The Small-Business Owner's Guide to Workers' Compensation Insurance

Chapter 3: Everything You Need to Know about Workers' Comp Claims
Part 1: What Constitutes a Workers' Compensation Claim?

When an employee is injured on the job or develops an occupational illness, they have two options: sue the employer or file a Workers' Compensation claim. Filing a claim means the employee can receive medical coverage, wage replacement, and other benefits. To access these benefits, both the employee and employer must follow certain steps to ensure the injury is compensable.

The claims-filing process can be a bit complex because there are several parties involved: the employee, the employer, the insurance company, doctors, and the state's Workers' Compensation Board, to name a few. Read on for more details about how this process works and how statutes of limitations affect filing a claim.

When to File a Workers' Comp Claim

Your employee is eligible for Workers' Comp benefits as long as the following statements are true:

  • The injured worker is an employee of your business (not an independent contractor).
  • You, the employer, have Workers' Comp Insurance.
  • The employee was hurt as a result of job-related duties.

Most injuries that occur on the job or fall within the scope of employment can be covered by Workers' Comp. This includes occupational accidents, diseases, trauma injuries, or illnesses caused by exposure to work activities or chemicals.

On the other hand, Workers' Comp generally doesn't cover…

  • Stress or other psychiatric injuries.
  • Self-inflicted injuries.
  • Injuries caused by fighting or horseplay.
  • Injuries that happen on the commute to or from work (aka the "Coming and Going rule").
  • Injuries incurred while committing a crime, while under the influence of drugs or alcohol, or while violating company policies.

As soon as an employee suffers a covered occupational injury, the clock is ticking. Workers' Comp claims are time-sensitive, which means your employee has a limited number of days to report the incident and collect benefits.

Typically, as soon as the worker suffers an occupational injury, they should report it to you. If they delay filing the report, your Workers' Compensation Insurance provider could potentially deny your employee their compensation benefits. The delay may also give your carrier the impression that the claim isn't legitimate.

For cumulative work injuries or illnesses, the area gets a little grayer. For example, say a technical writer develops carpal tunnel syndrome over time. Generally, the clock starts ticking on this claim when…

  • The writer took time off work because of the injury.
  • They knew that the injury was caused by their work.

Workers' Compensation Statute of Limitations

Different states also have different statutes of limitations for filing Workman's Comp claims. That means that, depending on where you live, your employees will have a specific deadline for filing a claim (which may vary based on the type of injury). For example, in Maryland, the statute of limitations for filing a Workers' Comp claim is two years from the date of the injury.

A state's statute of limitations dictates how long someone has to file a Workers' Comp claim. This time period varies from state to state.

Another deadline is the amount of time an employee has to notify their employer about the injury. In most cases, they must notify you within 30 to 45 days of their injury. For example, in Missouri, employees who fail to notify their employer within 30 days of the injury can jeopardize their ability to receive Workers' Compensation benefits.

In most states, employees have 30 to 45 days to notify you of their work injury.

The notification can be formal (e.g., a letter or email detailing the work injury) or informal (e.g., an employee mentioning that their wrist hurts from typing all day). To err on the side of caution, always ask your hurt employee to submit a written notification of their injury, detailing the nature of the ailment and when, how, and where it occurred.

What Happens When an Employee Files for Workers' Comp?

When an employee suffers a work injury or illness, it is their responsibility to notify you, their employer, as soon as possible. But as we discussed in the previous section, their benefits are time-sensitive. Therefore, you should be ready to supply injured workers with the following:

  • Access to an approved medical practitioner. Except in the event of an emergency, a medical professional approved by your state's Workers' Compensation Board must treat all workplace injuries and illnesses. Once your employee reports an injury, refer them to an approved healthcare provider. (If an employee goes to an out-of-network healthcare professional, they may not receive coverage.) The approved doctor will fill out the appropriate paperwork to file with the claim. If granted compensation, your employee may be required get their prescriptions filled at an approved pharmacy.
  • Information about your Workers' Comp policy. In a pamphlet, outline the name of your insurance provider and details about your policy. This includes your employees' rights, the types of injuries / illnesses covered by your policy, and the benefits your policy offers.
  • A claims form. When an employee notifies you of an eligible injury, you should send them the appropriate claims form within the next 24 hours. Your state board can provide you with more information about the types of forms. As an example, take a look at the U.S. Department of Labor's Notice of Occupational Disease and Claim for Compensation Form [PDF] New browser window icon..
  • Compensation for minor injuries. If the injury in question is minor (as defined by your state's regulations), employers may be able to choose to pay for treatment out of pocket and avoid filing a claim with their insurance company.

After an employee notifies you of an injury or illness, they then receive their first medical treatment by an approved healthcare provider who fills out a medical report. This report must be sent to all relevant parties (i.e., you, your insurer, the appropriate state office, and the employee). Meanwhile, the employee may file their claim with the appropriate state board.

From there, it's up to you to file the claim with your insurance provider and verify that the case is properly investigated, documented, and reported. Your insurer then decides whether the employee is eligible for benefits. If the employee's injury / illness is covered, payments begin.

To make sure you understand all the details of your state's system, contact your state's employment department or the U.S. Department of Labor's Office of Workers' Compensation Programs New browser window icon. page.

Why Employers Must Follow Proper Reporting Procedures

As we've mentioned, each state has a slightly different way of handling Workers' Compensation Insurance claims. But following the correct procedure — and supplying employees with the proper information so that they may do the same — is of utmost importance. Why? Because employers can be fined for Workers' Comp transgressions, such as…

  • Not carrying Workers' Compensation Insurance.
  • Not supplying employees with accurate information.
  • Failing to report injuries or file claims on time.
  • Misclassifying employees and / or injuries.
  • Influencing a medical practitioner's diagnosis.
  • Appealing a claim without probable cause.

Need a real-world example? Check out how much Jim Carrey was initially fined for violating New York's Workers' Compensation laws (even though he was later cleared of wrongdoing).

Next: Part 2: How Do I Handle a Workers' Comp Claim?

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