Frequently Asked Workers’ Comp Questions
The following Frequently Asked Questions (FAQ) are provided for those people new to the workers comp field (as we all were at one time or another). NOTE: This is a generic overview and does not reflect the workers comp laws of any particular state. Check the state laws on our site, or ask your insurance claims professional. See disclaimer at bottom of page.
| Q. | What is workers compensation? |
| A. | It is a form of insurance required of employers in all 50 states (except TX) and Unites States territories. It is purchased by employers to meet their statutory obligations. The insurance pays the medical expenses and part of the lost wages suffered by an employee who is injured on the job or becomes ill due to work done on the job. |
| Q. | If my company purchases workers compensation insurance, can the employee still sue the employer for being injured on the job? |
| A. | No. The workers compensation statutes makes the employer strictly liable for the injuries that occur on the job, even if the result of the employee’s carelessness. In exchange for making the employer strictly liable for the injuries incurred, workers compensation is considered an exclusive remedy and takes away an employee’s right to sue for injuries caused by the negligence of the employer. |
| Q. | Where does an employer obtain workers compensation insurance? |
| A. | In forty-six states the employer can purchase workers compensation insurance from an insurance carrier who specializes in this coverage. In the four states of North Dakota, Ohio, Washington and Wyoming, the employer must purchase the workers compensation insurance from a state-operated fund. You can receive a free quote for coverage in our Workers Comp Insurance Quote Center. |
| Q. | Can a company opt-out of purchasing workers compensation insurance? |
| A. | It is compulsory in all states and territories except Texas and New Jersey. It is elective in Texas, but if the employer does not have workers comp coverage, the employer is liable for suit without being able to raise any defense. In New Jersey, the employer is subject to a “disorderly person offense” with an initial penalty of $1,000 plus an assessment of 15% of any award (not to exceed $5,000), plus an assessment of $1,000 for every 10 days the employer elects not to have workers comp insurance. |
| Q. | Are the workers compensation rules the same in every state? |
| A. | No. Although there are similarities in many states, each state determines its own rules, requirements, policies and procedures. There is no single cohesive set of rules to follow. The employer must learn the individual requirements of each state where they do business. |
| Q. | Who is required to have workers compensation insurance? |
| A. | Almost every employer. Most states exclude sole proprietors and partnerships without employees. Most states also exclude volunteers at non-profit organizations. Very small businesses with less than a specific number of employees set by statute (usually one to five) are also excluded in many states. |
| Q. | What medical expenses are covered by workers compensation insurance? |
| A. | Every necessary medical expense incurred as a result of an on-the-job injury or job related illnesses is covered. |
| Q. | Are all injuries occurring at work covered by workers compensation? |
| A. | For the most part, yes, but there are some important exceptions. Most states exclude injuries caused by the employee being intoxicated or under the influence of illicit drugs. Intentionally self-inflicted injuries are normally excluded, including injuries received in a fight. There are other exceptions in the various states. |
| Q. | Who selects the doctor to treat a workers compensation injury? |
| A. | It depends on the law of the state where the injury occurs. In about half of the states, the employer determines the medical provider for the workers comp injury. In the other half of the states, the employees can select their medical provider. |
| Q. | What are the wage benefits paid to the employee? |
| A. | In most states, the employee receives two-thirds of the gross income, with maximum amount caps and minimum amount limits. In other states the employee may receive 75% or 80% of the net take home pay. The wages can be classified into two types – temporary income benefits and permanent income benefits. The temporary benefits are paid while the worker is recovering from the job related injury or illness. Permanent benefits are paid when the worker reaches maximum medical improvement but will always have a degree of disability from the injury or illness. |
| Q. | How long can the employee collect temporary income benefits? |
| A. | It varies by state. In some states the limit on temporary income benefits is 100 weeks. In other states the income benefits can go on for as long as the employee is unable to return to work. |
| Q. | What are the limits on permanent income benefits? |
| A. | It varies by state. In some states the limit on permanent income benefits are capped at a set number of weeks, often 300 to 400 weeks. In other states the permanent income benefits are paid until the employee reaches full retirement age. In other states the permanent income benefits are paid for life. |
| Q. | What are “scheduled injuries”? |
| A. | When states started adopting workers compensation laws nearly 100 years ago, the safety standards for industry were much lower, often resulting in amputations of body parts, or the loss of hearing or sight. If an employee lost an arm, he received an amount of money set by the state. If she lost an eye, she received a different amount of money set by the state. For each appendage, eyes and ears were stated amounts, thus the list (schedule) showed both the employer and the employee what would be paid for each body part. Most states continue the practice today even though these types of injuries are rare in the modern world. Depending on the state, a scheduled injury is often stated as percentage, such as “10% impairment rating of the right arm” or “10% impairment.” |
| Q. | What happens when an employee dies on the job due to a work-related car accident or other occurrence? |
| A. | Every state has requirements for death benefits. The surviving spouse and/or dependents receive income benefits to offset the lost income due to the death of the employee. If there is no spouse or no dependents, the money may be paid to next of kin or even to the state, depending on state law. |
| Q. | Are there any other types of benefits paid by workers compensation insurance? |
| A. | Some states provide for rehabilitation expenses of seriously injured workers. Also, some states require the seriously injured worker to be retrained for another occupation if the worker is unable to return to the former job. |
| Q. | If my employee gets sick at work, is that covered by workers compensation insurance? |
| A. | It depends on what made the employee ill. If the employee’s illness is due to a medical condition not job related, it is not covered by workers compensation insurance. If the employee becomes ill by breathing fumes or dust created by the work itself, it is covered by workers compensation insurance. For instance, employees who develop black lung disease from coal mining or construction workers who develop asbestosis from working with asbestos are covered by workers compensation insurance for their occupational disease. |
| Q. | How can my company lower the cost of workers compensation insurance? |
| A. | The best ways to decrease your cost of workers compensation insurance is for your company to have a strong safety program, nurse triage at intake and a modified duty return-to-work program. |
| Q. | Where can I obtain additional information about workers compensation? |
| A. | Please contact us at any time with your questions about workers compensation. We offer paid consulting services, and so do the companies in our Directory. |
