Workers’ compensation provides benefits to employees who are injured at work and protects companies from having to pay for the full cost of the workplace injury. In most cases, health insurance, through an employee or obtained independently will not cover injuries that occur at work. Instead, employers purchased workers’ compensation insurance to provide medical and time off benefits to employees. Most of the states require employers to have workers’ compensation insurance.
Who pays for workers’ comp?
Employers must pay 100% of the cost of workers’ compensation insurance for the company. This is not a cost that can be passed along to employees.
What options are there for purchasing workers’ comp insurance?
Because workers’ comp is often required by state law, some states offer programs through which employers can (or are required to) get their insurance and benefits. States that require employers to use the state-run program are called monopolistic states. These include Ohio, North Dakota, Washington, and Wyoming. In this case, employers pay premiums directly to the state program and if there is a claim, the state program will pay the affected party what is owed, whether through benefits or compensation.
Most states allow employers to purchase workers’ compensation coverage through a private insurance company. In this situation you will pay the insurance company for the coverage and your employees will have their medical bills and compensation associated with the work-related injury paid by the insurance company.
Some businesses choose to self-insure to remove the costs of premiums from their workers’ compensation costs. However, these businesses then become fully responsible for any claims that come up. Because of this, most self-insured businesses are large businesses with access to a third-party administrator who handles the paperwork and claims.
Professional Employer Organizations (PEOs)
PEOs are another form of outsourcing for workers’ compensation. PEOs are uniquely designed to help small businesses receive lower pricing like a self-insured business without the risk of dealing with claims on your own. PEOs also often employ claims management and safety professionals to help keep the costs of claims low.
Are you a small business looking for the best way to offer workers’ compensation? Reach out to Helpside at firstname.lastname@example.org to learn more about our workers’ compensation plan.