What is Workers’ Comp Insurance? How Does it Work?

What is Workers’ Comp Insurance? How Does it Work?

April 30, 2021By admin

Creating and maintaining a safe workplace environment is of the utmost importance. It is in everyone’s best interest that tasks are completed safely, and workers aren’t exposed to undue harm. That being said, accidents do happen. In fact, the U.S. Bureau of Labor Statistics reported that 888,220 nonfatal workplace injuries and illnesses resulted in employees missing work in 2019. Fortunately, there’s a system that’s been put into place to protect employees and employers should anything unexpected happen. It’s called workers’ comp insurance. This article will discuss what it is, how it works, and some specifics relating to Massachusetts. 

What Is Workers’ Comp?

Workers’ comp insurance is a system that provides employees with compensation if they are injured or fall ill at work. This compensation usually consists of medical expenses and lost wages that the employee is not receiving because they cannot work. It is required that employers offer workers’ comp insurance in most states, but employers can still offer it even if it’s not required by state law.

How Does Workers’ Comp Work?

There is a formal process to submitting a workers’ comp claim. After an employee gets injured, the first step is to notify their employer promptly, which is important because claims are time-sensitive. Then the employee must fill out a form to document the claim about the injury (what happened, when did it happen, where did it happen, what were the circumstances, etc.) The employer will then have to submit the appropriate documentation (including the claim form) to the insurer, and along with a report to their state workers’ compensation board. The employee will then be instructed to seek medical treatment for the injury or illness. The health care provider will fill out a form after the visit to document the type and severity of the injury or illness. That report is then sent to the insurance company to determine which medical bills are related to the workers’ comp claim. All parties then await the decision of the insurance company on whether the claim is valid. The employee can either accept the insurance company’s payments or negotiate for a larger-structured payout or lump sum payout. Employees have the right to appeal the decision if their claim is denied. When the employee feels ready to return to work, they must notify their employer and the insurance company.

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Massachusetts Workers’ Comp Laws

Massachusetts state law requires every business that has employees to offer workers’ compensation insurance. This law would even include a company with just one part-time employee; they must still offer coverage. Independent contractors, business owners, and corporate officers (with some exceptions) all need to be covered by the insurance in the state of Massachusetts.

There are penalties to not having workers’ comp insurance in the state, such as stop-work orders and fines ranging from $100 per day to $250 per day. A conciliator at the Massachusetts Department of Industrial Accidents or an administrative law judge must approve all agreed-upon workers’ comp settlements. The statute of limitations in Massachusetts for workers’ comp claims is four years, meaning that employees have four years from when they discover that their employment caused their injury or illness to file a claim.

What is Workers’ Comp Insurance to Your Business and Employees?

Workers’ comp insurance is necessary for any business; it is put into place to protect both employees and employers. It protects employees from mounting medical bills if they happen to become ill or injured at work. It protects employers from facing litigation and the possibility of paying costs out-of-pocket to their injured employee. Now that you know what the insurance is, how it works, and some of Massachusetts state law’s intricacies, you can see how vital this financial safeguard is to labor in America.  Please reach out to us with any questions regarding workers’ comp insurance or Mass payroll!