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Workers’ compensation is important insurance coverage for both employers and employees because:
Most employees are covered by their employers’ workers’ compensation insurance, and most businesses purchase workers’ compensation through private insurance companies.
The three key parts of workers’ compensation are the types of policies available to an employer, the benefits the worker receives, and how the coverage is paid for.
While the workers’ comp process may seem simple, there are several factors that affect whether a claim is paid out. So, it’s important to understand the specific policy terms. Some factors include:
What’s covered by workers’ compensation insurance isn’t always obvious because workplaces and work duties vary. Some incidents that may be covered by workers’
compensation include:
There are many variables. What is covered in one state may not be covered in another.
Generally, workers’ compensation plans will pay for the expenses related to the covered accident, injury, or illness. Some examples include:
Generally, yes. All states except Texas and Wyoming require that businesses with employees have workers’ compensation insurance. However, companies in these two states may still need workers’ compensation due to:
In the U.S., workers’ compensation is primarily regulated at the state level. Therefore, workers’ compensation laws, benefits, requirements, and penalties for not purchasing workers’ compensation insurance are different from state to state—often significantly.
In most states, companies can purchase workers’ compensation insurance from any private insurer, subject to state requirements.
If you have specific questions about workers’ compensation requirements for your state, contact the U.S. Department of Labor.
The cost of workers’ compensation varies by policy rate and employees' salary. Here's an example to help you understand how the cost of workers' comp is calculated:
Generally, insurance providers start with a base rate (for example, $.30 per $100 in payroll). If a business pays an employee $40,000, the starting premium for that employee would be $120.
A company’s base rate can vary and is affected by multiple factors:
Most employees are covered by their employers’ workers’ compensation insurance. And most businesses purchase workers’ compensation through insurance companies.
There are different types of workers’ compensation benefits, such as wage replacement, disability benefits, or payments for medical treatment costs, but there are also different types of workers’ comp plans or policies.
Plans are categorized by features that can be complex but generally don’t affect the benefits awarded to employees.
From the employers’ perspective, however, understanding what types of plans are available—or required—can be important for complying with state law and controlling costs, among other reasons.
Workers' compensation policy types and plans can vary depending on who provides the coverage and how the coverage is structured.
Filing a claim for workers’ compensation is not the same as filing a claim for other types of insurance. Because workers’ compensation insurance is carried by the employer and covers injuries and illnesses affecting employees, the process for filing and managing a workers’ compensation claim involves multiple parties.
An employer pays an insurance company for a workers’ compensation plan.
Once safety concerns are addressed and proper medical attention is underway, the supervisor should help determine the appropriate course of action. They should also complete an injury or illness report with the help of the employee. The supervisor should also communicate with the employee about workers’ compensation procedures.
The company will file the accident or illness report with its insurance provider.
The supervisor, employee, insurance provider, and medical professionals will communicate to ensure appropriate benefits and the affected employee’s possible return-to-work timeline.
At Sentry, our safety team and available resources can help you reduce your risk of workers’ compensation claims.
Contact usUnderstanding how workers’ compensation works—and what type of benefits are available or who pays for them—is a complex conversation. Each case requires individualized attention and consideration, as many factors depend on which state’s rules apply, among other variables.
That’s why we’re here to help employers and their teams fully understand what they need to know about workers’ compensation and how to get a plan that meets their unique needs.
You can prepare for a personalized conversation about your workers’ compensation goals, budget, and requirements by exploring the wide variety of workers’ compensation plan types we offer.
Workers’ compensation benefits won’t cover the cost of medical treatment for injuries or accidents that occurred outside of work or for pain and suffering. State and federal laws and policies define work-related injuries.
Incidents that may not be covered by workers’ compensation include:
When you’re not sure, report the incident and let the process sort it out.
Generally, if it’s determined that a worker is injured while performing their job, workers’ compensation can likely provide benefits, from medical coverage to wage replacement.
One core benefit of workers’ compensation is that it helps prevent lawsuits by providing benefits without the need to establish fault. Often, workers forego the right to take legal action when they accept workers’ compensation.
However, a worker may still have the right to sue their employer in any of the following scenarios:
Any serious accident or illness can leave an employee physically unable to perform their job. It’s important to note that an employer can’t fire an employee for filing a workers’ compensation claim—it’s legal and protected.
Examples where an injury or illness could lead to job loss include:
Yes, employees can receive workers’ comp benefits while working.
Workers’ compensation doesn’t pay a full salary. However, employees are entitled to a certain percentage of what would have been their regular gross wage. Amounts may differ, with minimums and maximums varying by state. Tax implications and company benefits may also affect benefit amounts.
An in-depth look at how workers’ compensation works
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