If you’re a business owner with more than one employee at your company, workers’ compensation is an essential insurance coverage. Not only is it mandatory in nearly every state, but workers’ compensation insurance keeps you from having to pay for employee’s medical costs and lost wages out of pocket. Learn how each type of workers’ compensation coverage protects you and your employees.
Workers’ compensation insurance offers financial protection to your employees if they experience a work-related injury. Because every health condition requires different treatments, ongoing care, and recovery times, your policy provides various coverages for employees. The four standard coverages found in workers’ compensation policies are medical, rehabilitation, disability, and death benefits.
The medical coverage portion of your workers’ compensation policy pays for injured workers’ medical bills following an accident. To be eligible for coverage, your employees must sustain an injury or contract an illness on your premises or during the scope of their work. For example, if your employee gets injured while driving a vehicle or visiting a customer’s home during the workday, they are eligible for benefits.
After a worker sustains a covered injury, your workers’ compensation policy typically pays for 100% of the following:
- Ambulance fees
- Emergency room bills
- Surgeries, if medically necessary
- Prescription medication costs
- Certain diagnostic tests
- Hospitalization fees
- Doctor visits
In some states, your employees may be required to choose from a list of approved physicians. Because policies differ based on your insurance company and location, it is important to read your policy and understand any coverage exclusions.
Medical coverage benefits your employees by paying for any necessary medical treatments after an accident. Medical bills can add up quickly after a work-related incident, no matter how minor. Additionally, medical coverage benefits your business. All you have to pay is a yearly premium, and your insurance company picks up your employees’ medical bills in most incidents.
Without workers’ compensation insurance, your employees could sue you for damages. By purchasing a policy for your employees, you can avoid court and protect your financial assets.
Depending on the type of injury or illness your employee sustains, they may need ongoing medical treatments or physical therapy. Your workers’ compensation policy typically pays for these rehabilitation costs. It also covers treatments that help your employees regain the skills they need to return to work.
In some cases, your employee may be unable to work in the same position after an accident. Certain states cover vocational rehabilitation to ensure your employee can develop the skills necessary to get a different job. Your policy may pay for tuition and other training expenses if that training enables your employee to find a new role.
Your employees may have to withdraw from work temporarily or permanently after an accident. Workers’ compensation coverage pays for a portion of employees’ lost wages during their leave from work. Disability benefits fall into two categories: temporary and permanent.
Temporary Injury Benefits
There are two types of temporary injury benefits. The first, known as temporary total disability, pays for a portion of your employee’s wages if they can’t work at all for a short period of time. For example, let’s say your employee suffers a knee injury on the job. They have to have surgery and spend six weeks away from work. For those six weeks, they would receive an untaxed portion of their wage.
The second type of temporary injury benefit is temporary partial disability. If an employee suffers an injury that only keeps them from doing a portion of their job, your workers’ compensation policy will pay the difference. For example, if your manual laborer breaks their arm and can only perform clerical work for a month, they may only work for six hours a day. Your policy would cover a portion of their wage for the 40 hours of missed work that month.
Permanent Injury Benefits
Permanent injury benefits fall into the same two categories as temporary benefits: partial and total. Permanent partial disability coverage applies if your employee sustains a permanent injury that limits their ability to do their former job. For example, let’s say your worker used to load and transport pallets but can now only transport pallets using a forklift due to a permanent back injury. If you reduce their hours or wage, permanent partial disability will pay a portion of lost wages.
Permanent total disability benefits differ by state, but they typically pay for a portion of pre-injury wages if an employee can’t return to their former job after an injury.
In the rare case that one of your employees dies as a result of a work-related injury, your workers’ compensation policy will likely compensate their family members for funeral and burial expenses, plus a portion of their wages. Financial benefits vary by state, but most offer a weekly payment or lump sum to qualified dependents after the employee’s death.
Employees don’t have to die directly following an injury to receive death benefits. If an occupational hazard accelerates their death or causes it years after exposure, your employee’s family may still be eligible for benefits.
Workers’ compensation insurance is complicated. Your employees must meet specific criteria to receive benefits under your policy, and you have to comply with state laws for employers. Additionally, it can be challenging to know which insurance company offers the best coverage for your company. If you need an expert’s help determining your coverage limits and policy needs, InSource Insurance Group can help.
Though we offer workers’ compensation insurance for employers in every industry, we specialize in providing insurance for high-risk employers in the oil and gas and construction sectors. As a result, we have handled some of the most complicated workers’ compensation cases. We know how essential workers’ compensation coverage is for both employers and employees, and we want to help you find the perfect policy for your business.
Contact us today to learn more about workers’ compensation insurance and take the first step in securing coverage for your company.