For anyone injured or ill while on the job, having workers' compensation is essential insurance that provides relief to both the employee and business owner. How does workers’ comp work? In short, workers' compensation coverage, otherwise known as workers' comp insurance, offers benefits to cover lost wages, medical expenses, and other medical bills for an injured employee or a work-related injury.
When a small business expands, so does the number of employees and the potential for workplace injuries. Rather than cover the cost of medical care out of pocket, business owners protect themselves by having workers' compensation insurance coverage in place.
There's a lot to know about worker's compensation benefits, and the details vary from one insurance company to the next. This article will cover the basics of what you need to know along with relevant FAQs about the claims process, workers' comp claims, exclusions, and how to support your people with workers' comp insurance.
How Does Workers' Comp Work?: The Coverage
State laws vary, but many consider business insurance, including workers' comp insurance, an absolute necessity from day one.
An injured worker may be entitled to workers' comp despite who is responsible for the injury and the insurance itself is paid wholly by the employer to cover medical treatment.
Not every injury is covered, though. Here are some examples of job injuries that are covered:
- Carpal tunnel
- Damage to the back from repetitive movements
- Lung injury due to breathing toxic substances
- Physical falls at work
- Injuries as a result of a car accident while driving on the job
Here are some instances where workers' comp benefits can be denied:
- When blood/alcohol tests reveal impairment at the time of injury
- Self-inflicted injuries
- Any injury as a result of violating the law or company policy
- Any injury that occurred outside of work hours
- When the employee was not at work or commuting to or from work
- Psychiatric conditions
How much a business will be charged for a premium comes down to a few factors. The premium will always be paid by the company and there are no payroll deductions for workers' compensation insurance. Here are the factors influencing premiums:
- The type of industry your business is in
- The location of the business
- The number of employees
- The history of workers' comp claims and safety incidents on your record
- Total annual payroll
Almost every industry can benefit from having a workers' comp insurance policy, but the benefit needs might differ significantly depending on your type of work. It's a brilliant idea to do ample research and compare insurance carriers and premiums before picking an insurance policy.
How Does Workers' Comp Work?: The Claim
How does workers’ comp work when it comes to the claim process? Here are the critical steps that follow once your employee has notified you of a claim (remember, it's your responsibility):
- File the claim with the workers' compensation insurance provider and the state workers' comp board.
- After the insurance company evaluates the claim, they notify the employer and injured employee whether the claim is approved.
- If denied, the employee can appeal the decision to the workers' compensation board.
- If approved, benefits may cover costs such as medical expenses, disability benefits, and lost wages. An employee can opt for the reimbursement via a lump sum or a structured settlement in periodic installments.
- Injured employees who have recovered notify their employer and the workers' comp insurance company when they are ready to return to work. Disability benefits sometimes continue, but it will depend on the case.
In several states, it's the employer's responsibility to ensure a completed claim arrives at the benefits administrator in a timely and accurate manner.
We know that it can get complicated and overwhelming. Pulpstream can help easily facilitate the workers' compensation claim administration.
Use Pulpstream to automate your process, and it enhances the entire lifecycle of the claims process to help you to stay on top of:
- Claims notifications
- Insurer adjuster communications
- Claim documentation
- Insurer integration
- Accommodations and return to work event tracking
- OSHA report generation
Pulpstream streamlines captive claims management from intake to settlement, including initial review processes and determinations, correspondence management, expense and payments tracking, detailed loss run reports, and custom claims analytics in one fell swoop, saving your team hours of manual administrative labor.
Workers' Comp Benefits
If there's any question left about how workers' comp works to benefit your organization, this section highlights how it helps both parties.
Whether it's proactive peace of mind or financial stability, workers' comp makes complete sense.
When you know your company has invested in your well-being, it creates a positive employee experience.
Depending on the nature of the injury, state requirements, and the specific insurance carrier's policy, employees may get access to vocational rehabilitation, compensation for permanent disability, and survivors' benefits.
A workers' comp policy protects employers from costly medical expenses and potentially legal bills if an employee gets injured on the job.
If the cost of the medical bill is so high that you can't cover it, it can jeopardize your business and its financial standing.
On the flip side, it can provide confidence to know that you're prepared to support your staff in their time of need.
FAQ: Eligibility Requirements for Workers' Comp
What should I do if an employee gets injured at work?
Ensure that the employee receives prompt medical attention and then file your claim.
How long does it take for a workers’ comp claim to be approved?
The timing of a claim varies by the incident, so it isn't easy to predict.
How much does the average injury cost?
According to the National Safety Council, the average cost per medically consulted injury in 2020 was $44,000.
This figure includes wage losses, medical expenses, administrative expenses, and employer costs but excludes damaged property or vehicles.
How are workers' comp premiums calculated?
The cost of the insurance depends on the type of work (low risk vs. high risk), location, and size of the business.
The rate is calculated per every $100 of payroll. The National Council on Compensation Insurance offers analytics, trends, and granular details about how each state calculates workers' compensation premiums.
Protect Your Company and Team With Pulpstream
If there's one key takeaway from this article, it's that your employees’ well-being and safety are in your hands. Employers can’t afford to have an administrative error delay access to their employees' workers' comp benefits.
Optimize compliance and operational efficiency by automating repetitive tasks and connecting data silos. Save your administration team time and empower employees in their claims process with Pulpstream's seamless user experience.
Pulpstream can automatically generate documents, doctor's notes, and medical reports. It makes it easy for employees to self-upload certificates and communicate using text. It also prompts automated notifications about return-to-work.
Protect your people and safeguard your organization against unpredictable work injuries with a proper workers' comp plan and automated support from Pulpstream.
Contact our team to learn how our no-code platform can support your goals.