How Does Workers' Comp Work?

How Does Workers’ Comp Work?

As a business owner, there are a million and one things to keep track of – payroll, inventory, marketing – it can be overwhelming. But one thing you can’t afford to ignore is workers’ comp.

What is it? How does workers’ comp work? And most importantly, what happens if someone gets injured on the job? This post will answer all your questions about workers’ comp so you can rest easy knowing your business is covered.

What Is Workers’ Compensation Insurance?

Three construction workers working in a site

Workers’ compensation insurance covers medical care expenses and wage replacement for work-related injuries or illnesses. Employers are required by virtually every state to have workers’ compensation coverage.

Because it is required by law, many small business owners join up for workers’ compensation insurance without fully comprehending what it covers or how it works. As soon as an employee files a claim, this inevitably results in a great deal of confusion.

Who Needs Workers Compensation Insurance?

As we mentioned, workers’ compensation insurance coverage is required by law in most states. However, there are states that do not require employers to have workers’ compensation insurance, but they are few and far between. In these so-called “opt-out” states, businesses may choose to purchase private workers’ compensation insurance or forego coverage altogether.

How Does Workers’ Comp Work?

Below, we outline the steps required to make the worker’s compensation process easier :

1. Instruct Your Employee To Seek Medical Treatment

Your injured worker should see a physician as soon as possible to receive medical treatment for their injuries or illness. This might occur before or after you begin the claims filing procedure, depending on the severity of the damage.

After treatment, the health care practitioner who examines the employee will fill out a medical report. In most situations, the employee’s doctor will need to send that information directly to the insurance provider. This data will be utilized to determine which medical expenses are connected with the workers’ comp claim.

2. File The Claim With Your Workers’ Comp Insurance Carrier

After the employee has seen a doctor and has gathered the required information, it’s time for you to file a claim with your workers’ comp insurance carrier. You will likely need to complete some paperwork and may be asked to provide additional documentation, such as the employee’s medical report.

Once you have submitted the claim, the workers’ comp insurance company will open an investigation to determine whether or not it is valid.

3. Wait For The Insurer To Approve Or Deny The Workers’ Compensation Claim 

The insurance company will investigate the workers’ comp claim and may approve or deny it based on their findings. If the claim is approved, the insurer will begin paying for the employee’s medical expenses and lost wages. If the claim is denied, the employee can appeal the decision.

Appealing a denial can be a lengthy and complicated process, so it’s important to ensure that all of the evidence is in order before you file the initial claim.

4. Prepare For Your Employee’s Return To Work

After the employee has recovered from their injuries, they will likely want to return to work. You should be prepared for their return by creating a modified duty plan or accommodating their needs in some other way.

How To Improve Your Worker’s Comp Program

Three women talking about workers' compensation insurance

Now that you know how workers’ compensation works, you may be wondering how you can improve your program. Below are a few tips:

Be Prepared For Your Employee’s Return To Work

Return to work programs assist you in getting your staff back to work as soon as they are physically able. Instead of waiting until an employee is ready to resume full-time duties, a return to work program may help them gradually rejoin the workforce. The employee may work in a limited capacity until they are able to resume their position.

Other strategies include retraining workers on a different set of skills and allowing them to continue working (instead of receiving less than their normal compensation) for the time being.

When employees return to work sooner, you save money on wages paid to any temporary workers you had to hire to cover for your injured employee while they were recuperating.

Always Makes Sure Your Employees See A Doctor

If an employee is injured, make sure they see a doctor as soon as possible. In some cases, the sooner an injury is treated, the less severe it will be. This can save you money on medical costs and lost wages.

Additionally, if you have a return to work program in place, the doctor can provide you with updates on the employee’s progress and when they are likely to return to work.

Encourage Employees To Report Injuries Quickly

The sooner an injury is reported, the sooner it can be treated. Employees may be hesitant to report an injury for fear of losing their job or being seen as weak.

Reassure your employees that they will not be penalized for reporting an injury and that you want them to receive the treatment they need so they can return to work quickly.

You may also want to offer a bonus or other incentive for employees who report injuries promptly.

Regularly Review Your Insurance Policy

Your workers’ compensation policy should be reviewed on a regular basis to ensure that it meets your needs. As your business grows, you may need to increase your coverage.

Additionally, you should review your policy after any major changes, such as relocating your business or hiring new employees.

By understanding how workers’ compensation works and taking steps to improve your program, you can protect your employees and your business.

Invest In safety

Prevention is the best way to reduce workers’ compensation costs. By investing in safety equipment and training, you can help prevent accidents and injuries from happening in the first place.

How Much Does Workers Compensation Insurance Cost?

The median cost for a workers’ compensation policy is $560 each year — or $47 per month.

The cost of workers’ compensation insurance varies depending on the state in which the business is located and the industry it operates in. For example, a construction company will typically pay more for coverage than an office-based business because there is a higher risk of injury in the construction industry.

While the cost of workers’ compensation insurance may seem like yet another expense for small business owners to shoulder, it is important to remember that this coverage protects both the business and the employees in the event of a work-related injury or illness. In other words, it’s an investment worth making.

Does Workers Compensation Cover Covid-19?

If you were exposed to the virus at your place of business, you might be eligible for worker’s compensation for Covid-19 in some states. According to the National Conference of State Legislatures:

  • Several states have implemented laws providing compensation for Covid-19 workers comp claims for specific occupations. Minnesota, Utah, and Wisconsin limit benefits to first responders and healthcare providers. All important employees are covered by Illinois, New Jersey, and Vermont. California and Wyoming provide coverage to all employees.
  • Seventeen states and Puerto Rico have passed legislation to expand workers’ compensation coverage to include Covid-19 as a work-related injury.
  • California and Kentucky have taken executive action to extend health coverage to other essential workers, such as those working in grocery stores.

How To Get Workers’ Compensation Insurance

In most cases, you will need to contact your state’s workers’ compensation office to learn how to get coverage.

If you are required to purchase coverage from the state, you will need to submit an application and pay a fee. In some cases, you may also be required to submit proof of financial responsibility, such as a bond or certificate of deposit.

If you are not required to purchase coverage from the state, you can shop around for a policy that meets your needs. When looking for workers’ compensation insurance, it is important to compare rates and coverage options from multiple insurance companies.

You can also contact your state’s workers’ compensation office to learn more about getting coverage.

Workers’ Compensation Benefits

Workers’ comp benefits include:

Medical benefits: Worker’s compensation will pay for your medical expenses related to a work-related injury or illness, including hospitalization, prescriptions, and physical therapy.

Wage replacement: If you are unable to work because of a work-related injury or illness, workers’ compensation will replace a portion of your lost wages.

Death benefits: If a worker dies as a result of a work-related injury or illness, workers’ compensation will provide death benefits to the worker’s surviving family members.


Workers’ compensation is a vital part of the safety net for workers in the United States. If you are injured at work, it is important to know what benefits you are entitled to and how to get them. By understanding how workers’ compensation works, you can help ensure that you and your family are protected in the event of a work-related injury or illness.

Need Help With Your Worker’s Comp System? Contact Us!

If you have any questions about workers’ compensation or need help setting up a system for your business, contact us today. We would be happy to help you get the coverage you need to protect your business and your employees.