Workers Compensation – What it is, Types, and How to Apply

Workers’ compensation insurance pays important benefits to employees when they are injured or sick because of their jobs. It makes sure that the injured workers receive all the lost wages and the care needed regardless of who is at fault. This benefit includes payment to cover lost wages, medical treatment, and death benefits.

Workers Compensation - What it is, Types, and How to Apply

In most states, it is required for businesses to purchase worker’s compensation insurance for their employees.  Employers are protected from any costly employee lawsuits over injuries sustained while working. Furthermore, having worker’s compensation insurance is very important in most states as soon as you have your first employee.  It is also important for the business because it covers any medical bills related to the employee’s illness or injury.

What is Workers Compensation?

Workers compensation is a government-mandated program that offers benefits to workers who become ill on the job or injured as a result of the job. It is a disability insurance program for workers offering cash benefits, healthcare benefits, or even both to employees who suffer illness or injury as a direct result of their jobs. 

The employers pay for employee compensation coverage. Employees don’t add to the funds.  A workers’ compensation claim is paid if the employer confirms that the illness or injury was work-related. If the insurer rejects the claim,  then the compensation judge decides the case.  In addition, the worker’s compensation might compensate a family after a work-related death.

Types of Workers Compensation

In the United States, workers’ compensation rules are operated by the individual states. Employers buy a worker’s compensation insurance policy to offer perks for employees in the state of an injury at work.  Although worker’s compensation can vary between states, however, most places provide four types of workers’ compensation benefits to workers.  There are different types of workers compensation and they include:

Medical Only

Workers compensation pays 100% of medical costs for injured workers and it pays cash benefits for lost work time after a seven-day waiting period. Several worker’s compensation cases don’t involve lost work time better than the waiting period for cash benefits.  In most cases, only the medical costs are paid.  However, they represent only a small share of overall payments.

Temporary Total  Disability

Several injured workers can get temporary total disability for a specific period.  In some states, you must be unable to return to work for at least seven days to be eligible for temporary total disability payments.

If you are gone from work for at least 21 days, you will also get payments for the first seven days that you are away. Temporary total disability benefits two-thirds of the average weekly wage you were earning before the injury.  You are also not able to receive benefits for more than 400 weeks.

Temporary Partial Disability

Most times, you are still able to work after a work-related injury, however at a low capacity.  You might even have to work for just a few hours, earn a lower wage, and take on a less demanding role because of your work-related injuries.

In case of this event, you will get temporary partial disability benefits.  Temporary partial disability benefits are paid at two-thirds of the difference between the average weekly amount you were making before and also the average weekly wage you can earn now.

Permanent Total Disability

If an injured worker has impairments that are judged to be permanent after he or she gets to the maximum medical improvement, then permanent disability benefits will be paid.

Permanent total disability benefits are paid to workers who are unable to work because of any work-related illness or injury.  The benefits are paid when the worker has any physical impairments that might limit the employee’s ability to work.

Death Benefits For Dependants

Workers compensation also pays death benefits when a work-related injury or illness is fatal. The benefits include an amount for burial and funeral expenses and cash benefits for the workers’ family or even dependents.  For employees who die without any dependants, the benefits are limited to only funeral and burial expenses.

The above-mentioned shows the different types of workers’ compensation.

Who Needs Workers Compensation Insurance?

Several states require businesses to have workers’ compensation insurance even for small business that operates with just a single employee.  It is also important that you have coverage as soon as possible. Even if you are the sole owner of your business, you might be required to have a worker’s compensation. 

Without worker’s compensation, you will have to pay out of your pocket for the costs, because your health insurance will not cover any medical bills associated with an employee’s work-related illness or injury.

What Does Workers Compensation Cover?

This insurance covers a variety of things and they include:

  • Disability benefits are available if the injury is caused by a permanent or partial disability.
  • Lost wages are also covered when the employee needs some time away from work to recover from any work-related injury or illness.
  • Death benefits also include funeral costs and survivor benefits for the employee’s family.
  • Ongoing care costs which include physical therapy are also covered by workers’ compensations.

Worker’s compensation benefits are paid regardless of who is at fault and the workers’ compensation laws usually prevent employees from suing their employers for any work-related illness or injury.

Benefit of Workers Compensation Coverage

Workers’ compensation benefits both the business and the employees. Here are a few perks of workers compensation coverage:

It covers your employees for extended absences. An illness or accident that results in an extended absence could be financially devastating for your employees. Also, it covers lost wages and ongoing care costs like physical therapy.

In addition, it lowers your out-of-pocket expenses. if a worker gets sick on the job, then the worker’s compensation pays for the lost wages, the medical expenses, and other fees such as funeral costs.

Workers compensation covers your employees regardless of who is at fault.  It is usually that mistakes happen in the workplace; this is why the worker’s compensation will cover your employees even if they are the reason for the accident.

The above-mentioned are some of the perks of getting a worker’s compensation.

How Do You Apply For Workers’ Compensation?

The application process varies by state.  The employee with a job-related illness should:

  • Write down the information of the illness or injury in detail, with the photos and the names of witnesses.
  • Then report the injury to your employer. The employer should take it from there, and then file your claim with the insurer.

You can follow through with the employer’s insurance company to ensure that a claim is filed. However, if the claim is denied, then you can appeal the decision with your state’s workers’ compensation board.

How Much Does Workers Compensation Cost?

The average cost of workers’ compensation is about $542 per year. This is about $45 per month. The worker’s compensation insurance cost depends on the job classifications of employees and these classifications reflect the risk of the job.

How Long Does Workers Compensation Last?

The state might limit the length of workers’ compensation payouts. These limits might be anywhere between 3 to 7 years based on the state. However, some states stop this payment when the employee turns 65.