Workers’ Compensation in the US can be confusing and challenging.
Unlike many other countries, the coverage is a statutory requirement or financial obligation for all employers, in every state. In the US, insurance laws and regulations are determined state by state, not at the federal level.
The state-by-state governance can cause potential gaps in coverage. For example, a US subsidiary may be located in North Carolina and some of their employees live and work outside of NC, in South Carolina or Georgia. The Workers Compensation policy must include all three (3) states on the policy in what is referred to as Section 3.a. Section 3.a. is a key to the policy and coverages provided.
Anytime during the year, if an employee is hired in another state, JKJ should be contacted to update the policy. Employees in different states should prompt this mid-year update by the employer to JKJ.
To obtain a policy, a few terms, which may be helpful to have some familiarity with, are:
Statutory – required by the state or other governmental jurisdiction
Federal Employer ID Number – “FEIN” the identifying number assigned to an entity by the US government. This number is necessary to start a WC policy, and for many other aspects of doing business within the US.
Minimum Premium – the lowest premium to be charged, even if the final exposure or rating would result in a lower policy premium.
Class Code – the determined classification employees in the operation are assigned. The classifications (stemming from employee duties) will determine the rates and premium calculations. This classification is verified, and thereafter, assigned by the governing state bureau.
Employers Liability – a second segment of coverage included with the Workers Compensation policy. Protecting the entity against possible allegations against common law liability by a third party resulting from your employee’s injury.
Monopolistic State – Four (4) states in the US remain monopolistic. The WC departments of the four states are the only source for Workers Compensation coverage. These four states are: North Dakota, Ohio, Washington and Wyoming. If employees work in these states or travel often to these states a policy may be required. Also a separate employer’s liability policy should be obtained.
Payroll Estimates – the expected payroll or wage roll to be paid during the policy term. State rules for overtime and other methods of compensation will be considered.
Audit – the process after a policy has expired or canceled when the insurance carrier obtains actual payroll figures and balances the premium to actual versus the original premium based on estimated payroll.
Physician Panel – a pre-set and assigned listing of doctors and treatment facilities for the care of employees after a workplace injury or illness.
This information and listed terms represent a brief overview. JKJ associates are well versed in Workers’ Compensation and ready to introduce our clients or prospective clients to this coverage. Let us know about questions regarding a current policy or possible business situation.
Author:E. Ann Collins, CIC, CRM
Commercial Account Manager
