5 Facts Everybody Should Know about Workers' Compensation
From the desk of Wayne Abbott
Whether it’s an accident on a ladder, or a sprained ankle on the stairs, we’re all susceptible to injury.
For businesses, injuries translate into accrued costs. Fortunately, workers’ compensation (WC) protects employers (and employees) from state-imposed penalties and lost wages. So when picking your WC plan, keep these five facts in mind.
1. The Purpose of Workers Compensation Is Two-Fold.
When we think of WC, we often think of the employee: WC protects the employee from outrageous bills.
While certainly true, we mustn’t forget the employer. Without WC, employees can sue employers, causing the latter to pay for the former’s entire health care costs. And that can be pricey. The purpose of WC, then, is to protect both parties from undesirable and unexpected costs.
2. Know your state regulations.
Since every state’s WC requirements are different, businesses must know their state regulations. For instance, WC may depend on the number of employees you have, or it may depend on the kind of business you operate. Uninformed employers that do not follow state regulations may face large penalties.
3. Determine if the claim is authentic or a fraud.
If you think the claimant exaggerates his symptoms, or shows inconsistencies in his explanation, contact your WC insurance provider immediately. While uncommon, WC fraud, also called “malingering,”1 does happen. To prevent malingering, conduct interviews with claimants, ask for clinical records, and look through work reports. Don’t hesitate to question the claimant if you think a fraud is taking place.
4. Decide on traditional or pay-as-you-go Workers Compensation.
With pay-as-you-go, employers pay WC directly off payroll. Because it works off exact wages rather than annual estimations, pay-as-you-go saves money.
Traditionally, your provider will look through previous years of payroll and make an estimation. Then, after the estimation is made, your provider will require a down-payment, and paid installments at a monthly, quarterly, or yearly rate.
Before you decide, research both methods and decide which one is right for your business.
5. Don’t look alone.
Lastly, don’t look alone. Find an agent who will help you choose the right WC policy, an agent who has multiple insurance carriers and experience in the commercial insurance area.
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