Health Insurance Articles
How Workers Compensation Coverage Affects Health Insurance Costs
2010-07-15
Some research suggests workers compensation coverage is not used as often as we might expect. Compared to other kinds of health insurance coverage, workers compensation may be the most misunderstood. Workers compensation is an agreement entered into between an employer and an employee involving liability and personal expense issues. Workers compensation laws are governed by state law, and in most cases, state law determines what entitlements workers compensation offers. In some cases, workers compensation encourages employers to offer health insurance coverage to their employees as a way to reduce overall costs.
Historically, significant job-related injuries led to the creation of workers compensation as insurance against the costs to both the employer and employee. The employer benefits from workers compensation because an employee gives up the right to file a civil lawsuit against the employer for punitive damages regarding workplace safety issues. Employees benefit from workers compensation because they may receive full compensation for medical expenses and wages lost due to injury suffered in the function of employment. Because state law mandates workers compensation benefits, state law also determines which companies must purchase workers compensation insurance and which employers are exempt. Notably, federal workers compensation laws are mandated by federal law rather than state law.
In most cases, workers compensation is a "no fault" type of health insurance coverage. This means medical care is covered regardless of how a work-related accident happened. Workers compensation is also a universal type of health insurance coverage. In addition to providing full reimbursement of medical expenses, workers compensation may also provide reimbursement for lost wages and function like a life insurance policy when workers are killed in an employer's service. In order to qualify for workers compensation, injuries incurred must be directly related to work performed as an eligible worker as defined by state law.
The cost of health insurance coverage related to workers compensation can be interpreted in several ways. For an employer bearing the brunt of health insurance coverage and workers compensation insurance costs for their employees, keeping their employees healthy is the surest way to keep health insurance costs low. The more employees who are injured and collecting health insurance coverage benefits, the higher the costs of health insurance coverage. The inverse of this principle is true as well. From the perspective of an injured worker, workers compensation benefits could be a better financial decision when compared to health insurance coverage. Health insurance coverage might only cover a certain percentage of medical expenses, whereas workers compensation may cover 100 percent of medical expenses.
