Workers Compensation Insurance: An Overview
Workers’ Compensation coverage pays benefits to workers injured on the job, including medical care, part of lost wages and permanent disability. It also provides death benefits to dependents of employees killed from a work-related accident. Workers’ compensation systems are different in every state, as individual statutes and court decisions have shaped the way they handle claims, evaluate impairments, settle disputes, provide benefits and control costs.
Background of Workers Compensation Insurance
During the 19th century, the number of individuals joining the workforce grew exponentially. As a result, the number of workplace accidents grew as well. At that time, the only way that injured workers could obtain compensation for their injuries was to sue the employer. Many legislative proposals emerged early in the 20th century, focusing on compensating injured workers for their medical care and lost wages.
By 1949, all states had a system in place to provide compensation for injured employees. Under these systems, the employer was responsible for providing compensation for the cost of medical care and wages lost, and consequently, the employee gave up his or her right to sue the employer for injuries. Currently, Texas is the only state where workers’ compensation is not mandated for all employers.
As part of the insurance package, the injured workers’ medical, rehabilitation and lost wages are paid for by the state or insurance carrier. If the injury leaves the employee disabled, the insurance carrier will pay the claim based on the extent of the injuries and based on its permanence. The disability will fall into one the following categories: temporary total, temporary partial, permanent partial or permanent total disability.
Workers compensation rates and programs are managed by private insurers, state funds or the National Council on Compensation Insurance (NCCI). Thams Agency can provide more information about how your state handles these programs.
The Employer’s Responsibilities
- Employers are required to do the following to comply with Workers’ Compensation insurance laws:
- Employers are required to provide coverage for their employees and are held liable for all injuries suffered by employees while they are on the job (with the exception of employers residing in the state of Texas).
- Pay premiums and provide the carrier with audit payroll numbers.
- Provide a safe environment.
- Notify the carrier as soon as possible after an injury.
- Investigate injuries.
Managing Your Workers’ Compensation Costs
Your workers’ compensation insurance premium is based on a rating your company has, which is based on payroll, averages for your industry and claims experienced over a three-year period. Claims have a direct impact on this experience modification factor (mod), which can significantly drive up premiums. This means many times a company will pay for its own claims in increased premium costs. There are many things that companies can do to lower their workers’ compensation costs, such as:
- Inspecting your insurance policy to make sure that all job classifications and payrolls are correct.
- Making an investment in workplace safety to avoid accidents to improve claim histories and reduce overall costs. If you modify operating procedures even slightly, you can alleviate unnecessary exposure to injuries.
- Consider using a managed care organization that has a relationship with your insurance company. This will help you save on medical treatment costs.
- Create a modified duty program at your organization to help injured employees return to work sooner. Under these programs, employees are assigned duties that they can physically complete while they recover. The most successful return to work programs incorporate speedy, quality medical care and assistance to reduce emotional stress after an accident.
There are other actions that your organization can take to reduce workers’ compensation costs, and we have the tools to show you how. Put the Team of Thams Agency to work for you. Contact us today or call us at 712-263-3193 to learn more.
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You served my folks well and I have found no reason to switch elsewhere. Your company seems rooted in Denison and an asset to the community, which is always an important part of being in business in any community.
Virginia Dobler McCurdyCustomer since 2011
Thams Agency has an honest, and straight forward approach to dealing with customers. They work hard to find the best insurance coverages and prices for the customer, while giving guidance and reasoning for customers to make the most informed decision possible.
They have helped reduce my payments with discounts like homeowner, safe driving, multi car, etc. Their rates are better then the old insurance company I had, they just kept raising rates although I had never had an accident (and they didn’t have discounts either). When I first came in to to talk to Todd and ask about their rates, they were 50 % lower then what I was paying. Now they are even lower due to discounts.
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Client since 2004
After switching to Thams, I feel like I am getting as good, maybe even slightly better property insurance coverage for a whole lot less money. As long as the premium does not take any significant jumps in the next few years then I believe this was a great switch to Thams. Very friendly staff. I feel like I should have gone to see them many years ago.
Brian E.Customer since 2014
We feel that we have professionals serving our every need at the Thams Agency whether it be house, auto, or health. One stop takes care of all of our insurance needs, and we know it’s done right. P.S. Your offices are lovely. Good move on your part to remodel and maintain the historical attributes of the building while still making it modern.