Nearly all states require businesses to maintain workers’ compensation insurance if they have employees. The coverage provides workers and employers with financial protection should a team member be involved in a work-related injury. The exact benefits an injured employee receives will depend on how severe the injury was and the likelihood of the employee returning to work.
If you’re a new business owner or want to learn more about the benefits workers’ compensation can provide your employee, the following sections will offer a closer look at the coverages available to your team.
Since every state except Texas requires employers to purchase workers’ comp coverage, an injured employee will be entitled to benefits. However, the type and amount of benefits an employee receives will vary depending on your company’s state.
For more information on what benefits your state workers’ compensation department offers, try searching on the U.S. Department of Labor website.
While each work-related injury or illness is investigated with your insurance company’s investigation department, certain incidents appear more often than others.
For example, the following types of injuries are all covered under workers’ comp:
When an accident happens due to the employee’s own negligence, or as a result of the use of drugs and alcohol, it is often not covered by workers’ compensation.
When an employee is injured at work or suffers an illness due to their work environment, they’re covered under workers’ compensation insurance. The actual type of benefits they receive will depend on how long they’ll be out of work and what kind of injury/illness they suffer.
Workers’ comp will cover medical fees associated with emergency treatment, hospital costs, and follow-up doctor visits for those who suffer minor injuries. If an employee suffers a major injury, then they could receive any of the following benefits:
The best-case scenario for a workplace injury is that an employee only needs to go to the hospital for minor treatment and can resume work within a couple of days. In these instances, workers’ compensation will cover expenses such as medications, doctor visits, and surgeries.
For injuries that are a little more serious, workers’ comp coverage will also help cover the cost associated with medical equipment like wheelchairs and special transportation.
If an employee suffers a severe injury that leaves them unable to work, workers’ compensation will generally provide disability benefits. Since there are different types of disabilities, most states will classify a work-related disability into one of the following categories:
The amount of disability benefits an employee is eligible for is related to the amount of money they earned before the injury. Generally, the benefits equal roughly two-thirds of the employee’s wages. However, some states have a maximum amount they’ll pay out to an injured worker.
When it comes to rehabilitation benefits, workers’ compensation insurance provides injured workers with several types of coverage. For example, workers’ comp typically covers the cost of a work-related injury that results in an employee needing medical or therapeutic care such as physical therapy.
Workers’ comp coverage may also cover some of the costs associated with vocational rehabilitation if an employee’s injury or illness prevents them from returning to the same job before the incident.
In the worst possible scenario where an employee dies due to a work-related injury or illness, workers’ comp insurance will provide benefits to the deceased employee’s beneficiaries. Depending on the state an employee lives in, workers’ compensation could also provide coverage for funeral expenses.
Often the primary goal of the death benefits from workers’ comp insurance is to help financially support the family after losing their loved one. Generally, most states will provide the family with a percentage of the deceased employee’s earnings in a lump sum payment.
In most scenarios, employees won’t need to pay income taxes for workers’ compensation benefits. However, most states will enforce a waiting period before certain benefits are disbursed, such as temporary disability.
Remember, every situation is different and state workers’ compensation laws are subject to change, so be sure to do your research and speak with a trusted advisor.
Thanks for reading! Please note that this content is intended for educational purposes only. As laws change regularly, you should refer to your state legislation and/or an advisor for specific legal counsel. If you’re a small business owner, learn more about workers’ compensation insurance or check your current rate in 3 minutes.