What Does Work Comp Cover?
Wondering what does work comp cover? Workers’ compensation covers losses and expenses incurred by employees due to work-related injury, illness, or death.
Here's what you need to know:
-
Each year, millions of work-related injuries, illnesses, and fatalities are reported in the U.S.
-
Employees covered by their employers’ workers’ comp plans receive benefits for the losses and expenses they incur
-
Employers who do not carry workers’ compensation coverage may be on the hook to pay for those losses and expenses from their operating budget
If you’re wondering, What does work comp cover? you’re not alone. According to the Bureau of Labor Statistics, in 2021 alone, private industry employers reported 2.6 million nonfatal workplace injuries and illnesses.¹ Each year, others are fatal. Employers, injured workers, and surviving family members all need to know the answer.
Workers’ compensation insurance is designed to cover losses and expenses employees bear due to work-related injuries and illnesses. It’s a good idea for all businesses to have a workers’ comp policy, regardless of whether or not their state requires it by law.
In this article, we’ll cover what workers’ compensation insurance helps pay for surrounding work-related accidents and incidents. Different states have different requirements regarding workers’ compensation coverage and policies. Therefore, you’ll still need to research the laws and requirements in your specific state.
Medical expenses
Workers’ compensation insurance helps pay the medical bills associated with work-related injuries or illnesses. This can apply to doctor, specialist, and emergency room visits as well as hospitalization, surgery, and ongoing care costs. For example, if your employee hurt his or her back while lifting a box at your place of employment, your workers’ comp policy would pay for the medical care required to heal and return to work.
Missed wages
For employees who cannot return to work right away due to their injury or illness, workers’ comp pays a portion of their missed wages. This will typically represent 2/3 of their average weekly wages for a previous period if they are considered 100% disabled while recovering. This helps ensure employees can still pay their bills and personal expenses. It also helps limit the financial liability for the business.
Illness
Workers’ compensation coverage helps pay for work-related illness if it can be proven that workers contracted it on the job. For example: if the air at the business is known or found to be hazardous, and this resulted in employees contracting respiratory illnesses. Workers’ comp benefits would cover the costs of medical treatment, lost wages, and any disability allocation that might apply.
It’s important to note that this coverage may not apply to every illness. Check with your state and your specific workers’ compensation policy about which diseases are and are not covered. These and other rules and regulations may be subject to change.
For comp claims to be approved, workers may be required to establish causation. This means providing proof they contracted the infection solely from the job and not other possible sources.
Business owners should understand that all workers’ comp claims are reviewed and handled on a case-by-case basis. If a workers’ comp claim is denied, the claim process isn’t necessarily over. Employers may file the appropriate paperwork with their insurance provider to potentially appeal or receive more information about the denial.
Injury
Workers’ comp insurance helps pay the medical expenses and rehabilitation costs for workplace accidents and work-related injury. If an employee is injured on the job, workers’ compensation benefits would help pay for medical treatments, lost wages, and ongoing care costs if/as applicable.
Injuries commonly covered by workers’ comp include slips and falls, back injuries, cuts and lacerations, limb or bone loss, and vehicular accidents. Workers’ compensation has also been known to cover repetitive motion injuries, like carpal tunnel syndrome, in office workers.
Disability
Workers’ compensation coverage also applies to temporary and permanent disability. For example, a machine operator who loses a hand likely would not be able to return to work right away, if at all. And if they are able to return to work, they might not be able to perform the same job. In this instance, the workers’ compensation insurance policy would pay disability benefits to replace part or all of the injured worker’s wages.
Vocational rehabilitation
Vocational rehabilitation helps recently injured and disabled employees return to the workforce. From a workers’ comp perspective, this often involves physical therapy. It can also mean helping them learn how to deal with new limitations while developing new skills for successful reentry to the workforce.
Funeral costs
If an employee succumbs to job-related fatality, workers’ compensation may pay for all or some of the funeral expenses. Compensation coverage may also provide a one-time lump sum death benefit calculated per the employee’s wages and paid to the survivors. Survivors are usually the employee’s spouse and/or children. Death benefits can be used to pay bills while the employee’s family recovers from their loss.
What does work comp cover for employers?
Workers’ comp coverage protects employers as much as it protects employees. Generally speaking, workers’ comp benefits employers in terms of protection and peace of mind. All employers, including small business owners, with employees on payroll should carry workers’ compensation coverage. In some cases, even sole proprietors and independent contractors should consider it. Despite the workers’ comp premiums employers pay, the cost of coverage is easily justified if/when it’s ever needed. For starters, employers gain peace of mind knowing their employees will be cared for if necessary. In addition, without coverage, a business owner could face a costly lawsuit. They may subsequently be held legally and financially liable for the costs of a work-related incident from their own coffers.
Most insurance companies offer workers’ compensation insurance and can add it to an existing business insurance portfolio. Some offer pay-as-you-go workers’ comp, which can help keep costs down. If you can’t find a private insurance company to provide it, your state may have or require workers’ comp to be purchased from the state. If you’re not sure what requirements apply to you, check your state’s workers’ compensation laws and regulations.
For a deeper understanding of compensation insurance and coverage, see our guide to “What Is Workers’ Compensation?” For ongoing HR news, tips, tools, and resources, visit Workest by Zenefits daily.
1 Employer-Reported Workplace Injuries and Illnesses 2021, U.S. Bureau of Labor
