Workers' compensation insurance may be a financial protection vehicle for workers who are either sick or injured on the work and can't work and earn an income. Basically, workers' compensation insurance usually covers wages lost by not having the ability to figure and it helps employees buy medical costs. If the worker dies, workers' compensation also usually covers the value of a funeral and burial, saving the worker's family from having to pay those expenses.
Here's a more detailed rundown of what costs and issues are covered by workplace compensation plans:
Medical/health care costs. The primary costs covered by workers' compensation insurance are medical expenses. The costs are usually tied directly to injuries or illnesses suffered on the job and may include emergency room stays, medical care transportation, testing and treatments, and any costs incurred from specific physicians, clinics, hospitals, and other health care centers.
Salary lost. Often, injuries and illnesses incurred on the work cause the lack to figure, and consequently, the lack to draw a paycheck. Policies vary on a state-by-state basis but injured or sick workers can count on earning about two-thirds of their regular income -- tax-free -- under workers' compensation insurance.
Funeral costs. Workers' compensation insurance also covers death benefits and funeral costs in the event an employee dies on the job either from illness or injury. In many similar scenarios, the insurance also pays out a death benefit to the worker's family, based on annual income and time served on the job.
Cost payouts depend significantly on state compensation laws and policies. Overall, 49 U.S. states require companies to supply workers compensation insurance (Texas is that the only state that does not require it), and every state has its own unique laws and statutes that govern workers' compensation.
Here's a more detailed rundown of what costs and issues are covered by workplace compensation plans:
Medical/health care costs. The primary costs covered by workers' compensation insurance are medical expenses. The costs are usually tied directly to injuries or illnesses suffered on the job and may include emergency room stays, medical care transportation, testing and treatments, and any costs incurred from specific physicians, clinics, hospitals, and other health care centers.
Salary lost. Often, injuries and illnesses incurred on the work cause the lack to figure, and consequently, the lack to draw a paycheck. Policies vary on a state-by-state basis but injured or sick workers can count on earning about two-thirds of their regular income -- tax-free -- under workers' compensation insurance.
Funeral costs. Workers' compensation insurance also covers death benefits and funeral costs in the event an employee dies on the job either from illness or injury. In many similar scenarios, the insurance also pays out a death benefit to the worker's family, based on annual income and time served on the job.
Cost payouts depend significantly on state compensation laws and policies. Overall, 49 U.S. states require companies to supply workers compensation insurance (Texas is that the only state that does not require it), and every state has its own unique laws and statutes that govern workers' compensation.
A Brief History of Workers' Compensation
Workers' compensation insurance dates back four centuries, where ancient Sumerians (now present-day Iraq) were awarded compensation for being injured on the work. Workers' compensation at the time was primitive, but the "scale" model where some workers were awarded more compensation supported the character of their injury and therefore the level of risk associated with their job still exists today.
As society progressed, employers grew more aggressive about not paying compensation, even going as far as making employees sign so-called "death contracts" that blocked them from seeking financial recourse in the event of being hurt on the job.
By the late 1800s, Prussian Chancellor Otto Bismarck created the Employers Liability Law, which more thoroughly laid out the premise of social welfare within the workplace, particularly in high-risk occupations like mining, metal factories, and military service.
That law laid the groundwork for the workers' compensation structure available today. By the first 1900s, the discharge of Upton Sinclair's "The Jungle" chronicled the horrible conditions workers faced in Chicago slaughterhouses. That led the U.S. Congress to enact laws protecting workers (especially the Employers' Liability Acts of 1906 and 1908,) thus introduction a replacement era of workers' "on the job" financial protection.
Over 100 years later, most U.S. states mandate that companies operating in the state adhere to strict rules and governance on worker's compensation issues for both full- and part-time employees.
When Does Workers' Compensation Kick In?
Workers' compensation covers employees under the following scenarios:
- When a worker is hurt on the job and requites medical attention.
- When a worker is recovering from an illness or an injury and can't earn on an income.
- When a worker is killed or is disabled on the job, and the worker's family requires financial assistance.
- When an employee opts to turn down financial benefits offered as the result of an injury or illness on the job and takes legal action against his or her employer.
The Cost of Workers' Compensation Insurance
The cost related to workers' compensation varies, depending totally on the character of the work. By and enormous, a lumberjack goes to need more coverage than an office accountant, whose job is a smaller amount dangerous. Companies build their workers' compensation price model on both occupational risk and what state they operate in, which mandates what a corporation must pay in workers' compensation.
Most state workers' compensation models base their cost on the average cost per worker, per $100 in worker wages. For example, a recent report from the National Academy of social welfare states that the typical cost for workers' compensation in Texas is 31 cents per $100 in payroll. Compare that to West Virginia, where the typical cost is $1.55 per $100 of payroll.
As noted above, the jobs dictate what a company pays in workers' compensation costs.
According to the U.S. Bureau of Labor Statistics, the entire monetary value of workers' compensation per employee stands at 44 cents per hour. The average cost during a white-collar occupation like sales and paperwork is 22 cents per hour. Meanwhile, the typical cost within the higher risk construction trade stood at $1.07 per hour.
You can look at worker's compensation costs in another way -- based on annual pay, cost per employee, and the nature of the employee's job.
According to the National Council on Compensation Insurance, based on a rate of $100 per employee salary, a clerical or office worker who earned $28,000 annually would cost $33.60 to cover each year (plus a one-time administration fee of $250).
But a landscaping worker, who is more likely to get injured on the job, and who earns $36,000 a year, would cost $2,498 to cover for worker's compensation.
It's also worth noting that the above figures are based on employers who haven't made previous claims to an insurance company for workers' compensation costs. Companies that do have previous claims can face workers' compensation costs up to five times higher than the figures cited above.
How You Can Get Workers' Compensation
In most instances, you gain access to workers' compensation insurance once you take a replacement job. That's because in every U.S. state but Texas, workers' compensation is mandated and companies are obligated to having workers automatically signed up for a compensation plan as a condition of employment.
The lone exception is for freelance workers, also known as sole proprietors. These workers aren't actual employees of a corporation and must remove their own workplace compensation insurance policies from private insurers. That gives them equivalent financial protection as salaried workers if they get injured or ill on the work.
To trigger workplace compensation payouts if you get hurt or ill at work, you'll need to take the following steps.
- If you suffer an occupational illness or injury, seek medical help directly. Job one is to take care of yourself health-wise first. If you wait a couple of days or longer, you are taking an enormous risk, because it gets harder to form a workplace compensation claim the longer you wait.
- Then, once you're able, notify your employer directly. They'll start the paperwork process after you complete the necessary forms and documents, and will walk you through the claims application process. Your employer will also put you in touch with the insurance company.
- Once your paperwork is in order, it's time to file a claim. That claim will go straight to your employer's insurance company and needs to be completed before any compensation filing deadlines run out (your company's insurance provider can give you the appropriate deadline dates.) Your filed paperwork will include any medical reports, any forms needed by the state you reside in, and forms filed with your employer. Make sure your claims ask for payments related to any medical expenses already paid out in addition to wage-based payments (again, about two-thirds of your salary.)
- You'll start receiving payments. Once your workers' compensation insurance paperwork is filed and approved (expect that process to take several days to a week or so) you'll begin receiving payments in the form of checks or electronic bank deposits every payday.
You'll receive payments until you come back to figure, during which case your regular salary will resume. Based on your injury or illness, that process could be a gradual one and you'll need to discuss that scenario with your employer.
Contact worker compensation audit lawyer.
