageable and have an aggressive claims team.
Employers in Missouri can apply for permission to self-insure from the Missouri Division of Workers' Compensation. The state also allows group trust self insurance workers compensation.
Qualifications requirements include a net worth of at least $500,000 and provide a minimum security amount of $200,000 to the agency. Additionally, they must make an annual report to show their activity on claims.
Employers in Montana can apply for permission to self-insure from the Montana Department of Labor and Industry.
An employer may seek to self insure if they meet the regulations from the state. They have to show they can shoulder the financial obligation on the same. An employer must deposit all the money paid to the fund.
Employers in Nevada can apply for permission to self-insure from the Nevada Division of Industrial Relations. To qualify, the employer must have a net worth of at least $2.5 million and meet other financial and operational requirements. Further, an employer must deposit not less than $100,000 for past claims and show evidence for excess insurance to get compensation against catastrophic loss.
Employers can apply for permission to self-insure from the New Hampshire Department of Labor. To qualify, the employer must have a net worth of at least $500,000 and meet other financial and operational requirements.
New Hampshire allows LLCs, corporations with no more than 3 officers and sole proprietors to apply for self insured workers compensation insurance.
Companies in New Jersey can get self insurance if they apply from the state. They must submit all the supporting documents like a financial audit and any other information required by the file form. The processing fee of $1,000 is non-refundable and the company must deposit an amount of $1,500 for credit risk assessment report.
Applicants must pay a fee of $150 to process the application. In New Mexico, an employer applying for self insurance must have a networth of $2.5 million. Also, they should have a healthy financial trajectory. Other things considered in New Mexico include a reasonable risk management program and proof of employees.
The company must meet the set regulations that have a set income over the past 3 years. They must show proof with documentation. Also, all applications are made via a state agency that handles the applications. A company must submit everything required including a security deposit of $1,756,000.
Employers in North Carolina can apply for permission to self-insure from the North Carolina Industrial Commission. To qualify, the employer must have a net worth of at least $500,000 and meet other financial and operational requirements.
To file for self insurance, an applicant must pay and maintain a deposit bond for the insurance. They also must provide proof that they can handle claims and payouts of considerable amounts. An application must provide a financial report from a private CPA firm showing the annual report including a breakdown of losses and profits.
Filing for insurance in the state of Ohio is easy. All employers must provide five years of most recent financial reports presented according to GAAP standards. Other documents needed are tables showing the layout of all entities associated with the employer.
Ohio state requires an employer to plan how to handle their claims. You can prepare a document showing the claim and compensation process. Also, the law requires an employer to explain the transition from private insurers to state funds to workers.
The Oklahoma Self guaranty fund board is in charge of self insurance. All applications are made through the board.
The Oregon Department of Consumer and Business Services oversees self-insurance applications. Also, Oregon allows un-house processing of claims with the aid of one certified claims examiner. Furthermore, businesses must show proof that they can process and disburse claims as often and promptly as required to be approved.
An applicant must pay a statutory fee of $500 and a $100 for certification renewal. The application to the bureau must be made 3 months before the effective date of the self insurance.
Proper documentation including financial audits from a public accounting firm and other supporting documents are required before application submission.
Employers in Rhode Island have to provide required information to get approval for self insurance. Requirements include financial reports, any third party that will handle and oversee the program, number of employees and future plans to expand or restructure the company. The application form is online on the state website and there is an application fee.
Employers in South Carolina must have a net worth of at least $500,000 and meet other financial and operational requirements to get certification for self insurance. Additionally, there are rules and regulations that an applicant must comply to keep their certification.
Application for self insurance in South Dakota include an application fee of $2,250, a security firm, and four most recent annual reports.
Tennessee requires that all applicants pay a non-refundable fee of $500. They must provide a fully signed and notarized application form. Additionally, they must have an insurance premium of not less than $350,000. Moreover, one must provide 3 financial reports from 3 recent years. Also, they must include 3 years of loss runs made recently.
Texas allows private entities, state, and government entities to self-insure workers compensation. The Texas Labor Code Chapter 407 allows employers to apply for a self insurance authority certificate.
Self insurance in Utah is legal. Employers must follow all the rules by making an application through the state agency. You must fill the form and provide supporting documents. For proof, a company should have financial reports, a history of profit and loss, a loss-run report, and an estimation of the excess insurance coverage.
The Vermont Department of Labor takes charge of workers compensation. Companies and other entities that want self insurance must apply to the agency for approval. The state of Vermont requires the following documentation:
Financial report for the past 3 years
A detailed payroll report
The insurance and disease rate for each $100 on the payroll as determined by the NCCI.
Virginia companies that want to do away with insurance companies can apply through the Treasurer of Virginia. The simple requirements include:
An audited financial report
Must have been in business for at least 3 years
Pay an application fee of $200 (non-refundable)
The number of employees on the payroll
Applications may take up to 90 days for review.
The company must have at least $ 25 million in assets to apply for self insurance. Some government entities can also insure their employees through self-insurance.
West Virginia allows self insurance. Companies have to apply for insurance status with the state online. They download a form and pay a processing fee via check to the state. Also, they must include proper documents like Financial reports and profit and loss statements for recent years.
The following are the requirements for self insurance in Wyoming:
Guaranty of workers compensation payments if the applicant is an LLC, corporation, or partnership
Audit financial statements for the last five years
Health and safety performance report
Satisfactory security (bond, reserves, etc.)
Wyoming does not allow self insurance for workers compensation. Consequently, all employers must buy insurance from a state plan.