Who Pays for Workers' Compensation Benefits?

Who Pays for Workers' Compensation Benefits?

Workers’ compensation benefits must be available to all employees under the Workers’ Compensation Act. Most states have their own workers’ compensation statutes that require employers to have workers’ compensation insurance coverage for their employees. This type of insurance is liability insurance to protect/cover employers in case one of their employees is injured (nonfatal or fatal) during the course of his or her employment (while on the job). Workers’ compensation benefits may cover payment for injuries sustained by the employee, emergency/future medical treatments, therapy, lost earnings and death benefits for family members. Also, in the insurance policy contract, employers must pay the premium for each employee. The premium per employee is usually based on the gross amount of wages that employee earns on an annual basis.

When a workers’ compensation claim occurs, the insurance pays the employee from the company’s policy. The company may be insured in a few different ways; the type — or origin/source — of the insurance depends on the jurisdiction you are in and the specific statutory conditions in that state. The insurance mandated by statute may be a fund managed by the government, a private insurance company or the employer may be self-insured (meaning, the company has no outside insurance and is held responsible for their own financial liabilities). Along these lines, in some states, self-insured companies may have an insurance contract that limits their financial liability to an employee up to a specific amount. This is to protect the company from detrimental losses, or total loss of the company’s finances. This type of contract may not be permitted by statute in some states, it depends on the statutory conditions for workers’ compensation insurance in the jurisdiction in which you are located.

Do Workers' Compensation Benefits Cover Only Injuries, or Also Long-term Problems and Illnesses?

All employees are entitled to workers’ compensation benefits if they are injured while working in the United States. The injury may be due to an accident that occurred while working or an illness that is related to the employee’s occupation/trade. Workers’ compensation benefits covers more than treatment for physical injuries that occur while working. Other benefits included may be:

• Lost wages (up to ninety percent in most states), that may include permanent or temporary wage replacement or payment of lost earnings to survivors in the case of the employee’s death
• Healthcare, medical treatment, therapy services rehabilitation and any medical devices (such as prosthetics) that may be deemed medically necessary. This includes immediate treatment and future treatments.
• Disability benefits, for temporary or permanent disabilities
• Death benefits to the deceased employee’s survivors.

The amount of benefits, types of injuries that receive benefits and length of time that the benefits may be paid will be specified by state law. Generally, most statutes will provide benefits for medical treatments as long as the care received is for improvement, or rehabilitation. Once an injury is classified as permanent and static (progress is at a standstill), some jurisdictions will not extend benefits for employees. It is important to speak to an attorney familiar with the workers’ compensation statute in your area to discuss your situation and options.

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