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Workers’ Compensation Insurance — What Is Workers’ Comp?

February 29, 2012

At its core, workers’ compensation is a body of laws designed to relieve employees of the financial burden of work-related injuries or death. Benefits are available to the injured employee (or dependents in the case of death) without regard to fault.  Benefit levels are statutory and the specific type and amount paid varies from state to state. Common benefits usually include:

Payment of Medical Expenses — Designed to cure and relieve the effects of a work related injury.  The employee has no waiting period, no dollar limit, no deductible, and no co-insurance.

Temporary Disability — A partial income replacement benefit when an injured worker is unable to work from the results of an industrial injury.  This benefit is usually tax-free and around 65% of an employee’s regular weekly wage, subject to statutory minimums and maximums.

Vocational Rehabilitation — Employees who are medically precluded from returning to their regular job as a result of the industrial injury are entitled to counseling and retraining (if necessary) to return them to gainful employment. This may include training in an alternate field in order to return to the workplace.

Permanent Disability — Generally a lump sum payment that depends on a number of elements, including the type of injury, the age of the victim, and the earning-power lost.

Death Benefits — If an employee dies as the result of a work related injury, dependents are entitled to receive workers’ compensation death benefits.

Workers’ compensation benefits are paid by the employer.  Most employers opt to purchase insurance which transfers the risk to an insurance carrier who collects a premium for assuming the risk.  Although levels vary by state, benefits are mandatory in all 50 states, making work related injuries a cost of producing goods and services.

One last note about types of employees with regard to workers’ compensation: volunteers are also considered employees by most states. Although volunteers do not receive a wage or salary, most states allow them to collect workers’ compensation benefits if they are injured in the performance of their duties.

The topic of Workers’ Compensation will continue next week with an overview of rates and premiums. Until then, thanks for reading. Stay updated by subscribing to Avanti Services via RSS or follow us on Twitter and Facebook.

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