Insurance
Workers' compensation insurance can easily be one of your biggest operation expenses. It is a form of no-fault insurance that pays for medical treatment, lost wages, and monetary awards when a disability occurs. If an injured employee is unable to return to work, it provides vocational rehabilitation to train the worker in a new profession. In the unfortunate situation of a workplace fatality, the policy may pay out a death benefit to survivors and cover burial expenses.
Workers' compensation laws are complex and your insurance provider is a good resource to turn to for guidance, but don't stop there. Like most everything you will read about in this book, laws vary by state and change often. Your state's workers' compensation board is another place to turn to for assistance with getting and staying in compliance.
More than half of the states require that employers provide workers' compensation insurance regardless of the number of employees. The remaining states that require it do so when there are a specific number of employees on staff, and this may be as low as three or four employees. Whether or not it is required, it is a wise choice to purchase it to protect company liability.
Most states require coverage that provides full medical benefits, but a few have limits. Lost wages are generally reimbursed at a rate of two-thirds of the employee's salary, but there is a cap that varies greatly from one state to another. For instance, there may be a cap of $500 per week, which would mean that an employee is paid for two-thirds of her wages up to $500 dollars. If two-thirds of her salary is $650, she would receive only $500. In addition, there is a waiting period before wage benefits become effective, and the employee must be off work for a specific period of time or be hospitalized. Employers are usually required to continue to provide medical coverage for the employee at the rate it was covered before the accident.
