How to Insure Your Income: Mechanics of Workers' Comp
Employers provide workers' comp coverage to their employees in several ways. These include:
- an insurance policy paid for by the employer and naming employees as beneficiaries;
- membership in a state-approved employers' group designed to process and pay claims; or
- a bond or other financial device that shows the employer has enough money to pay any claims through self-insurance.
Workers' comp coverage applies to bodily injuries and diseases that occur arising out of or in the course of employment. Covered losses must be work-related (losses that are not work-related are not covered by workers' comp). Any covered injury must be accidental -- and can include death resulting from the accident.
However, only occupational diseases that are unique to a particular job are covered. A causeand-effect relationship must exist between the job and the disease. Ordinary diseases suffered by the general public are not covered.
It's important to distinguish between health insurance and workers' comp. With health insurance, an employer may decide to offer coverage only to certain groups -- such as salaried employees or employees on the job a certain period of time. A;; employees must have workers' comp. Health insurance and workers' comp are sometimes combined -- but these programs have to be available to all employees.
Workers' compensation laws provide for the payment of four types of benefits:
- medical benefits;
- income benefits;
- death benefits; and
- rehabilitation benefits.
In order to be eligible for workers' comp benefits, a disabled worker must:
- work in an occupation that is covered by workers' compensation;
- have had an accident or sickness that is work-related; and
- be disabled, as defined by the relevant state workers' comp law.
A disability may be total (making any work impossible) or partial (resulting in a reduced ability to work). Either type may be temporary or permanent.
