What Is Workers’ Compensation Insurance and How Does It Work?
Whether you’re an employer or employee, one of the most important ways to protect a business and its employees is through workers’ compensation (or “workers’ comp”). While most people are familiar with the concept, there is much information that you might not be aware of with this type of insurance.
Here is an overview of what workers’ comp is, how it works and who can help businesses ensure they have the right steps in place for this type of insurance.
What Is Workers’ Compensation?
Workers’ compensation is insurance that provides medical and/or wage benefits to employees who have sustained an injury or developed an illness as a direct result of their job or working conditions.
There are different mandates state by state regarding coverage as well as wage and medical benefits, but generally speaking, most states require employers to have workers’ compensation insurance for their business.
What Is Covered and Not Covered by Workers’ Comp?
What’s Typically Covered: Although it varies by state, generally speaking, workers’ comp covers:
- Lost wages
- Medical care (and ongoing care, if needed)
- Funeral expenses (if needed)
In Florida, workers’ comp also includes coverage, which allows businesses to pay legal expenses should an employee sue their employer for a work-related injury or illness.
What’s Typically Not Covered: This also depends on the state, but here are a few examples of the types of things that might not be covered through many insurance plans:
- Injuries sustained due to an altercation started by the injured employee
- Injuries sustained due to an employee being intoxicated or under the influence of certain drugs in the workplace
- Injuries sustained intentionally in order to receive workers’ comp
- Injuries that are proven to be fraudulent or highly exaggerated
- Injuries (emotional or physical) that are not a direct result of a physical workplace trauma
Who Pays for Workers’ Comp?
It is the responsibility of employers to pay for this insurance to cover their business and its employees, and under workers’ compensation law, at no point shall businesses require employees to contribute to the cost of this insurance or compensation.
While most states require workers’ compensation coverage, there are some that do not. For those states, this insurance is elective. Browse this state-by-state comparison of workers’ comp requirements online to learn more.
How Do Workers’ Compensation Claims Work?
In most cases, the employee is required to report their work-related injury to their supervisor first, then they are sent for treatment if they wish to be treated. The employee can then file a workers’ comp claim, being sure to include any paperwork or forms that are required by their state to submit.
If eligible, the employee will receive their compensation and may return to work when they are cleared to do so by the treating physician for the workers’ comp claim.
Other Frequently Asked Questions About Workers’ Comp in Florida
- Who Needs Workers’ Compensation Coverage? In the Florida Statutes, it states that workers’ compensation must be provided for: construction businesses with 1 or more employees, including any non-exempt business owners; non-construction businesses with 4 or more employees (either full- or part-time), including any non-exempt business owners; and agriculture businesses with 6 regular employees and/or 12 seasonal workers who work more than 30 days during a season but no more than a total of 45 days in a calendar year.
- How Much Does Workers’ Compensation Insurance Cost? As explained by Florida’s Division of Workers’ Compensation, the cost of workers’ compensation insurance is determined by a few factors: the payroll for the business, the business’s location, the number of employees, the type of work performed by the employees (and associated risk factors), coverage limits and the individual employer’s claims history. There may also be discounts available that can be applied to select employers.
- What Are the Repercussions of Not Having Workers’ Comp? Should a business fail to provide the required workers’ compensation coverage as dictated by their state, it can result in severe consequences, such as fines, out-of-pocket payment for claims, and in some cases, imprisonment. Businesses may also be required to shut down operations entirely, depending on the state and circumstances.
PER: Your Coach and Trusted Resource for Workers’ Comp
Understanding workers’ compensation insurance can be complicated, as there are different requirements per business as well as per state. If you’re a business looking for assistance with workers’ comp, let a trusted resource like Professional Employer Resources (PER) be your guide. We offer workers’ comp insurance for all our clients and assume all administration of these policies while working directly with carriers to reduce costs and get employees back to work quickly during or after recovery, depending on their abilities.
When you work with our team at PER, you get access to:
- A master insurance policy provided by PER
- Payment flexibility: no deposit required — you only pay the premium as wages are paid
- Premium calculation and reporting
- Claims management and loss control
- Drug-free workplace programs
- Legal responsibility transferred to PER for audits and defenses
- OSHA record-keeping and logs for compliance
- Assistance with creating light-duty work for injured employees