A business owner’s guide to workers’ comp insurance

Key takeaways:

  • Workers’ comp insurance protects employees who are injured on the job.
  • It covers an employee’s healthcare expenses and lost wages if they can’t work.
  • Its other benefits include rehabilitation therapy, disability, vocational rehabilitation, and death benefits.
  • In Florida, non-construction businesses with four or more employees are required to carry workers’ comp.
  • Workers who are classified as employees are eligible for workers’ comp.

Workers’ compensation insurance, also known as workers’ comp, provides medical and wage replacement benefits to employees that are injured on the job. It’s required in most states, including Florida. Its benefits help compensate your employees if they experience work-related injuries or illnesses. 

It might sound simple, but workers’ comp can be a bit confusing. For instance, what exactly does it cover (and not cover), who is eligible, and do all businesses need it? Plus, does Florida have specific laws regarding workers’ comp? Here are six important things to understand about workers’ compensation to ensure your business remains compliant. 

What’s covered by workers’ comp?

Workers’ comp insurance covers employees who sustain injuries or illnesses on the job. Covered injuries include anything from physical trauma like broken bones, cuts, or falls to repetitive stress injuries like carpal tunnel syndrome. In the event of an injury, workers’ comp benefits will cover ongoing care and medical bills, as well as death benefits. It may also help replace lost wages if your employee can’t work, including sick leave, vacation days, or continuing to pay all or part of the worker’s salary until he/she is healthy enough to return to work.

Workers’ compensation benefits may include: 

  • Medical expenses
  • Disability/lost wages
  • Rehabilitation expenses
  • Vocational rehabilitation
  • Death benefits

What do these benefits cover? How much will they pay to an injured worker? Here’s a further breakdown. 

Medical benefits

If an employee’s injury or illness claim is approved, your business will be obligated to cover their medical expenses related to the instance. There are different types of medical expenses that can be covered. They may include: 

  • Doctor’s visits
  • Hospital care (ER, inpatient, surgery)
  • Ambulance charges
  • Medications
  • Physical therapy
  • Medical equipment/assistive devices (crutches, wheelchairs, braces, etc.)
  • Pain management
  • Other out-of-pocket expenses related to the injury

There are no deductibles or copays for your employee. While there are no coverage limits, the claim authorization may set some limits of care, such as the number of physical therapy visits. Medical coverage generally continues until the employee reaches a point where there’s not expected to be any more improvement (known as maximum medical improvement). 

Disability and wage replacement benefits

Some injuries can result in a permanent disability that leaves an employee unable to return to the same job or come back to work at all. In that case, workers’ comp can pay disability or wage replacement benefits. The amount of wage replacement is different for every state. In most cases, it’s a percentage of the employee’s average weekly wages. 

In Florida, minimum wage replacement benefits equal two-thirds of the employee’s average weekly wage during any 30-week period. Disability benefits can be temporary or permanent and total or partial. They include: 

  • Temporary total or partial disability
  • Permanent total or partial disability 

With a temporary total disability, an employee is unable to work for a period but will be able to resume their job duties eventually. With a permanent total disability, an employee suffers a permanent injury and will never return to their previous role. With a temporary partial disability, a worker can still work but at a limited capacity or on a part-time basis. With a permanent partial disability, a worker can resume working but at a reduced capacity. 

Rehabilitation benefits

Workers’ comp can cover physical rehabilitation after an injury and other types of rehab, such as vocational rehabilitation. If an employee is dealing with a permanent injury, this benefit will help provide accommodations, alternative work options, or the training/education/certification required for a new position. Its benefits may include: 

  • Job training
  • Resume development
  • Job development or placement
  • Tuition
  • Books and other expenses

Its purpose is to help injured employees train or acquire the necessary education or certifications to resume working in some capacity. The new position should come with a salary equal to the previous one. If it’s not equal, the worker may be entitled to a partial wage loss benefit. 

Death benefits

If a worker dies from a work-related accident or illness, workers’ comp can help the surviving partner/spouse and any dependents. These benefits will be paid if the employee dies within one year of the incident or five years of continuous disability. Here’s an example of death benefits in Florida:

  • Up to $7,500 for funeral expenses
  • Up to $150,000 for dependents
  • Education benefits for a spouse

Workers’ comp death benefits are similar to life insurance. Benefits may be paid in installments or as a lump sum. They may also be paid years after an injury if an employee’s death is related to the work injury or illness. 

Who’s covered under workers’ comp?

Not all workers are automatically eligible for workers’ comp. There are some requirements. They include:

  • The worker must be classified as a full-time or part-time “employee”
  • It must be a work-related injury or illness
  • A claim must be filed within a certain timeframe after the injury/illness

Consultants, freelancers, and some independent contractors are generally not eligible for workers’ comp. Volunteers are also not eligible, with some exceptions. 

Who’s required to carry workers’ comp insurance in Florida?

In general, businesses in Florida that employ four or more workers must carry workers’ comp insurance. Some industries have specific requirements as to who must carry workers’ comp. They are:

  • Construction industry – One or more workers, including the owner.
  • Non-Construction industry – Four or more employees, including the owner(s).
  • Agriculture industry – Six regular employees and/or twelve seasonal employees who work more than 30-45 days in a season.

Contractors must ensure that all sub-contractors have workers’ comp insurance before beginning any project. Workers’ comp is usually optional for sole proprietors. The exception is if they have employees who aren’t also owners. 

There’s a statute of limitations for claims

Workers’ comp claims must be filed within a certain timeframe for payments to be authorized. In Florida, employees cannot claim benefits for an injury/illness more than two years from the date of the incident. There are some exceptions, of course, that will be written in the laws in your state.

How much workers’ comp do you need?

The amount of workers’ comp coverage you need depends on several factors. For instance, the type of business or industry you’re in influences how much your workers’ comp insurance rates will be. The number of employees you have also affects how much coverage you need. Your state also plays a role in determining how much coverage you need. Some states have higher minimum requirements than others. 

Workers’ comp in Florida costs about 26 cents per $100 in payroll for employees in low-risk jobs. It costs about $19.40 for every $100 in payroll for workers in high-risk jobs. There’s a 2% discount for having a workplace safety program and a 5% discount for having a drug-free workplace program. 

How are premiums determined?

Premiums are based on the industry classification code and your payroll. Certain industries or jobs come with higher risks of injury or illness. So-called “dangerous” activities or jobs also come with higher premiums. 

Other factors include your state, location, and claims history compared to other businesses in your area and/or industry. Aside from premiums, you may have other expenses related to workers’ comp. They include administrative costs to handle claims and reporting claims to your insurer and the state. 

Avante Insurance and workers’ comp insurance needs

As a business owner or manager, it’s your job to protect your employees. Workers’ comp is a required element of protection. To understand it better, speak to one of our licensed insurance agents. 

If you have questions about business insurance like workers’ comp, contact us. We will ensure you have the right coverage to protect your enterprise. 

This blog and website are made available by the publisher for educational and informational purposes only. It is not to be used as a substitute for competent insurance, legal, or tax advice from a licensed professional in your state.