Workers' compensation insurance 10% Flashcards
1
Q
Workers’ comp covers…
A
work-related injuries and protects employers from their liability when injury occurs
2
Q
Workers’ comp
A
Covers an employee’s medical bills and lost wages following a work-related injury
3
Q
Workers’ comp is purchased by
A
the employer
4
Q
Is workers’ comp primary or secondary coverage?
A
Primary coverage, pays before other policies
5
Q
Workers comp is an exclusive remedy meaning
A
keeps employee from suing employer for covered injuries
6
Q
Worker’s comp is a no fault policy
A
applies no matter who is at fault for the injury
7
Q
Workers’ compensation benefits are
A
state specific
Most states require WC, but not all.
8
Q
Monopolistic:
A
the state provides WC
9
Q
Competitive:
A
the state has a fund that runs in direct competition with private insurers, and employers choose which they prefer
10
Q
Is Michigan Monopolistic or competitive?
A
Competitive State
11
Q
Compulsory:
A
workers’ comp coverage is required by law for all employers and employees
12
Q
Elective:
A
both employers and employees may choose not to be covered under workers’ compensation
13
Q
Workers’ Compensation in Michigan is governed by the
A
Workers’ Disability Compensation Act (Chapter418)
14
Q
In Michigan, as in most states, workers’ compensation is
A
Compulsory
15
Q
The following people do not count as employees, and so do not need WC insurance:
A
● House hold domestic servants who:
○ are related to the employer
○ worked less than 35 hours/ week for 13 weeks or more in the past year
● Foreign nationals working under the Mutual Educational and Cultural Exchange Act
● People who are self-employed
● Independent contractors
● Named partners (or their relatives) excluded by endorsement
16
Q
The following employers must have WC insurance:
A
● All public employers
● Private employers with at least 3 regular employees (orfewerthan3, if any of
them have clocked at least 35 hours/ week for at least 13 weeks in the past
year)
● Agricultural employers who have at least:
○ 3 regular employees who worked for at least 35 hours/ week for at least
13 consecutive weeks in the past year (coverage only applies to these employees)
○ 1 employee who worked for at least 35hours/week for 5weeks in a row
(only medical and hospital coverage is required)
○ note: family members who live at the agricultural employer’s premises do not count as employees
17
Q
Covered injuries:
A
● Take place at work (or somewhere the employee must be for work)
● Arise out of, and in the course of, employment
● Limit the employee’s “wage earning capacity”
18
Q
Covered injuries can include:
A
● Mental disabilities caused by actual events of employment (not unfounded perceptions)
● Age-related conditions (e.g. arthritis or heart/ cardiovascular conditions) if the
employment significantly aggravates or accelerates them
● Occupational diseases
19
Q
Does not include injuries that are:
A
● Caused by intentional and willful misconduct
● The result of social or recreational off-duty activities
20
Q
Occupational diseases
A
● Arise out of a risk inherent to a specific job
● Employee can receive benefits if the employment:
○ significantly contributed to the disease or its development
○ exposed the worker to a greater risk of contracting the disease
21
Q
General damages for pain and suffering, and punitive damages for employer negligence, are usually
A
not available in workers’ compensation
plans
22
Q
Workers’ comp policy structure
A
- Employee benefits
a. wage loss benefits
b. medical benefits
c. death benefits - Employer’s liability
- Other states insurance
- Your duties if injury occurs
- Premiums
- Conditions
23
Q
Part One: Workers’ Compensation
A
Employee Benefits
24
Q
Employee Benefits (3 parts)
A
- wage loss benefits
- medical benefits
- death benefits
25
wage loss benefits
These pay the employee a portion
of the wages lost as the result of a work-related injury.
26
three kinds of wage loss benefits:
● Total Disability
● Partial Disability
● Permanent Total Disability
27
Average weekly wage (AWW)
An employee’s average income in the highest paid 39 weeks of the 52 weeks leading
up to the injury or illness
28
Waiting period
Income benefits are paid starting on the eighth day after the injury takes place. Then, if the disability lasts for 2 weeks or more, the first 7 days will also be covered
29
Total disability benefits
● For employees who can not do any regular work because of injury
● Pays 80% of pre-injury AWW(up to the state maximum)as long as the
disability lasts
30
Partial disability benefits
● For employees who cannot make as much money as they could before their
injuries
● Pays 80% of the difference between the employee’s pre-injury and post-injury
AWW (up to the state maximum) as long as the disability lasts
31
Permanent Total disability
● Pays 80% of pre-injury AWW (up to the state maximum) for 800 weeks, or longer if the worker is still completely disabled at that point
32
Specific Loss benefits
● Cases that involve the actual loss of a body part have a specified time limit for
benefits(listed below)
● Minimum benefit:25%of the state AWW
33
Minimum Benefits
Unlike the other wage loss benefits, permanent total disability and specific
loss benefits both have a minimum amount:
injured workers who qualify for
these benefits will get at least 25% of the state average weekly wage, if not
more
34
Second Injury Fund
provides benefits when an employee, who was already permanently injured by a previous accident, suffers a second specific loss that combines with the first one to leave the employee totally disabled.
35
For example… (secondary injury fund)
Say John lost his hand in an accident as a child. Years later, when he loses an eye in a work accident, he will qualify for total disability benefits because of the two injuries put together. His employer, however, will only be responsible for providing specific loss benefits for the loss of his one eye (162 weeks).
After that, the Second Injury Fund will step in to continue his disability benefits, for at least the remaining 638 weeks (800- 162 = 638), or longer if he remains totally disabled after reaching 800 weeks
36
Medical benefits
● Pay for all reasonable and necessary medical expenses due to a work-related
injury
● No overall dollar limit to medical benefits
● Covers doctor visits, surgeries, emergency room visits, hospital stays, x-rays,
medicine, crutches, dentures, hearing aids, and more
● Employer chooses the physician, but after 28 days of treatment, the employee
can choose a different doctor by notifying the employer and insurer
37
Death benefits
Benefits for a worker’s dependents if the worker dies from an injury or disease arising out of employment:
● 80% of the deceased employee’s AWW for 500 weeks
● After the 500-week period, if any wholly or partially dependent person is under 21 years old, a WC magistrate may decide to continue the benefits until she turns 21 (if the dependent was only partially dependent, the benefits will continue at an amount proportional to that dependence)
● Funeral and burial expenses up to $6,000
38
Employers’ liability coverage will not cover:
● Any liability that the employer takes on as part of a contract
● Any work that is in violation of the law, including damages caused by such
work, injuries to employees who knew they were acting illegally, and penalties
imposed for breaking the law
● Injuries that are caused intentionally or made worse by the insured
they are somewhere else temporarily)
● Injuries occurring outside the United States or Canada (except to citizens while
● Claims arising from unlawful discrimination, coercion, or discharge
● Obligations under any compensation law or federal act (such as the Longshore
and Harbor Workers’ act, the Jones act, etc.)
39
WC options 1. Buy workers’ compensation coverage from a
private insurer
40
WC Options 2. Buy workers’ compensation coverage from the
Michigan Workers’
Compensation Placement Facility
41
3. ____-______ after receiving approval by the WC Agency bureau. Non-public
employers that want to self-insure might need to deposit and maintain some
kind of security with the state treasurer (a surety bond or a letter of credit)
Self-insure
42
4. Obtain insurance through a ____-_______ _____ Under this option, 2 or more
public employers of the same type of unit, or multiple private employers which
operate the same kind of business and have at least $1,000,000 in combined
assets, can band together to obtain approval for self-insurance as a group
Self-insurer group
43
Part Three: Other States Insurance
Workers’ comp will cover employees who are injured in another state if:
● The employer is subject to Michigan WC Laws
● The employee is:
○ a resident of Michigan at the time of the injury or
○ working under a contract of hire made in Michigan
44
Part Four: Your Duties If Injury Occurs
Obligations of the employer:
● Make sure the employee receives immediate medical care
● Report the injury to the insurer right away
● Cooperate with the investigation, settlement, and/or defense of the claim
● Do not interfere with the insurer’s right to recover losses from others
45
Part Five: Premiums
● Based on risk classifications
● Different professions involve different amounts of risk
● “High risk” employees require higher premiums
46
Part Six: Conditions
Outlines the rights of the insurer.
- Insurer has the right to inspect the workplace, safety manuals, procedures, and other administrative policies of the insured at any time
- insured cannot transfer any of its rights or duties without the written consent of the insurer
- explains how the policy can be cancelled by either party
- lastly requires the first named insured, the employer, to act on behalf of all insureds with respect to any policy transactions.
47
Voluntary Compensation Endorsement
● Provides additional coverage
● Requires the employer to cover employees that would otherwise be exempt
48
Federal Programs
- FECA
- FELA
- Jones Act
- Longshore and harbor Workers' compensation Act
- Black Lung Benefits Act
49
Federal Employees Compensation Act, or FECA
● Provides insurance for civilian employees of the federal government
● Pays medical expenses and two-thirds of normal monthly salary while the
injured employee is unable to work
50
Federal Employers Liability Act, or FELA
● Protects inter state rail road workers and their families, by allowing workers who
are not covered by regular WC laws to sue their employers
51
Jones Act
● Protects injured seamen by allowing them to sue their employers for damages and to choose a jury trial
52
Long shore and Harbor Workers’ Compensation Act
● Provides compensation and medical care to employees who are injured on the
job on navigable waters of the US
● Covered employees receive 2/3 of weekly salary for as long as the injury continues
53
Black Lung Benefits Act
● Provides monthly payments and medical treatment to coal miners totally
disabled from Black Lung Disease
● Monthly benefits for dependent survivors of the miner if pneumoconiosis
substantially contributed to the miner’s death
54
Part two: Employers Liability
Worker's comp is an exclusive remedy. However, in some situations in which the employee can sue, this is when this coverage comes in. (covers the insured when employees claim injuries not covered by Wc)
55
work-related injuries and protects employers from their liability when injury occurs
Workers' comp covers...
56
Covers an employee's medical bills and lost wages following a work-related injury
Workers' comp
57
the employer
Workers' comp is purchased by
58
Primary coverage, pays before other policies
Is workers' comp primary or secondary coverage?
59
keeps employee from suing employer for covered injuries
Workers comp is an exclusive remedy meaning
60
applies no matter who is at fault for the injury
Worker's comp is a no fault policy
61
state specific
Most states require WC, but not all.
Workers’ compensation benefits are
62
the state provides WC
Monopolistic:
63
the state has a fund that runs in direct competition with private insurers, and employers choose which they prefer
Competitive:
64
Competitive State
Is Michigan Monopolistic or competitive?
65
workers’ comp coverage is required by law for all employers and employees
Compulsory:
66
both employers and employees may choose not to be covered under workers' compensation
Elective:
67
Workers’ Disability Compensation Act (Chapter418)
Workers’ Compensation in Michigan is governed by the
68
Compulsory
In Michigan, as in most states, workers’ compensation is
69
● House hold domestic servants who:
○ are related to the employer
○ worked less than 35 hours/ week for 13 weeks or more in the past year
● Foreign nationals working under the Mutual Educational and Cultural Exchange Act
● People who are self-employed
● Independent contractors
● Named partners (or their relatives) excluded by endorsement
The following people do not count as employees, and so do not need WC insurance:
70
● All public employers
● Private employers with at least 3 regular employees (orfewerthan3, if any of
them have clocked at least 35 hours/ week for at least 13 weeks in the past
year)
● Agricultural employers who have at least:
○ 3 regular employees who worked for at least 35 hours/ week for at least
13 consecutive weeks in the past year (coverage only applies to these employees)
○ 1 employee who worked for at least 35hours/week for 5weeks in a row
(only medical and hospital coverage is required)
○ note: family members who live at the agricultural employer’s premises do not count as employees
The following employers must have WC insurance:
71
● Take place at work (or somewhere the employee must be for work)
● Arise out of, and in the course of, employment
● Limit the employee’s “wage earning capacity”
Covered injuries:
72
● Mental disabilities caused by actual events of employment (not unfounded perceptions)
● Age-related conditions (e.g. arthritis or heart/ cardiovascular conditions) if the
employment significantly aggravates or accelerates them
● Occupational diseases
Covered injuries can include:
73
● Caused by intentional and willful misconduct
● The result of social or recreational off-duty activities
Does not include injuries that are:
74
● Arise out of a risk inherent to a specific job
● Employee can receive benefits if the employment:
○ significantly contributed to the disease or its development
○ exposed the worker to a greater risk of contracting the disease
Occupational diseases
75
not available in workers’ compensation
plans
General damages for pain and suffering, and punitive damages for employer negligence, are usually
76
1. Employee benefits
a. wage loss benefits
b. medical benefits
c. death benefits
2. Employer’s liability
3. Other states insurance
4. Your duties if injury occurs
5. Premiums
6. Conditions
Workers’ comp policy structure
77
Employee Benefits
Part One: Workers’ Compensation
78
- wage loss benefits
- medical benefits
- death benefits
Employee Benefits (3 parts)
79
These pay the employee a portion
of the wages lost as the result of a work-related injury.
wage loss benefits
80
● Total Disability
● Partial Disability
● Permanent Total Disability
three kinds of wage loss benefits:
81
An employee’s average income in the highest paid 39 weeks of the 52 weeks leading
up to the injury or illness
Average weekly wage (AWW)
82
Income benefits are paid starting on the eighth day after the injury takes place. Then, if the disability lasts for 2 weeks or more, the first 7 days will also be covered
Waiting period
83
● For employees who can not do any regular work because of injury
● Pays 80% of pre-injury AWW(up to the state maximum)as long as the
disability lasts
Total disability benefits
84
● For employees who cannot make as much money as they could before their
injuries
● Pays 80% of the difference between the employee’s pre-injury and post-injury
AWW (up to the state maximum) as long as the disability lasts
Partial disability benefits
85
● Pays 80% of pre-injury AWW (up to the state maximum) for 800 weeks, or longer if the worker is still completely disabled at that point
Permanent Total disability
86
● Cases that involve the actual loss of a body part have a specified time limit for
benefits(listed below)
● Minimum benefit:25%of the state AWW
Specific Loss benefits
87
injured workers who qualify for
these benefits will get at least 25% of the state average weekly wage, if not
more
Minimum Benefits
Unlike the other wage loss benefits, permanent total disability and specific
loss benefits both have a minimum amount:
88
provides benefits when an employee, who was already permanently injured by a previous accident, suffers a second specific loss that combines with the first one to leave the employee totally disabled.
Second Injury Fund
89
After that, the Second Injury Fund will step in to continue his disability benefits, for at least the remaining 638 weeks (800- 162 = 638), or longer if he remains totally disabled after reaching 800 weeks
For example… (secondary injury fund)
Say John lost his hand in an accident as a child. Years later, when he loses an eye in a work accident, he will qualify for total disability benefits because of the two injuries put together. His employer, however, will only be responsible for providing specific loss benefits for the loss of his one eye (162 weeks).
90
● Pay for all reasonable and necessary medical expenses due to a work-related
injury
● No overall dollar limit to medical benefits
● Covers doctor visits, surgeries, emergency room visits, hospital stays, x-rays,
medicine, crutches, dentures, hearing aids, and more
● Employer chooses the physician, but after 28 days of treatment, the employee
can choose a different doctor by notifying the employer and insurer
Medical benefits
91
● 80% of the deceased employee’s AWW for 500 weeks
● After the 500-week period, if any wholly or partially dependent person is under 21 years old, a WC magistrate may decide to continue the benefits until she turns 21 (if the dependent was only partially dependent, the benefits will continue at an amount proportional to that dependence)
● Funeral and burial expenses up to $6,000
Death benefits
Benefits for a worker’s dependents if the worker dies from an injury or disease arising out of employment:
92
● Any liability that the employer takes on as part of a contract
● Any work that is in violation of the law, including damages caused by such
work, injuries to employees who knew they were acting illegally, and penalties
imposed for breaking the law
● Injuries that are caused intentionally or made worse by the insured
they are somewhere else temporarily)
● Injuries occurring outside the United States or Canada (except to citizens while
● Claims arising from unlawful discrimination, coercion, or discharge
● Obligations under any compensation law or federal act (such as the Longshore
and Harbor Workers’ act, the Jones act, etc.)
Employers’ liability coverage will not cover:
93
private insurer
WC options 1. Buy workers’ compensation coverage from a
94
Michigan Workers’
Compensation Placement Facility
WC Options 2. Buy workers’ compensation coverage from the
95
Self-insure
3. ____-______ after receiving approval by the WC Agency bureau. Non-public
employers that want to self-insure might need to deposit and maintain some
kind of security with the state treasurer (a surety bond or a letter of credit)
96
Self-insurer group
4. Obtain insurance through a ____-_______ _____ Under this option, 2 or more
public employers of the same type of unit, or multiple private employers which
operate the same kind of business and have at least $1,000,000 in combined
assets, can band together to obtain approval for self-insurance as a group
97
● The employer is subject to Michigan WC Laws
● The employee is:
○ a resident of Michigan at the time of the injury or
○ working under a contract of hire made in Michigan
Part Three: Other States Insurance
Workers’ comp will cover employees who are injured in another state if:
98
● Make sure the employee receives immediate medical care
● Report the injury to the insurer right away
● Cooperate with the investigation, settlement, and/or defense of the claim
● Do not interfere with the insurer’s right to recover losses from others
Part Four: Your Duties If Injury Occurs
Obligations of the employer:
99
● Based on risk classifications
● Different professions involve different amounts of risk
● “High risk” employees require higher premiums
Part Five: Premiums
100
Outlines the rights of the insurer.
- Insurer has the right to inspect the workplace, safety manuals, procedures, and other administrative policies of the insured at any time
- insured cannot transfer any of its rights or duties without the written consent of the insurer
- explains how the policy can be cancelled by either party
- lastly requires the first named insured, the employer, to act on behalf of all insureds with respect to any policy transactions.
Part Six: Conditions
101
● Provides additional coverage
● Requires the employer to cover employees that would otherwise be exempt
Voluntary Compensation Endorsement
102
- FECA
- FELA
- Jones Act
- Longshore and harbor Workers' compensation Act
- Black Lung Benefits Act
Federal Programs
103
● Provides insurance for civilian employees of the federal government
● Pays medical expenses and two-thirds of normal monthly salary while the
injured employee is unable to work
Federal Employees Compensation Act, or FECA
104
● Protects inter state rail road workers and their families, by allowing workers who
are not covered by regular WC laws to sue their employers
Federal Employers Liability Act, or FELA
105
● Protects injured seamen by allowing them to sue their employers for damages and to choose a jury trial
Jones Act
106
● Provides compensation and medical care to employees who are injured on the
job on navigable waters of the US
● Covered employees receive 2/3 of weekly salary for as long as the injury continues
Long shore and Harbor Workers’ Compensation Act
107
● Provides monthly payments and medical treatment to coal miners totally
disabled from Black Lung Disease
● Monthly benefits for dependent survivors of the miner if pneumoconiosis
substantially contributed to the miner’s death
Black Lung Benefits Act
108
Worker's comp is an exclusive remedy. However, in some situations in which the employee can sue, this is when this coverage comes in. (covers the insured when employees claim injuries not covered by Wc)
Part two: Employers Liability
