Vermont workers' compensation insurance

Vermont strives to maintain near-universal workers’ comp coverage. This means that generally, everyone working in Vermont must have workers’ comp insurance. Only employees who meet certain criteria are exempt:

• Sole proprietors or partners in unincorporated businesses aren’t required to have coverage, but they can voluntarily elect to participate.
• Members of limited liability companies (LLCs) and corporate officers can opt out with the permission of the Vermont Department of Labor.
• Casual workers – i.e., those who are not employed in the core functions of the business – are exempt.
• Someone involved with amateur sports
• A person working in agriculture or other farm jobs whose employer has an aggregate payroll of less than $10,000 in a calendar year
• Certain elected officials and volunteers are excluded from coverage.

Even when it's not required, buying workers' compensation is a smart financial move. Your health insurance company might deny a claim for an injury related to your work, which could leave you responsible for costly medical bills.

Vermont won’t require you to provide insurance coverage for an independent contractor, unless the person assigns one or more additional workers to your project. If the contractor is working alone, then you won’t need to provide coverage.

The state applies a number of tests to determine whether the individual working for you is a contractor or an employee. A contractor could be considered an employee for workers’ comp purposes if:

• You have the ability to tell the person how to complete the work.
• You provide the tools and other equipment needed for the project.
• You determine the person’s work days and hours.
• What you pay the person is based on hours on the job versus a fixed project cost.
• You have employees on staff doing essentially the same work.
• The person’s duties are considered integral to your normal business.

Because determining employee vs. contractor status can be complex, the state encourages employers to seek legal advice or to check with the Vermont Division of Workers’ Compensation before making a worker classification decision.

Here are several examples of how workers' compensation coverage helps pay expenses for injured workers:

• A fast food worker burns themselves while preparing an order for a customer. Workers' comp would cover their medical appointment with a health care provider and pain medication.
• A retail store employee slips on a wet floor and hits their head. In this instance, workers' compensation would cover their emergency room trip, head MRI, medical treatments, and any follow-up visits with their medical provider during their recovery.
• A registered nurse develops a shoulder injury from lifting and turning patients. Workers' comp would cover their surgery, medications, and physical therapy. It also provides temporary disability benefits until they have recovered, including a certain amount of their average weekly wage to account for their lost wages.
• A janitor suffers from respiratory problems after years of using harsh cleaning chemicals. After filing a workers' comp claim, they receive permanent disability payments for their ongoing lung issues.

Business owners in Vermont have a few choices when it comes to buying a workers' compensation policy:

• Private insurance companies. You could contact each workers' compensation insurance carrier independently to compare their products and rates, but that's where agents and brokers like Insureon come in. As the nation's leading digital insurance agency, Insureon partners with 30+ top-rated insurance carriers to deliver the right coverage for your business. Fill out an easy online application to get started.
• If denied, you can obtain coverage from the assigned risk pool. Businesses with higher risks can buy coverage from the Vermont Assigned Risk Pool, which is administered by the National Council on Compensation Insurance (NCCI).
• You can self-insure your business. To qualify for self-insurance, Vermont business owners must file an application with the Vermont Department of Labor and meet standards for assets, profit, and cash flow. In addition, they must post bonds and provide a guarantee that they can meet excess liability.

Here's a breakdown of this equation:

• The classification rate reflects your employees' risk. Each worker has a classification code for the type of work they do. Insurers look up those codes in a database to find the associated rate, which is lower for office workers and higher for carpenters, tree trimmers, and others with a higher rate of injuries. Like most other states, Vermont relies on the National Council on Compensation Insurance database.
• The experience modification rate (EMR) reflects your business's risk. The average experience modification rate is 1.0, which means a business is similar in risk to others in its profession. Higher EMRs reflect higher risks, such as a history of claims. The EMR only comes into play for annual workers' comp premiums of at least $5,000, so it's not a factor for many small business owners.
• The insurer multiplies these numbers by your payroll divided by 100 to determine your workers' compensation rate. Workers' compensation audits are typically conducted annually to ensure your business pays the correct premium for this coverage.

A workers’ compensation settlement is an agreement between the injured employee, employer, and insurer that resolves a workers’ compensation claim. This benefits both the employee and the employer.

In Vermont, many workers’ comp claims end in settlements. This means the parties to the claim – the injured employee, the company, and the insurer – must agree on a lump-sum payment in return for the employee (or their survivors) agreeing to forgo future payments.

There are two basic forms of settlements in Vermont:

• A non-medical, limited settlement closes out disability-income benefits, but leaves future medical payments open.
• A total lump-sum settlement closes out the entire claim in return for the insurer paying the employee (or their survivors) a specific amount of money.

The Vermont Division of Workers’ Compensation must approve all workers’ compensation settlements. All entities must submit a Compromise Agreement (Form 16) with the division, along with a letter detailing the issues in dispute and disclosing how settlement funds will be distributed.

Once the state approves the settlement, it is final.