what is WORKERS COMPENSATION INSURANCE? For All That Matters

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1 what is WORKERS COMPENSATION INSURANCE? For All That Matters

2 Why take pride in creating a SAFE WORKPLACE? Businesses advocating and upholding a safe workplace culture: 3 Promote a happier, more conscientious workforce 3 Typically benefit from lower work comp insurance premiums 3 Attract better-qualified job applicants and reduce employee turnover

3 Workers compensation (work comp) insurance pays medical fees and lost wages for an employee who has suffered an illness or injury resulting from job-related duties. It s one of the oldest forms of no-fault protection, which is: 3 Controlled and governed by each state, with laws specific to policyholder rates, employee benefits, and claims handling 3 Required in each state in which you operate, including temporary locations without it, a business owner can be fined or jailed 3 Not replaced by health insurance 3 Intended to cover full-time and part-time employees, with some states allowing protection to extend to business owners, officers, and partners 3 Extended to an employee injured during business travel, beyond their respective state 3 Designed to prevent an injured employee from suing their employer for related negligence or damages

4 Work comp covers an injured employee s: 3 Medical Expenses Most states require the work comp insurer pay for medical procedures recommended by a doctor that are related and necessary in treating the work-related injury. Such expenses include emergency room care, doctors visits, hospital stays, medical tests, the cost of rehabilitation treatment, and sometimes transportation costs to and from appointments. 3 Wage/Salary Compensation If the injured employee is unable to perform their job during the recuperation period, they are often entitled to monetary wage replacement benefits. Work comp insurance pays the injured employee during the recovery period, based on the applicable state law. 3 Disability When a job-related injury results in a permanent disability, the employee may be eligible for disability compensation, based on the degree of impairment. Such benefits typically begin at the end of the healing period and correspond to the percentage in which the disability has reduced the person s earning capacity. 3 Rehabilitation Vocational Rehabilitation provides various services to an employee disabled as a result of a workplace injury. Benefits are designed to help restore the injured worker to a job related to their former employment or a different job generating income as close as possible to what they had prior to the disability. 3 Survivor and Death Benefits Should a work-related injury cause an employee s death, work comp pays survivor and death benefits. Each state stipulates the amounts covering funeral expenses and the monetary support extended to eligible dependents. WHAT is COVERED?

5 The process of determining your work comp insurance premiums begins with The National Council on Compensation Insurance (NCCI), a major U.S. rating and data collection bureau specializing in work comp. This not-for-profit organization gathers vast amounts of information regarding work comp injuries, costs, benefits, rates, job classifications, regulation, and legislation. Data is analyzed by state, identifying job classifications (class codes) and the respective insurance rates. Using this data, NCCI produces the documentation governing the details of how work comp insurance premiums are computed in most states. Those not utilizing NCCI have developed similar rate calculation methods. Work comp premiums are computed using three primary factors: 1. Payroll - for each class code on an annual basis 2. Rate - per class code 3. Experience Modification Factor (E-Mod) - an adjustment of annual premium based on previous loss experience, usually representing the business prior three-year loss history. Only those businesses reaching a specified threshold of work comp premium are assigned a Work Comp E-Mod. Work Comp Premium = Payroll x Rate x E-Mod

6 To learn more about work comp insurance and how ACUITY can help your bottom line, visit acuity.com/insidewc or talk to an independent insurance agent. Information presented is a high-level summary and subject to the laws in your state. Please contact your agent for specific coverage detail. WC-615 (5-13) For All That Matters