Workers’ compensation, also called workers’ comp, workers compensation or workmans comp, is monetary reimbursement to employees for expenses incurred due to work-related injuries or illnesses. In the case of illness, it would have to be severe and caused by work conditions.
Workers compensation is paid by the insurance company that the employer has contracted for workers’ compensation insurance or by a state established fund. Workers’ compensation insurance is mandated in every state except for Texas, where it is optional.
Workers compensation insurance protects both the employee and the employer. It protects the employer from lawsuits regarding the injury or illness, which are usually more expensive than the direct costs of the injury or illness.
It protects the employees from having to pay for medical and other costs with their own money and from having to pay a lawyer to sue the employer. The following medical costs will be covered by workmans comp:
- The ambulance from the workplace to the hospital
- Emergency room visit
- Doctor visits for the injury or illness
- Any medication prescribed in connection with the injury or illness
- Needed surgical procedures
- Diagnostic testing such as x-rays or CAT scans
- In-patient hospital stays related to the injury or illness
- Physical therapy to fully recover from the injury
Workers compensation usually will also cover partial missed wages while the employee is unable to work and in the event that an employee dies from a work-related injury or illness, workers compensation pays for death benefits to the employee’s family to cover funeral expenses along with some additional financial assistance for the family.
There are some things that workmans comp insurance typically does not cover. This includes:
- Injuries suffered by an employee who started a physical fight,
- Employee injuries incurred as a result of being drunk or otherwise intoxicated on the job,
- Injuries an employee gets intentionally,
- Injuries suffered as a result of violating company policy, and
- Emotional injuries that are not accompanied by a physical workplace trauma.
In addition, workers compensation is not available to independent contractors, replacement workers or former employees. Some states do not require very small businesses such as sole proprietorships, LLC owners and partnerships to have workers comp insurance.