In almost every state, having workers' compensation is mandatory for all for-profit businesses with very few exceptions. There are penalties for those who do not have the mandatory coverage for their employees. If you don't have employees, you're likely wondering if you're required to have coverage, or if it's a good idea to cover yourself as the owner of the company. If you're a sole proprietor and an independent contractor for another company, it can become even more confusing.
What Does it Cover?
Before getting into whether you should be covered as a business owner, it's best to learn what workers' compensation covers. When a worker is injured on the job or becomes ill because of the workplace environment, that worker is entitled to benefits that replace his or her wages, coverage for medical treatments and eventual vocational rehabilitation if required.
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Workers' comp will not cover self-inflicted injuries, ones suffered while the person wasn't on the job and those sustained while committing a crime. Independent Workers In some cases, workers who are considered independent contractors might still be covered under your workers' compensation insurance.
Their tax status as a 1099 might not matter. This is also true for owners of a business who work for others as an independent contractor. For example, if you're a plumber with your own business, but you work for a builder on his job sites as a contractor, you might need to get your own coverage or be placed under the builder's coverage. It would depend on the state as well as the contract between you and the builder.
Small Business Owner
As a small business owner, you are required to have workers' compensation if you have a certain number of employees. In some states the amount of employees might be 1 or 4, and you'll have to check with the governing bodies like the Department of Labor in the state to find out if you need to have coverage for your employees. You can opt to have a good insurance coverage or put yourself on the workers' compensation plan. If you have to cover employees, it might save you only a minimal amount not to add yourself to the policy.
Sole
Proprietor For sole proprietors with no employees, it could mean saving the entire cost of the policy each month to avoid having workers' comp for yourself. On the other hand, if you're injured while on the job, you could be out of work and have no way to cover the loss of business. In many states, you're not required to have workers' compensation for yourself as the sole proprietor of the business. When Should You Be Covered? While many states don't require coverage, you might opt for coverage in certain instances. While health insurance might cover injuries on the job, they could decide to fight coverage on injuries that took place on a work site. Health insurance is the option that is considered when workers' comp isn't taken for a sole proprietor or co-owners of a business. You'll need to decide whether your business is risky enough for workers' compensation versus regular health insurance. High Risk Occupations Construction workers, electricians, plumbers and welders are a few of the professions that might be independent workers that are on job sites considered dangerous. Some other industries require workers' compensation before business owners will contract with your company like cleaning crews. If there's a chance that you might get hurt on a job site, the company could require workers' compensation coverage before they'll give you the job. How to Opt Out Almost every state except Texas requires compensation insurance on your workers. You can opt out of compensation coverage in other states if you're a sole proprietor or have a partnership where the two of you are co-owners. You might need to opt out of the coverage with the state's insurance department. When you call the state's insurance department, you'll learn whether you can opt out at all. At that time, ask for a Request for Waiver form, or download it from the website. Once the form is completed, it can be sent to the Workers' Compensation Board. This board will approve or deny the request depending on a few factors. In many states, you'll need to have coverage if you have even one employee, but if you're a sole owner or co-owner in a partnership, you can opt out of having workers' compensation in certain instances. You should think long and hard about opting out of workers' compensation though. In some industries, you'll need coverage while working on a job site where injuries are common. Those working as an independent contractor with a company should learn whether they'd be covered under the business' compensation or not. They might require coverage for contractors.
Have you ever went without health insurance between jobs, or while working part time or because you just couldn?t afford it? No having health insurance is a big risk in a time where medical costs are sky high, Prescription drug prices are outrageous and when your paying your family doctor $50 for a office visit. Fifty dollars represents a full 8 hours of work for many Americans.
Employers who do not offer an employee healthcare can leave them open to a different type of financial responsibility. Employees who qualify for a premium tax credit, in turn qualify their employers for a provision called the Employer Shared Responsibility.
Liability – There is no legal difference between your business and yourself. You are responsible for all debts and obligations of your business.
In most states, insurers may deny applicants coverage. They often try to impose either a permanent or temporary condition that puts a limitation on your coverage. Some may even charge a higher premium based on your health status, your occupation, and other personal characteristics. Institute 2009). For those people who consider themselves self-employed who want to buy their own private health insurance, it can be twice as expensive as that that is being offered through employers.
In fact, the majority of employees within the United States are covered by the FLSA. However, there are employees who are exempt from the FLSA minimum wage and overtime regulations.
Worker's Compensation is a service that provides reimbursement for lost wages to employees who have sustained injuries from work or work-related tasks. It is also one of the services that is most often the victim of fraud. Each of the three types of fraud, claimant, employer, and provider, is defined by the same characteristics, outlined by the Ohio Board of Workers Compensation:
Many employers have been baffled as they attempt to sort through the overlapping obligations created when a sick or injured worker's medical condition triggers the different rights and responsibilities under new federal laws. If businesses want to avoid costly lawsuits from disgruntled employees it is essential to understand their responsibilities under the laws. Employers must make a tw...
In many of these cases, the employee himself has no idea that this insurance has been taken out on him because the company is not always forced to notify their employees. (Sandel 133) In Michael Sandel’s book, he talks about the true story of a man named Michael Rice who unknowingly battled with janitor’s insurance. Rice worked as an assistant manager at Walmart and ended up having a heart attack on the job. Due to his sudden death, a life insurance policy of $300,000 was paid out to Walmart, while his family, his wife and two children, received nothing. (Sandel 131) The idea that Michael Rice’s family, like many other families across the globe, received no compensation for his death represents the bad taste that Sandel describes comes along with janitor’s insurance. It seems very redundant for a superpower like Walmart to receive such a great amount of money on such a minimal job.
This is very similar to what is now known as disability insurance. Established in 1850, the Franklin Health Assurance Company of Massachusetts offered the first form of medical insurance to cover nonfatal injuries in the United States (Scofea, 1994). The company provided protection against lost income due to railway or steamboat accidents, rather than covering health services (Scofea, 1994). The policy would pay the injured worker two hundred dollars for a fifteen cent premium (Scofea, 1994). In the case of total disability, the policy would pay up to four hundred dollars. Although the Franklin Health Assurance Company of Massachusetts did not provide insurance for health services, this company paved the way for accident related health insurance in the United
Most people rely on their employers to provide them with health insurance, but with many health care is not available through the employers. Many small businesses can simply not afford the high cost of health care, or it may be available, but the employee needs to pay the entire premiums. A lot of employers are utilizing part time employees, the part time employees are usually not qualified for benefits, like health insurance. This is very unfortunate for these part timer’s not only because they will not get benefits such as health insurance, but also they probably have a slim chance of going full time because of the health insurance dilemma. Business owner’s need to assess what is good for them financially, and having plenty of part time employees who do not require insurance is probably the most cost effective method to keep the Business up and running.
Other companies pay for all insurance claims needed by the employee and only have them pay
Offering employee benefits is one way a company must competes in today’s marketplace to retain old employees and attracts new ones. These benefit packages may range from offering basic health insurance to additional discretionary and perk benefits such as vacation and retirement packages. Benefit packages are often a large portion of employee costs and Federal mandates require an employer to carry and offer certain benefits even if they offer nothing else. Federally required employee benefits make up approximately a quarter of the costs associated with employer offered benefit packages. Some of these mandated benefits include Social Security, Worker’s Compensation Insurance, and the Family Medical Leave Act.
Uninsured/underinsured motorists – this coverage protects you when the other driver has no insurance or the insurance cannot cover fully your claims. Hit and run incidents are also covered.
Benefits tend to give employees a sense of security. Health insurance is one of the major benefits that encourages employees to stay with an organization even in difficult situations. With health insurance companies attract and retain qualified employees. According to Optima Health (“Starting in 2015, employers with 50 or more full-time equivalent employees are required to offer affordable, minimum-value group health insurance. If they don’t, they may be assessed government penalties.” n.d.). There are other helpful health insurance benefits such as deducting 100 percent of their employees ' health insurance cost as a business expense. If the organization is incorporated the owner’s insurance cost is also deductible. But if it’s a small business with less than 25 employees, they may be able to receive a tax credit if they’re with a small group insurance. If there’s 50 or more employees the business is eligible for a larger group health insurance which offers lower rates. Also with employee health insurance employees have a bigger chance of being able to pay medical expenses. In addition to valuable benefit retirement saving plans are essential part of your future financial security. All employees are encouraged to save for retirement. Tax advantages are also accessible to business owners that offer retirement plans. All
Do a lot of research before purchasing catastrophic health care insurance for your coverage option.Ensure that this kind of insurance will include coverage for the catastrophic events you possess concern over. You must also consider Health Savings Accounts like a savings account to pay your