How Do Workers' Compensation Claims Work?
The Workers' Compensation Insurance claims process may seem complicated at first, but rest assured, it's a dance every employer can learn. You can never predict an accident, and knowing what comes next can get your injured employee squared away faster.
An employer's role in the claims process is pretty straightforward. You will…
- Give the employee the appropriate paperwork and guidance.
- File the claim with the insurer.
- Comply with state laws for reporting work injuries.
For very small businesses, the business owner will probably be the only one filing the claim. It's important to play your part quickly because if your tardiness is the reason benefits are tied up, you could have a legal mess on your hands.
A quick note before the overview: Workers' Compensation is regulated by the state, so the claims process may vary depending on where you're located. Before hiring your first employee, take a look at your state's Workers' Comp laws to understand what's required of you.
Having said that, let's take a look at the basic steps of the claims process.
1. The Employee Reports an Injury to the Employer
To make a Workers' Comp claim, the employee's injury or illness must be related to their work. Granted, this leaves room for a whole host of injuries. Simply slipping on an ice patch can constitute a work injury. Developing cancer from exposure to toxic substances is also a viable reason for a claim.
In emergency situations, the employee should be rushed to the ER. For less immediate concerns, they should go to a doctor to get a…
- Medical report to file with their claim.
In some states and with some insurers, the employee needs to visit a medical provider that’s part of your insurer’s network to receive benefits.
It’s imperative that the employee gives you written notice of the injury as soon as possible. Some laws require the employer to be notified within a few days. In New York, the employer must be notified within 30 days. Some states may even allow up to a year or two.
The tricky part comes with injuries or illnesses that surface over time, such as mesothelioma, which is caused by exposure to asbestos. Usually, if this is the case, the employee needs to report to you as soon as they are made aware of their injury or illness.
2. Employer Provides Paperwork
Once you're notified about the injury, you need to give your employee…
- The proper reporting forms for your insurance provider.
- A form for reporting to the state Workers’ Comp Board (depending on where you live).
- Information on the employee’s rights and benefits under Workers’ Comp.
- Information about returning to work.
The forms you need depend on your state, the type of illness or injury, and your insurer. If possible, give this information to your employee before they seek treatment. In fact, it’s a good idea to include your business's Workers' Comp Insurance information in your employment packet for new hires. Failure to give your injured employees this information could lead to lawsuits.
For more advice on communicating this information, see the post "How Do I Handle a Workers’ Comp Claim?"
3. Employer Files the Claim
Usually, you're responsible for submitting the paperwork to your insurance carrier, but the employee’s doctor needs to mail the medical report. There may be a time constraint for submitting these forms, so don't delay. The insurance company generally provides you with the correct forms, but you may need to acquire them independently.
Additionally, you may need to submit documentation to your state’s Workers' Compensation Board or other similar entity (see this Nolo article for each state’s Workers’ Comp department). This may apply for all workplace injuries, even if the employee is not seeking Workers’ Comp benefits.
If the employee needs to file a separate notice with the state board, make sure they know that.
4. The Insurer Approves or Denies the Claim
Once the claim is filed, the insurer will either…
- Approve the claim and contact the employee for payment details.
- Deny the claim if it doesn’t qualify for Workers’ Compensation.
Either way, the rest of the process is between the employee, their legal representation (if any), their doctors, and the insurance company.
If the insurer approves the claim, the employee may…
- Accept the payment offer, which may cover costs for medical bills, medicine, disability payments, and a portion of their lost wages.
- Negotiate for a lump-sum settlement or larger structured settlement (see “How Do Workers’ Comp Settlements Work?”).
If the insurer denies the claim…
- You can ask them to review the decision if you believe the decision is wrong.
- The employee can appeal.
5. The Employee Returns to Work
When the employee recovers and wants to return to work, they must alert you and the insurance company via a written notice. Depending on the severity of the injury, the insurance company may continue paying them disability benefits.
For more information on the Workers’ Comp claims process, see the post "How Do I File a Workers’ Comp Claim?"