Workers Comp 101

National Insurance Application System, Inc.

In Florida, every employer who has four or more employees, whether full time or part time is required to carry workers compensation insurance. [Corporate officers who have elected to exempt themselves from work comp coverage do not count as an employee]. There are a couple of exceptions to this rule. If you are in the construction industry and have one or more employees, you are required to have work comp coverage. Florida farmers who have more than five regular employees, or twelve or more seasonal workers who are employed for 30 days or more, are required to have work comp coverage.

What is Workers Compensation?

I. Workers' compensation is a system of state and federal laws that provides benefits for workers who are injured on the job or become ill due to on the job exposures. Workers compensation, also called workers comp, insurance provides the injured employee with medical benefits and partial wage replacement benefits. If you have a worker who is injured on the job, worker's compensation provides benefits to the insured.

II. No fault coverage: Work comp provides benefits to the injured employee without regard as to whose fault the accident was. In return for the guaranteed benefits, the employee can not bring legal action against the employer if the employer was in someway negligent and caused the accident. The employee is not compensated for any pain and suffering that occurs as a result of the accident.

III. Workers' Compensation = Workers' Comp = WC

IV. Rule #1: The injury must occur in the "course and scope of employment." Not all employees are covered but most are.

What Costs are Covered:

If an employee is injured on the job, they are entitled to payment of

• medical bills

• hospital bills

• lost wages (called 'indemnity payments')

• rehabilitation

• medications

• mileage to/from medical providers

• permanency, scarring, or residual loss of earning capacity

Coverage is divided into two categories: (1) workers compensation insurance and (2) employer's liability insurance. Workers compensation insurance covers medical expenses and reimburses employees for wages lost due to a work-related accident. Employer's liability insurance protects employers from lawsuits brought against them outside of the workers compensation system by employees who were injured in job-related incidents. Specific benefits vary by state so check the state you're doing business in for the specifics. All 50 states have workers compensation statutes. Each state has their own unique provisions as to what their work comp laws provide.

In most jurisdictions there are four primary types of benefits available to the employee. They are medical benefits, disability benefits, vocational rehabilitation and death benefits. Medical benefits pay for all types of medical expenses including doctors, hospitals, prescriptions, durable medical equipment and other medical providers (like nursing services, chiropractors, physical therapist, etc).

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Indemnity benefits can be broken down into four primary types in most jurisdictions:

1. Temporary total disability

2. Temporary partial disability

3. Permanent partial disability

4. Permanent total disability

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Temporary Total Disability Benefits are the most common indemnity benefit. The injured worker receives on a weekly or a bi-weekly basis a portion of their average weekly wage until they are able to return to work. If the injured worker is able to return to work , but only for a part of the time, or at a reduced rate of pay, temporary partial disability benefits are provided to make up a portion of the lost income until the employee is able to return to work full time. When the employee receives a permanent injury and will be partially disabled as a result of the injury, permanent partial disability is paid to the employee to compensate for their future loss of earning capacity due to the partial disability.

Permanent Total Disability Benefits: Florida has a unique way of determining if an employee who has reached maximum medical improvement has a permanent total disability (PTD). If the employee can be placed in a sedentary job within 50 miles of his residence, the employee is not PTD, unless he has a severe injury as defined by the Florida work comp statutes. Some of the severe injuries include spinal cord injuries that involve paralysis of an arm, leg or the trunk; amputation of a hand, arm, foot or leg; severe brain injury; and, second or third degree burns over 25% of more of the body. If the employee is classified by the Division of Workers Compensation as PTD, the employee will receive PTD benefits which are the same as TTD benefits until the age of 75. If an employee is drawing social security benefits, the PTD benefits are reduced to the point where the social security benefit plus the PTD benefit equals 80% of the average weekly wage earned prior to the injury.

Vocational Rehabilitation Benefits are designed to assist the employee who is permanently partial disabled and is unable to return to work for the employer. The vocational rehabilitation benefits assist the employee in being trained for another job or obtaining the education needed.

Death benefits (usually in amount similar to the weekly disability benefits) are paid to the surviving spouse, dependent children or other dependents of an employee who is killed on the job or dies as a result of an occupational disease.

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Obtaining Coverage:

The employer has several options to obtain workers compensation coverage in Florida:

1. purchasing a workers compensation insurance policy from a state approved insurance company

2. qualifying as an approved self-insured employer

3. contracting with a professional employer organization [employee leasing] that has a group workers compensation policy

4. purchasing a workers compensation insurance policy from the Joint Underwriting Association, a Florida state agency that sells workers compensation insurance coverage to employers who are unable to obtain coverage in the open market .

Claim Reporting:

The employee must report the injury to the employer within 30 days of the occurrence. If the injury is not reported timely, the insurance carrier has the option to deny the claim. The employer is under a strict time limit of 7 days to report the claim to the insurance carrier. The insurance company then has 3 days to send to the employee an informational brochure which outlines the employee’s rights and responsibilities under the workers compensation statutes.