What Is Workers' Compensation Coverage A?

What Is Workers' Compensation Coverage A?

Let me explain what workers' compensation coverage A really means. It's an insurance policy that safeguards employees according to state laws, offering medical care, death benefits, disability payments, and rehabilitation for those injured or killed on the job. As the insurer, we agree to cover all compensation and benefits outlined in your employer's state workers' compensation laws, regardless of who's at fault. Your premiums for this coverage depend on the employer's total payroll and the specific duties you and your colleagues perform.

Key Takeaways

You need to know that workers' compensation coverage A directly protects you under state laws. It delivers medical care, death benefits, disability support, and rehabilitation if you're injured or killed while working. These benefits come on a no-fault basis in most cases. Premiums tie into your employer's payroll and the risks of your job duties. Remember, workers' compensation B builds on A by covering situations where the employer is liable due to negligence, providing extra damages.

Understanding Workers' Compensation Coverage A

If you're injured, disabled, or die on the job, you or your survivors qualify for workers' compensation coverage A benefits. Your employer covers things like medical care, lost wages, and rehab costs through this insurance. These benefits are awarded without fault, as long as you weren't under the influence of drugs or alcohol—expect a drug test after any accident. Often, you'll get partial wage reimbursement, and survivors receive benefits if the worst happens.

Coverage A meets state insurance mandates. It handles your medical bills, related costs, and lost wages for covered incidents. Payments follow set schedules for specific injuries, with adjusters calculating expenses as they arise.

Warning

Be aware: if a company skips workers' compensation coverage, they face fines from $1,000 to $10,000 or more, and possibly jail time, varying by state or jurisdiction.

Employer Responsibilities

Workers' compensation Part A has no policy limits; the insurer pays all benefits required by the workers’ compensation laws of states listed in the policy. But you should know the employer might have to repay the insurer for amounts exceeding standard benefits. This happens in cases of serious and willful misconduct, hiring workers illegally, ignoring health or safety rules, or discriminating against employees under workers’ comp laws. In those situations, the employer reimburses the insurer for the extra payments.

Special Considerations

This coverage is required by law in almost every U.S. state, making it a major cost for employers. You'll pay higher premiums if your company has a history of claims or if jobs are high-risk. Coverage has expanded nationwide; data from 2018 shows a 7.2% rise in covered jobs from 2014, reaching over 142.6 million, with wages up 8.7%, but employer costs increased only 3.5% while benefits paid dropped 1.7%.

Workers' Compensation Part A vs. Part B

Part B also covers medical care, lost wages, and rehab for on-the-job injuries, but it steps in when the employer is liable due to negligence—that's why it's known as employers' liability coverage. While Part A handles state basics, Part B adds damages up to set limits, essentially including A but extending further. Payments under B depend on injury type, policy details, and the insurer. Typical limits might include $100,000 per accident for bodily injury, $500,000 policy limit for disease, and $100,000 per employee for disease.

Part B isn't used often, but it's valuable when a company faces lawsuits from an injured worker's family or third parties, or when damages exceed Part A.

Example of Workers' Compensation Coverage A

Consider John at Factory ABC, which produces steel pipes. The company enforces safety rules like wearing gloves for hot steel and grippy boots to avoid slips. One day, John slips on water from a leaky pipe while moving pipes, breaking his leg and damaging nerves despite his boots. He needs surgery and six months off work.

His health insurance covers part of the surgery and leg treatment, but not everything. Factory ABC's mandated coverage A steps in for the rest of the medical bills, his salary during recovery, and rehabilitation costs.

What Does Workers’ Comp Cover?

Workers' comp protects employees who get sick or hurt on the job, including death benefits, disability payments, lost wage compensation, medical expenses, and coverage against lawsuits.

Who Is Covered by Workers’ Comp Coverage?

Typically, all employees fall under workers' compensation. Non-military federal workers are covered by the Federal Employment Compensation Act (FECA). Private company employees usually are too, as most states mandate it. Check with your employer and state for your specific coverage.

How Is Workers’ Comp Calculated?

Compensation bases on your average weekly wage. Calculate it by multiplying your daily wage by days worked in a year, then divide by 52 weeks.

How Much Does Workers’ Comp Cost?

Costs vary by state, payroll size, industry, work type, insurer, and claims history. Nationally, it's about $936 per employee yearly, or $78 monthly.

Is Workers’ Comp Taxable?

No, workers' comp benefits aren't taxable. They might be if you're also on Social Security Disability Insurance (SSDI) and those benefits offset part of your comp payments.

The Bottom Line

Workers' compensation coverage A shields you under state law with medical, death, disability, and rehab benefits for on-the-job injuries or deaths. Companies must have it, and claims pay out without liability questions. It safeguards you as an employee and shields employers from hefty legal and medical expenses in lawsuits.