The Basics of Workers’ Compensation

Workers’ compensation insurance is there to help protect both your company and your employees. For the employer, workers’ comp provides assurance that your business is protected from financial harm in the event an employee is injured on the job by covering the cost of care needed for them to get back to work safely. For the employees, workers’ comp provides recompense for medical care, lost wages, and more if injured on the job. In most states, employers are legally required to carry workers’ compensation insurance. The laws surrounding workers’ compensation differ by state. Here are the basics of workers’ comp insurance.

What is Workers’ Compensation?

Workers’ compensation insurance is a state-government-mandated system that pays out the injured employee’s medical bills, medical care costs, and a portion of lost wages. It also provides death benefits to dependents of employees killed from a work-related accident. Workers’ compensation systems are different in every state, as individual statutes and court decisions have shaped the way they handle claims, evaluate impairments, settle disputes, provide benefits, and control costs.

​Workers’ compensation insurance benefits are available to employees who are injured or become ill as a result of a work-related incident. Workers’ comp ensures the employee is getting the medical care and medical attention their injury needs and to make sure they are healthy to return to work.

Exemptions

As stated above, each state has different laws and regulations for workers’ compensation. Almost all employers in the state of Florida are required to maintain coverage, however, there are a few exceptions whereby coverage is not required:

• Employers of companies with less than four employees, except for agricultural and construction companies
• Employees of agricultural companies that employ less than six full-time employees, or less than 12 seasonal employees
• Corporate officers with at least 10% ownership in non-construction companies are exempt from needing workers’ compensation insurance if the business is in good corporate standing.
  • Keep in mind that up to three corporate officers of construction companies may be exempted as well.

Some industries are still legally required to have workers’ compensation even if they only employ one person: construction, electrical work, concrete and stonework, landscaping, tree removal, plumbing, etc.

Workers’ Compensation Calculated

The cost of workers’ compensation directly depends on the risks associated with the specific company industry, their payroll, and their loss history. In Florida, the insurance premiums are calculated by multiplying the insured employer’s payroll by the rate promulgated by the National Council on Compensation insurance. The rate corresponds to a job-specific class code and is multiplied to each $100 in remuneration. 

At Biscayne, we developed the Florida Workers’ Comp Premium Estimator for companies to understand their premiums.

Types of Benefits

There are various types and classifications of benefits when it comes to workers’ compensation. Here are the different types: 

• Medical benefits – doctor visits, hospital treatments, medications, physical therapy. 
• Disability benefits – intended to replace a portion of the wages the employee loses when disabled due to a work-related injury. They are classified into 4 categories:
  • Temporary total disability 
  • Temporary partial disability
  • Permanent partial disability
  • Permanent total disability
• Death and dependency benefits
• Wage benefits
• Vocational rehabilitation

The Bottom Line

Workers’ compensation insurance is for everyone’s benefit, the employee and the employer. For some states, employers are fined for not providing workers compensation benefits. The priority for everyone is to ensure a safe work environment. 

At Biscayne Risk & Insurance Group, we understand that business shouldn’t be done at your own risk. Contact us today to learn more about workers’ compensation insurance.