Question

Discuss workers’ compensation program funding and the ways that premiums may be purchased by an employer.

Answer 1

1) ans) Workers' compensation is a general term used to describe insurance for workers hurt, injured or disabled on the job because of job-related activities.Workers' compensation provides medical expenses, lost wages, and rehabilitation costs to employees who are injured or become ill “in the course and scope” of their job. It also pays death benefits to families of employees who are killed on the job.In most states, employers may choose to obtain workers' compensation insurance through a state-run program or insurance fund.

Employers pay premiums, and when there is a claim, the insurance company checks to see what benefits are owed, and then pays the injured party.

Workers’ compensation benefits are paid for, in some way or another, by the employers of the state. employers pay for workers’ compensation typically in one of three ways:

-Premiums to a state-run insurance program,
-Payments to an insurance company, or -Directly to workers.

The employer continues to pay its portion of the premium, Employers cannot increase the portion of the premium because an employee is on FMLA leave.
Employers generally finance workers’ compensation through the purchase of insurance, with the employers paying premiums for coverage and the insurers paying the costs of covered benefits.

Insurance premiums, including insurance purchased under the LHWCA and Federal Black Lung Program, are regulated by the states. Premiums are generally affected by the risk involved in the specific types of jobs being insured and the experience rating of the employer.

It can serve as an incentive for employers to implement occupational safety and health practices to reduce injuries and illness and, by extension, workers’ compensation claims.

Four types of insurance arrangements are used in workers’ compensation:
1. insurance through an exclusive state fund,
2. insurance through a competitive state fund,
3. private insurance, and
4. self-insurance.

There are three major types of workers’ compensation insurance policies.

Traditional insurance: This works the same as most insurance policies, in that you pay a regular premium.

“Pay as you go” insurance: You only get access to this if workers’ compensation is integrated with your payroll, which means the premium is calculated based on the amount you pay in each payroll period.

State fund: This is when you buy insurance through a state-governed insurance provider