Injured and ill employees can receive medical and wage benefits from your company’s workers’ compensation insurance. Each state dictates how companies dispense coverage the wage and medical benefits available.
We refer to workers’ compensation as “social insurance” because it depends on an agreement between management and labor. Since employees receive support from your policy in case of injury or sickness, they will not sue the business in a court of law.
Companies like yours can purchase workers compensation insurance, and insurance companies will underwrite them. However, state-supported public money can underwrite these insurance plans in some scenarios.
How is the cost of workers’ compensation insurance determined?
Insurance companies categorize businesses into “classes” based on the potential for similar injuries and medical costs. The losses of all businesses inside a particular class over the past 5 years determine your company’s monthly rate.
As a result, your company receives an accurate premium for the real loss experience of businesses within your class. An insurance company will add economic factors from your state to further refine the rate.
“Experience rating” is a process where a class rate increases or decreases due to one company’s loss history.
You gain significant power in determining the cost of workers compensation insurance for your business. Operating under safe procedures, an insurance company will award you with a lower rate. On the flip side, they will charge you higher premiums for conducting business in a hazardous manner.
The cost of workers’ comp varies significantly by state and risk. According to the National Academy of Social Insurance (NASI) in their 2020 report, the lowest average workers’ compensation rate is $.51 per $100 of the Washington, DC payroll.
Alaska is listed as the most expensive state at $2.25 per $100 of payroll. Arizona averages $.83 per $100 of payroll.
The industry, location, and claims history of a business drastically affect workers’ compensation insurance. Premiums can range from as high as $80 per $100 of payroll or fall below $.07 per $100 of the payroll.
Who is required to carry workers’ compensation insurance?
Besides a few exceptions, all states legislate companies (not owners) to purchase workers’ compensation coverage for their employees.
You can face devastating financial consequences for avoiding insurance to cover your workers, such as fines and paying for out-of-pocket claims. A judge even has the right to imprison you or shut down your ability to do business in the state.
If you are the owner of an Arizona business, you decide whether to purchase workers’ compensation for yourself or not.
What is workers compensation claim and how do I file a workers’ compensation claim if my Arizona employee is injured?
Do these 3 steps in order.
- Check on your employee and get additional medical attention if necessary. They are your first concern when filing to prevent the injury or sickness from getting first.
- Give your work the company’s insurance information so they can file a claim. Your insurance carrier’s name and address, your policy number, and your policy’s expiration date are the primary items they’ll need.
- Inform the ICA and your insurance company of the accident/illness within 10 days. Also, you must complete Form 0101 of the Employer’s Report of Injury online or on paper.
Do you have any other helpful pointers when I file for workers’ compensation?
- Within 1 year of the injury or sickness, your employee must submit a Worker’s Report and Physician’s Report of Injury. It is crucial they or their doctor complete these forms. Otherwise, they will not receive workers’ compensation benefits.
- They can receive general assistance moving through the workers’ compensation process by working alongside the Ombudsman at the ICA. Your employee should note that the Ombudsman does not give legal counsel for pursuing a claim.
- To learn more about workers’ compensation, you can visit the Phoenix or Tuscon offices of the ICA or go to their website. It is possible the worker hired a personal injury lawyer to receive compensation, so you may have to consult with an insurance attorney.
Recipients Waive the Right to Sue
Employees forfeit the ability to file a legal claim against you or another employer for negligence if they receive workers’ compensation coverage. Similarly, you avoid future lawsuits by agreeing to insure your workers with liability protection. You and your workers benefit from the policy.
To further reduce litigation, Arizona is a no-fault state.
Unlike disability insurance or employment benefits, your employees can only reap workers’ compensation if you receive an injury or illness at work. They are eligible for ⅔ of their monthly paycheck for missed time on the clock due to an accident.
The insurance company will calculate the worker’s income the month before they experience workplace sickness or physical harm.
Keep in mind that your Arizona employees cap out at $4,521.92 so long as a medical professional is treating them. When they have stopped receiving care, lost time benefits will cease.
After the doctor has given approval for the worker to return to work, the insurance company will mail them a Notice of Claims Status. This letter informs them they can return to their job per the medical institution’s recommendation.
In the case where the employee can only perform modified work or cannot uphold full-time hours, your policy will continue to send lost time benefits.
The workplace accident may have created a permanent condition where they will receive a percentage of disability. These tragic scenarios occur when the doctor sees little to no room for improvement in your employee and that they have a life-long injury or illness.
Your insurance company will calculate how much they earn from disability compensation based on their work history, education, and age. If you want to learn more about Workers Compensation Insurance in Arizona, please contact us.