Workers Compensation is regulated by each state and the rules regarding this business obligation can vary significantly. Most states utilize a system where most employers purchase private insurance to meet this statutory obligation but some states maintain a state-run fund that competes with private insurance. There are a few states that require employers to use only their State Fund and do not allow private insurance.

The National Council on Compensation Insurance, Inc. (NCCI) developed the Workers Compensation and Employers Liability Insurance Policy. It provides insurance coverage for your statutory liability under the workers compensation law of your state for medical treatment for injuries and indemnity payments for employees disabled by accidents sustained on the job in your employment. 

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Workers compensation includes two coverages:

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1. Workers' Compensation Insurance- Provides for medical and loss of wages to an employee due to suffering a job-related injury caused by an accident or occupational disease.

2. Employers Liability Insurance- Provides coverage for lawsuits involving work related injuries. Employees, family members and third parties that the employee has filed suit against can sue for employment related injuries.

 

In Illinois, virtually any business that has what could be considered an employee (with over $1,000 in annual payroll) is required to meet their statutory Workers Compensation obligations by either getting an insurance policy, or by being approved as a self-insurer (only practical for large companies) or by becoming a member of a group self-insurance program. Executive officers of a corporation can opt out of coverage, if they wish, but this must be done by specific endorsement to the policy.

Keeping track of the mechanisms that make up your workers compensation policy can be a challenge. These include proper classifications, as a misclassification is one of the most common overcharges, rates and experience modification factor. The experience modification factor is an adjustment to manual premium, calculated by an advisory organization (also known as rating bureaus) such as NCCI, based on historic loss and payroll data of a particular insured. This factor can be a debit or credit to your premiums. 

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FIRSTGATE can work with your company to effectively manage your workers compensation claims and cost by:

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• Reviewing job descriptions to ascertain that employees are correctly classified

• Follow-up with the National Council on Compensation Insurance to make sure stat cards are filed promptly by your insurance carrier

• Tracking claims progress

• Assisting in setting up a return to work program

• Offer alternatives from guaranteed cost to self-insurance programs