5/G - AR Workers' Compensation Insurance

Question 1

What is Workers’ Comp?

Answer 1

Covers an employee’s medical bills and lost wages following a work-related injury

• Purchased by the employer
• Primary coverage: pays before other policies
• Exclusive remedy: keeps employee from suing employer for covered injuries
• No-fault policy: applies no matter who is at fault for the injury

Question 2

Before Workers’ Comp

Answer 2

Laws and employment contracts made it hard for employees to get compensated for injuries at work

• Contributory Negligence: injured employee did not get any compensation if he was even partially at fault in the injury
• Fellow Servant Rule: employer was not responsible for any injury caused by action or negligence of fellow employees
• Assumption of Risk: workers could not sue for risks inherent in job (and some employment contracts made them waive all rights to sue)

Solution: the Great Trade Off

• Employers offer WC insurance
• Employees give up right to sue

Question 3

Monopolistic vs. Competitive

Answer 3

Workers’ compensation benefits are state specific

Most states require WC, but not all.

• Monopolistic: the state provides WC
• Competitive: the state has a fund that runs in direct competition with private insurers and employers choose which they prefer

Question 4

Compulsory vs. Elective

Answer 4

Compulsory: workers’ comp coverage is required by law for all employers and employees

Elective: both employers and employees may choose not to be covered under workers’ compensation

Question 5

Who is Covered?

Answer 5

Arkansas Workers’ Compensation

• Compulsory
• Businesses with 3 or more employees must be covered

Employee
Any person in the service of an employer under any contract of hire or apprenticeship

Employer
Any individual, partnership, limited liability company, association or corporation carrying on any employment

Question 6

Who is not considered an employee?

Answer 6

The following people are not considered to be employees:

• Casual employees
• Convicted criminals working for the government
• Real estate agents
• Domestic servants in private homes
• Gardeners, maintenance workers, and repairman in private homes
• Farm laborers
• Those who work for the State of Arkansas or its political subdivisions
• Those who work for nonprofit charitable organizations
• Those covered by Federal Workers Compensation laws
• Those who sell or deliver newspapers

Question 7

What is Covered?

Answer 7

Covered Injuries:

• Accidental injuries
• Injuries caused by a specific incident in a particular time and place
• Injuries that cause physical harm
• Injuries that arise out of and in the course of employment
• Injuries that require medical service or that result in disability or death

Question 8

WC can also cover…

Answer 8

• Injuries to prosthetic appliances, glasses, contact lenses, or hearing aids
• Injuries caused by rapid, repetitive motion (e.g. carpal tunnel syndrome)
• back and neck injuries and hearing loss, even if not caused by a specific incident
• Heart or cardiovascular injury resulting from an accident (only if the worker was engaging in extraordinary physical exertion compared to the normal requirements of his job)
• Mental illness, if it is:
  a. caused by a compensable physical injury
  b. verified by a licensed psychiatrist or psychologist
• Hernias, but only if:
  a. they are the direct and immediate result of a strain or sudden effort
  b. the employee reports the injury within 48 hours

The following injuries are not covered:

• Any injury suffered by someone who is assaulting or fighting with another person in the workplace
• Any injuries caused by horseplay
• Injuries incurred during recreational or social activities
• Injuries involving an employee’s use of alcohol or illegal drugs (or the inappropriate use of prescription drugs)

Question 9

Outline of a Worker’s Compensation Policy

Answer 9

Workers’ Comp Policy Structure

1. Employee benefits
   a. disability and impairment benefits
   b. medical benefits
   c. fatality benefits
2. Employer’s liability
3. Out of state coverage
4. Employer’s duties
5. Premiums
6. Conditions

Question 10

Important WC Terms

Answer 10

Average Weekly Wage (AWW)
Average income in the 52 weeks leading up to the injury or illness

Maximum Medical Improvement
The date after which there is unlikely to be any further improvement or recovery to a person’s injury, based on reasonable medical probability

Waiting Period
The amount of time that must pass after a covered injury before benefits start 7 days in Arkansas:
- Benefits start on 8th day
- If disability lasts at least 2 weeks, then the first 7 days are covered too

Question 11

Disability Benefits

Answer 11

Temporary Total Disability Benefits (TTD)

• For employees completely unable to perform regular work due to injury
• Pay 2/3 of the injured worker’s AWW, up to the state maximum

Permanent Total (PTD)

• For injured employees who cannot earn any meaningful wages in any employment
• Pay 2/3 of the injured worker’s AWW, up to the state maximum
• These benefits last for the injured worker’s lifetime

Temporary Partial Disability Benefits (TPD)

• For injured employees who are unable to do the same kind of amount of work as they could before their injuries
• Pays 2/3 of the difference between the employee’s pre-injury and post-injury AWW, up to the state maximum

Permanent Partial Disability (PPD)

• The loss of function of the body, or one or more members of the body
• Pays 2/3 of the injured worker’s AWW, up to the state maximum
• Duration of benefits depends on the severity of the injury