For those who experience work-related injuries or illnesses, workers' compensation insurance — or workers’ comp — provides a “no-fault” program under which employees give up their right to sue employers for work-related injuries, illness, and death. Workers’ comp also enables employers provide insurance coverage to employees who suffer work-related injuries, illness, or death.
Workers' comp programs are primarily implemented and regulated by state governments and benefits include partial wage replacement, restitution for medical expenses, vocational services or vouchers, and — in the case of employee death — survivor benefits. Workers' compensation is a “no-fault” program, which means that benefits are administered generally without regard to whether a customer, coworker, employer, or employee was responsible for the injury (with certain exceptions described below). What matters is that the injury happened while on the job.
In essence, workers' comp provides protection for both employers and employees. Employees give up their right to sue employers for work-related injuries, illness, or death, and employers provide insurance coverage to employees who suffer from any of the events listed above.
Workers' Comp 101
Which Workers’ Compensation Injuries are Covered?
For the most part, if an employee is injured while on the job, workers’ compensation insurance will cover the injury. As with all programs, though, there are some limitations on what may be covered. While fault generally does not come into play, there are instances where the coverage may be denied. For example:
- If the employee is injured while he or she is intoxicated or under the influence of an illegal drug or controlled substance;
- If the injuries are self-inflicted; or
- If the injuries occur while committing a crime
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Additionally, if the employee violates company policies put in place for safety reasons, coverage may be denied in the event of a resulting injury. And although it sounds obvious, it should be stated — if an employee gets hurt while off the job, they are not entitled to workers’ comp.
What are Workers’ Compensation Benefits?
In the event that an injury takes place, there are a few different ways insurance can provide help to the employee.
However, before employees are eligible to receive benefits, they must meet with a doctor — often chosen and paid by the employer’s workers’ comp insurance provider. Once the doctor has determined the employee has experienced an illness or injury, several benefits may be available.
Generally acceptable medical practices are likely to be covered in the event of injury, such as doctor visits, medicine, surgery, and special equipment are usually covered. The key phrase is “generally acceptable.” Experimental treatments may not be covered.
Vocational Rehab Services, or Vouchers
If an employee’s injury or illness requires rehabilitation services to regain lost skills for the employee’s current job, or if the employee cannot return to his or her job and needs to learn a new vocation, those services are often covered through workers’ compensation insurance.
Partial Wage Replacement
Typically, injured employees receive an indemnity benefit payment that amounts to about two-thirds of their normal weekly wages during the time they are unable to work. Most states have rules that cap how much an employee can receive. Often, if an employee is permanently partially disabled or permanently totally disabled, a lump sum payment is negotiated that includes future partial wage replacement payments (which are usually calculated based on pre-set formulas) and payments for anticipated future medical services.
In the event that a work-related incident results in an employee death, workers’ compensation insurance generally provides survivor benefits to the employee’s dependents, including a spouse, child, parent, or sibling.
Where Can I Get Workers’ Compensation Insurance?
Many insurance companies provide workers’ compensation insurance, though some companies focus on particular industries, and may, for example, cover only the tech sector, or construction industry, as the risks for each industry are different. Justworks is a Professional Employer Organization (PEO), and we provide access to workers’ comp for our customers. You can learn more about how we help small businesses access affordable benefits here.
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, legal or tax advice. If you have any legal or tax questions regarding this content or related issues, then you should consult with your professional legal or tax advisor.