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Essential Workers' Comp Insights: Stay Informed & Protected
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Workforce Management

The Most Important Facts About Workers’ Compensation

One-Minute Takeaway

  • Workers’ compensation insurance is not optional.
  • When employees get injured or sick because of work, workers’ comp covers lost wages, treatment, and other costs.
  • Various states allow private insurance, competitive state insurance, or monopolistic state insurance.

Every business leader wants to keep their employees safe. That means implementing workplace safety systems, complying with OSHA standards, and being ready for any issues that come up. And of course, workers’ compensation insurance is a huge part of any workplace safety plan.

Accidents can happen to anyone, despite any precautions you put in place. When things go wrong, workers’ comp protects you and your team from some of the consequences. In this article, you’ll learn some of the most important details about workers’ compensation insurance.

Benefits of Workers’ Compensation Insurance for Employers

Workers’ comp is a two-way safety net. It protects businesses from the financial burdens associated with employee injuries, illness, and treatment. This insurance also lowers your risk of legal consequences if an injured employee decides to sue the company.

From a budgeting standpoint, workers’ comp can stabilize your bottom line. Employers pay a set, predictable insurance premium. In case of an incident, employees and their families receive payouts from the insurance provider, instead of drawing directly from your company’s budget.

Investing in workers’ comp insurance isn’t just a moral imperative or a mandatory benefit. It’s also good business. Studies show that every $1 you put into injury prevention results in a $2-$6 return (Safety and Health Magazine).

What does Workers’ Compensation Insurance Cover?

The details of workers’ comp depend on your company’s exact insurer. HR should work with a rep to learn what’s included in the company’s plan. Typically, workers’ comp policies cover several events, like:

  • Physical injuries from an accident or incurred in the course of regular work.
  • Occupational diseases, or illnesses that develop because of prolonged exposure to workplace hazards.
  • Short-term or long-term disability due to either of the above.
  • Death, in which workers’ comp would issue payment to the worker’s family.

These benefits can be used for a variety of expenses, like:

  • Medical treatment
  • Lost wages
  • Disability benefits
  • Treatment and ongoing care
  • Funeral costs
  • Survivor benefits

Employers’ Obligations for Workers’ Compensation

Legally, employers have to comply with certain workers’ comp regulations. The exact laws vary between U.S. states, but in most areas, you’ll need to:

  • Secure workers’ comp insurance through a private or state insurance provider.
  • Communicate your policy details to employees so they understand their rights and responsibilities. You might need to do this through training sessions, posters, or in your employee handbook.
  • Make regular contributions to your workers’ comp insurance policy. To stay compliant, you’ll need a reliable payroll solution.
  • Facilitate claim filing by establishing a clear system. Make sure employees know how to report workplace incidents, injuries, and illnesses, well in advance of any problems.
  • Cooperate with claims when issues arise. Work closely with your insurance provider to resolve workers’ comp claims quickly and fairly.
  • Meet other state-specific requirements, which can vary widely depending on your location.

Choosing the Right Type of Workers’ Compensation Insurance

When you’re selecting a workers’ comp insurance plan, it’s important to understand your options. In states with monopolistic state funds, you won’t have a choice – but more on that in a minute. Depending on your area, you may have access to three types of workers’ comp:

  1. Private Workers’ Comp Insurance

Private insurance companies can consolidate your different plans, saving HR time on administration. These plans can carry different premiums and offer different levels of coverage. If you’re considering private insurance, take the time to do plenty of research and choose the plan that works best for your company.

  • Competitive State Funds

Like private companies, these funds let employers pick and choose between different plans and insurers. As you can tell from the name, though, these insurers are part of the state. This is a great option for high-risk industries that have trouble finding affordable private insurance.

  • Monopolistic State Funds

Ohio, Wyoming, Washington state, and North Dakota have monopolistic state funds. (Nerd Wallet). Employers in these four states must purchase workers’ compensation insurance from the state; they don’t have the option to choose private insurance. Monopolistic state funds offer less flexibility than other options, but they may be easier for HR teams to navigate. If you do business in more than one state, monopolistic state funds may add a layer of complexity to workers’ comp. 

In any of these categories, you may get to choose between additional options. For example, some employers offer pay-as-you-go workers’ compensation insurance.

How Paycor Helps with Workers’ Comp

Workers’ comp insurance is not optional. If you don’t have coverage, it’s a major compliance issue, and can cause serious legal problems.

Paycor empowers leaders to stay compliant and offer effective, genuinely helpful workers’ comp insurance. Eligible companies can purchase workers’ comp insurance directly from Paycor. And if you use a state fund, including a monopolistic state fund, our payroll software can streamline contributions. Connect with a Paycor expert to learn how our powerful suite of HR tools can keep you compliant and keep your employees safe.