1. Do I need to carry Workers’ Compensation (WC or Workers Comp) Insurance? In Pennsylvania, whether you have one employee or one hundred employees, full or part-time employees, or your employees are family, you are probably required to have Workers’ Compensation Insurance. There are very few exceptions, and not having it can lead to lawsuits and even criminal prosecution.
2. What does Workers Comp Cover? Workers Comp helps cover health care expenses, ongoing health care expenses, disability payments, death benefits, and permanent injury payments (such as the loss of a body part) when an employee suffers a work-related injury or disease. It also helps protect your business against lawsuits related to the injury.
3. What is not covered by Workers’ Compensation? Some things are not covered under WC in Pennsylvania:
4. How are Workers’ Compensation rates calculated? Your Workers’ Compensation premium is based on the following formula: WC Premium = Classification Code Rate X Experience Modifier X payroll/$100.
5. What are WC Classification Codes? There is a 3-digit classification code for every type of job in Pennsylvania. It is based on the likelihood of that employee being injured on the job, and it helps determine your WC premium. Typically, the more risk of injury, the higher your WC costs.
6. What is an Experience Modifier? Your experience modifier compares the history of your losses to what is typically expected in a class similar to your company. It is based on the following:
The lower your experience modifier, the lower your premiums.
7. Where can I purchase WC Insurance? In PA, there are four ways you can purchase WC insurance:
8. What is WC fraud? You, an employee, or a health care provider can commit Workers’ Compensation fraud, which can increase your WC costs. Examples of WC fraud include the following:
9. What is a Return-to-Work Program? A Return-to-Work (RTW) program is designed to get an injured employee back to work as quickly and safely as possible, even if it’s a modified schedule or duties. Studies show that RTWs save employers on medical costs, lost time days, and workers’ compensation insurance costs. These programs can even reduce the number of lawsuits, wage replacement costs, and productivity losses.
Workers’ Compensation insurance may be mandatory in PA, but there are many steps your business can take to lower your WC costs: