Workers Compensation Insurance

The History of Workers' Compensation in the United States

In the United States in the early 1900's, workers didn't have the rights they enjoy today. Many people worked in perilous industrial conditions. The air quality was poor, the hours were long, and there were few if any safety standards.

On March 25, 1911 the Triangle Shirtwaist Factory in Manhattan, New York went up in flames. 146 employees, including 123 women, died in the fire. This tragedy, along with many other disasters prompted law suits and complaints against companies across the country. Workers were angry and wanted businesses to be held accountable. Companies’ feared litigation would get out of control and were concerned about the potential legal expenses.

Workers' Compensation Insurance as a solution to the worries held by both workers and companies. Workers' Compensation laws limit the amount injured workers can recover, helping businesses, while at the same time ensuring employees who are injured at work get the medical treatment they need.

Employment laws were passed prior to the Triangle Shirtwaist tragedy, but they didn't gain momentum across the country until the first few decades of the 20th century. Maryland was the first state to pass statewide workers' compensation laws in 1902. Four decades later, in 1949, all states had workers' compensation systems.

State Laws

Workers' Compensation Insurance is regulated by the states, and the laws differ from state to state. In some areas of the country, the laws are favorable to injured workers and provide them with several weeks of lost wages and substantial recoveries for permanent injuries. In other states, the laws are less helpful, and allow only minimal amounts of medical treatment and benefits for injured workers. In the United States, the state in which you are injured matters a great deal.

As the State is the insurance company, they collect insurance premiums from Employers, investigate workers comp claims, make payments and set the rates per class of employee – typically a percentage of payroll paid to each worker paid by the employer as an ‘insurance premium’

States generally follow the National Council on Compensation Insurance (NCCI) rules. NCCI is a non-profit corporation designed to help standardize the details of the workers compensation industry.

Here is a state-by-state listing of how each state handles workers compensation -

Federal Workers' Compensation

Workers' Compensation is administered by states for the most part, but Federal Workers' Compensation laws do exist for certain occupations. The United States Department of Labor covers wage replacement benefits, vocational rehabilitation, and medical treatment for long shore and harbor workers, energy employees employed by the federal government, and coal miners who suffer from Black Lung Disease.

How are the insurance premiums paid?

In the US, employers pay for the insurance premiums for workers compensation. As the state is the ‘insurance company’, employers pay the state the insurance premiums – typically a % of per $100 in payroll for each class of employee. Employers can choose to pay-as-they-go, where insurance premiums are paid regularly, usually when paychecks are sent. Some payroll companies such as ADP and Paychex allow the premium deductions and fees to be paid along with the payroll run.

How does an employer go about getting the right workers compensation coverage?

An employer can find a qualified insurance agent, who will guide them through the process of finding the right coverage and payment terms. Especially when an Employer has multiple classes of employees (workers), an agent can be invaluable in helping the employer navigate the complexities.

How Does the Claim Process Work?

In the United States, workers' compensation insurance is mandatory in most states. In some states, like Texas, companies can opt out and provide their own insurance, but this is risky and isn't widely used. Some states run their own systems and employers must use the insurance policies provided by the state. However, this isn't the norm. In most states, companies purchase insurance policies from private insurance carriers.

When someone is injured at work, companies must notify the insurance carrier. In some states, the employer must notify the state as well. The company representative works with a workers' compensation adjuster. The adjuster asks the employer a series of questions to determine the extent of the injury, how it occurred, and whether or not the employee is able to continue to work.

After the adjuster speaks with the employer, she has at least two more calls to make, one to the injured worker and another to the medical facility that treated the employee. The adjuster will ask the employee many of the same questions she asked the employer. She will need to figure out what happened, how the worker was injured, and what kind of treatment the employee will need. The adjuster will also have to confirm the name of the doctor(s) and medical facilities that the worker visited immediately following the injury.

She will ask if the worker is scheduled for a follow-up appointment and when and where this will be located. The adjuster also must ask if the worker missed anytime from work. If she did, the adjuster will need to request wages from the employer and calculate the benefits owed. In many states, workers must be out of work for seven days before they're entitled to temporary disability benefits.

In a few states, employees need only to miss a couple of days and in others they must 14 to 21 days before payments will be issued. Generally, these payments continue until the claimant is able to return to work.

Medical treatment related to the work injury is covered by the employer's workers' compensation insurance. The adjuster must call the medical facilities that the worker visited and determine when the next appointment will take place. The adjuster also needs to set-up billing and request the medical records.

It's critical that the adjuster stay on top of the medical treatment and continues to communicate with all parties throughout the life of the claim. If she doesn't, the bills could pile up and the injured worker could get away with receiving prescriptions, therapy, and surgeries that aren't related to the work related incident.

The injured workers' claim doesn't always end when they return to full-time work. If their injuries are severe, they may be entitled to an additional award to compensate them for permanent disabilities caused by the accident. Many states have schedules that provide adjusters and courts with pre-designated amounts for injuries to certain body parts. For instance, someone who loses a thumb will receive a particular amount and another person who loses a little toe will receive another amount.

When all of the medical bills, lost wages, and permanent disability payments are made, the adjuster must close the claim. This can be done in a number of ways. In some states, the adjuster simply needs to file a closure form with the state and wait for approval. In others, the claim will remain open and the claimant will continue to be allowed to receive related medical treatment unless a settlement is reached.

When this happens, the injured worker receives money in exchange for an agreement to not pursue further treatment for the injury. In most states, this can only occur when a doctor has certified that the claimant's injury is resolved. The settlement money is intended to compensate the worker for both permanent disability and for any future treatment that may be needed if pain and other symptoms return.

The workers' compensation system in the United States is complex. If you're involved in a work related injury, or if you're an employer, you must inform yourself of all of the intricacies involved. If you don't, the injured worker's health, finances, and job status could suffer as a result.

Today's Challenges

In 2017, health care costs and workers' compensation insurance premiums are high and this doesn't appear likely to change anytime soon. Companies, health care providers, and insurance carriers need to work efficiently and smart to cut costs and to stay on budget.

Injured workers are also becoming more and more reliant on narcotics, expensive therapies, and surgeries. Adjusters must work with medical providers and claimants to make sure injured workers receive the care that they need, but don't become addicted to drugs or break the bank in the process.

Fraud has always been a problem in workers' compensation and this is especially true today. Adjusters have to be on the lookout for doctors who order excessive tests and treatments, as well as injured workers who fake or exaggerate their injuries. Most workers suffer legitimate work-related injuries, but others try to take advantage of the system to stay off work or to maximize their benefits.

Adjusters must be vigilant and need to continue to communicate with all parties to make sure the claimant is progressing as they should be.

Adjusters also face the challenge of related, pre-existing injuries. At times, a worker will complain of an injury that s/he claims was the result of a work accident. If adjusters don't ask the appropriate questions or request prior medical records, they could be blind to the fact that the work incident merely exacerbated a prior, non-related injury.

In some states, the insurance company may be on the hook for the full extent of the injury, but in many others, knowledge of a prior injury can drastically reduce the treatment and benefits they receive for their work related impairment.

Future Challenges to Workers' Compensation in the United States

Workers' compensation systems aren't going away anytime soon. Despite the complications, workers' compensation continues to help injured workers across the United States. It's not perfect, but it does provide a way for injured workers to receive the treatment and benefits they need while also limiting the potentially devastating impact out of control litigation could have on companies.

In the future, workers' compensation claims will become even more complex as new innovations in medicine and technology emerge. The advance in prosthetics, surgical procedures, medical tests, and medicine, just to name a few, will have a significant impact on the costs involved in work comp cases.

Although briefly touched on earlier, opioid abuse requires another mention. In the coming years and decades, more and more patients will unfortunately fall victim to opioid abuse. This could lead to additional costs to cover rehabilitation and treatment. Abuse could also lead to additional medical issues, which claimants may blame on their doctors and workers' compensation insurance company.

The cost to treat opioid abuse is expensive, but it doesn't hold a candle to the potential expenses that could result from organ failure and death. Adjusters and insurance companies must stay on top of their claimant's treatment and must act to wean them off of these dangerous drugs if needed.

Changes to the health care system in the United States could also drastically impact workers' compensation. The Affordable Care Act is still in place, but this may change in recent months or years. Regardless of whether or not the ACA survives, health insurance will no doubt be very different in the coming years than it is today. This will affect costs, treatment options, and many other factors.

The rise of medical and recreational marijuana has impacted and will continue to impact workers' compensation in the coming years. In many states, marijuana use prior to a work related injury is enough to deny a claim. In other states, marijuana is classified as a medicine and may even be prescribed by doctors. As more and more states decide to legalize, insurance companies will be pressured to decide whether to pay for legally prescribed marijuana. They will need to work with states and the federal government to decide what they can and cannot cover.

Another likely challenge in the future is the rise of remote jobs. More and more people work from home these days and this number is only expected to increase. This will complicate insurance. Adjusters will need to work even harder to determine if the injury was work related and if it will be covered. Many workers who telecommute are independent contractors and therefore aren't covered by workers' compensation.

However, this isn't true for everyone and some workers may still be considered employees even though they don't have to head into an office every day. Modern technology allows us to communicate with people via email, phone, and video chats. Employers could still supervise and manage their employees even if they aren't in the same place. As this becomes a more popular way to do business, it will further complicate workers' compensation.

Terrorism is another threat in the future, not only to the lives of Americans, but also to workers' compensation. Insurance companies can afford to cover the occasional work injury, but they will be strained if they have to pay for dozens or hundreds of injuries at one time. For this reason, states must work with the federal government to create secondary funds and additional resources that help out in these situations. State and local law enforcement must also be vigilant and need to keep lines of communication open with federal authorities to make sure work related terror attacks are avoided.

25 Most Popular Workers Compensation Insurance Policies

There are many types of workers compensation, obviously the more dangerous the job, the more expensive the insurance coverage.

Artisan Contractors Workers Compensation
Contractors Workers Compensation
Computer Consulting Errors and Omissions Directors and Officers Liability and Workers Compensation
Computer Software Design Errors and Omissions Directors and Officers Liability and Workers Compensation
Hotels Workers Compensation
Construction Trade Contractors Workers Compensation
Artisan Contractors Salesman Workers Compensation
Restaurant Workers Compensation
Resorts-Hotels and Motels Workers Compensation
Staffing Services Workers Compensation
Construction Trade Workers Compensation
Hotels and Motels Workers Compensation (class code: 9050)
Alcohol amp; Drug Abuse Center Workers Compensation
Construction Special Trade Contractors Workers Compensation
HVAC Contractors Workers Compensation
Restaurantsnbsp; Bars and Taverns Workers Compensation
Environmental Consultants Workers Compensation
Excavation Contractors Workers Compensation
Nursing Homes Workers Compensation
Environmental Contractors Workers Compensation
Restaurant and Tavern Workers Compensation (class code: 9079)
Nursing Homes Workers Compensation (class code: 8829)
Home Health Care Agencies Workers Compensation
Medical Staffing Home Health Workers Compensation
Burglar Alarm Installation Workers Compensation

Workers' compensation is likely to change in the coming years, but the system as a whole is unlikely to go away. As a result, companies, workers, adjusters, medical providers, and insurance companies must be vigilant. They must think up smarter ways to work together to make workers' compensation in our country a more effective, sustainable system.

The following insurance markets provide workers compensation coverage on a mono-line or package basis for both standard and difficult-to-place class codes.
Empire Underwriters, LLC
“Tough” or Difficult to Place Risks Program

Highlights of Empire's "Tough" or Difficult to Place Risks Guaranteed Costs Retroactive Programs - "Retro Plans" High Deductible Programs Premium Deviations "Consent to Rate" Approvals Dividend or "Return of Premium" Plans ...
Empire Underwriters, LLC
Alternative Workers Compensation Program

Features of Empire's Alternative Workers Comp Programs Guaranteed Cost Retroactive Programs - “Retro Plans” High Deductible Programs Rate/Premium Deviations “Consent to Rate” Approvals Dividend or “Return of Premium” Plans ...
USG Insurance Services, Inc.
Contractors Insurance

USG Insurance Services, Inc. is a national wholesaler and managing general agent (MGA) with 18 offices across the country and the ability to write in all 50 states. Built from the ground up by some of the top executives in insurance, USG continues to...
Empire Underwriters, LLC
Contractors Workers Compensation Insurance

Empire has programs and solutions for your Contractors Workers Compensation Insurance needs! Appetite: MOD 1.30 or Greater High Hazard or Tough Classes Blue, Gray and White Collar Accounts Accounts in State Pools or Funds...

Workers’ compensation can be a huge barrier for small businesses. Oftentimes, these business owners are required to carry insurance, but it’s too expensive. Over the years, we have specialized in helping our agents find affordable small business ...
Empire Underwriters, LLC
Hard to Place Workers Compensation Insurance

Workers Compensation Insurance is a mandatory insurance in most states. Workers Compensation normally covers medical costs and a portion of lost wages for an employee who becomes injured or ill on the job. Like most businesses not every workers com...
Monarch Partners Group LLC

Monarch Partners Group LLC and affiliates (MPG,) have been providing standard and alternative market workers compensation solutions to agents and brokers nationwide for over 25 years.   MPG specializes in High Risk and Hard to Place risks s...
Amwins Underwriting
Healthcare Workers' Compensation

The AmeriComp Healthcare insurance program is offered by Amwins Program Underwriters.  The mono-line workers' comp solution is available nationwide. Target Classes include: • Assisted Living Facilities • Clerical (heath care related) • Clinic...
Empire Underwriters, LLC
High Risk & High X-Mod Workers Comp

Empire Underwriters recommends our Alternative Workers Compensation program for insured's that have high risk governing codes and high experience modifiers. If you have clients that have no option other than the State Compensation Insurance Fund, the...
Empire Underwriters, LLC
New York Workers Compensation Insurance Program

Appetite: MOD 1.30 or Greater High Hazard or Tough Classes Blue, Gray and White Collar Accounts Accounts in State Pools or Funds Distressed Accounts or Lapsed No Prior, Cancelled, Non-Renewed New Ventures ... OK ...
Empire Underwriters, LLC
Non-Standard Workers Comp Insurance

Do you have clients that are hard to write or are trying to get out of the of the state fund? Not all workers compensation insurance policies are the same, some require alternatives to receive the right coverage for their business. Some operations re...

PROGRAM OVERVIEW A Workers’ Compensation program built for tough industries. Payroll Opt-Out is a unique premium only master policy workers comp solutions for businesses in tough industries and with substantial premium (100k+). Like a standard mar...
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Further Reading 
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