What is Workers’ Compensation?

This form of compensation which is commonly referred to as “workers’ comp” is mandated by the government. Its purpose is to provide much-needed benefits to those who have become injured or ill while on the job. This program provides healthcare and cash benefits to those who suffer injury or illness as a direct result of performing their job duties. In recent years, this has proven to be the most lucrative of the property/casualty line of business. 

Texas is the only U.S. state that does not require employers to provide a solid backbone of workers’ compensation insurance. When an employee accepts their workers compensation benefits, they no longer can initiate a lawsuit against their employer for damages. Compensation received may include repayment of salary and reimbursement for medical costs. In 2022 worker compensation premiums for private carriers and states stood at $42.5 billion up from $38.5 billion in 2021.

Understanding Workers’ Compensation:

Workers’ compensation benefits may include partial wage replacement covering the time when the employee was unable to perform their duties. These benefits also include reimbursement for healthcare services and aids in recovery such as occupational therapy. The source of funding for these benefits is commonly private insurers, with each state having checks and balances in place to intervene during disputes. The “Black Lung” program handles death and disability benefits for coal miners and any immediate dependents. 

Workers’ Compensation Benefits:

Salary Replacement: The salary replacement that an employee can expect is less than any worker’s projected full salary. Programs on the more generous high-end reimburse the employee for about two-thirds of the worker’s gross salary. These benefits can compensate for a good deal of lost income since they are not taxable at the federal or state level. Taxes can, in some instances, be due to recipients who have suffered income loss from the Supplemental Security Income or Social Security Disability act. 

Healthcare Cost Reimbursement & Survivor Benefits: Most compensation plans offer coverage of medical expenses that are related to injuries stemming from a direct result of their current employment. A contractor could effectively claim injury for suffering an impact during a framing task, but not for an injury incurred while transporting themselves to the job site. If an employee perishes as the result of a work-related incident, workers’ compensation allocates payments to the worker’s dependents. 

Special Considerations:

An official claim for workers’ compensation may be disputed by the employer, much like typical unemployment insurance. The Workers’ Compensation Board will preside over the dispute. Disputes can arise over whether the employer turns out to be technically liable for the illness or injury. Sadly enough, these claims are susceptible to those performing elaborate types of fraud. The National Insurance Crime Board recently predicted that there is a quite staggering amount of claims accepted where co-conspirators are profiting from very deep-seeded acts of dishonesty. 

Independent Contractor Exception:

In most states, only regular W2 employees are eligible for workers’ compensation. Independent contractors are not, which includes many workers in the emerging gig economy who drive for entities such as Uber and Lyft. More than 34 million of these contractors worked part-time at jobs like these or delivering food with DoorDash and GrubHub. While contractors are almost always never eligible for benefits, turbulent changes in the global economy have many of these types of workers eagerly pushing for change. 

Coverage A vs. Coverage B:

There are two types of prominent workers insurance compensation coverage types: Coverage A and Coverage B

  • Coverage A: Includes all of the state-mandated benefits that any employee who is injured or ill is entitled to receive under the guise of their coverage. This covers crucial salary reimbursement, medical bills, costs for rehabilitation, and death benefits. The depth and amount of coverage depend from state to state, with Texas being the only one without this useful provision.
  • Coverage B: This kicks in to pay needed benefits that exceed the minimum required by Coverage A. An unfortunate (and successful) lawsuit against the employee is one of the only scenarios where these benefits are paid out, which usually cites negligence or gross misconduct across various channels. 

When a worker accepts workers’ compensation, a no-fault contract is created, which sees the employee waiving any rights to sue their employer. However, some very serious circumstances have allowed numerous employees the singular or collective right to pursue legal action against their employer. One of the best decisions for anyone in business is to purchase coverage that combines A and B types. 

How do you Apply for Workers’ Compensation?

The rules for workers’ compensation acceptance vary by state, but there is a general protocol: 

  • Document the details of injury or instance of illness in detail, with excellent photos and full names of present witnesses. 
  • Next, report the injury to your employer. The employer will take over from there and file the official claim with us as your insurer to guide you through.

Who is Exempt From Workers’ Compensation?

Most instances see just salaried employees eligible for workers’ compensation. The world’s many digital artists, creators, PR individuals, and other freelancers are not covered. Some workers such as touring musicians and real estate agents are exempt from this coverage, which varies by state. Here in Missouri, farm laborers, real estate agents, and domestic servants in a private home are exempt. 

How Can Workers’ Compensation Costs be Reduced?

The cost of workers’ compensation is unfortunately never very static. Eventually, legislators and employers begin to collectively feel a burden on the state’s economy. The focus switches to making sure insurers are notified of an injury immediately, and getting the employee quickly back to work. Reducing the amount of emotional distress after an accident and all parties working towards not enduring legal action are key. The systems at play sometimes get out of balance, with stress on all ends in a post-pandemic landscape. 

All of us at the Alexander Agency of St Charles know that the work climate in Missouri has been rapidly changing, but there’s SO much hope and promise every single day! We would love to be your provider for this coverage that guarantees wellness and longevity for your most important asset.