Workers' Compensation and Employers Liability
Worker's compensation benefits compensate workers who are injured in the course of their employment. Most workers compensation laws are required for all employers covered under the law. The full cost of providing workers compensation benefits is absorbed by the employer.

The five basis principles upon which worker's compensation laws are based include:
1) Employer must purchase & maintain workers compensation insurance
2) Benefits are paid periodically not in lump sum
3) Employee gives up the right to sue the employer in exchange for the benefits
4) Employees cannot be required to contribute to workers compensation premiums
5) The laws impose "Absolute Liability" on the employer for all injuries to the employee while working in his/her occupation. Negligence by the employee is even covered.

Benefits & Taxation

  • Medical expenses without limitation
  • No deductibles or coinsurance
  • Disability income with very short waiting periods
  • Payments between 60 to 70% of average weekly income
  • Death benefits payable to family members
  • Unlimited rehabilitation benefits
  • Workers compensation benefits are received free of income taxation

Practice Question:
Which of the following are correct statements concerning the workers compensation system?
I. Benefits received are tax-free
II. Employees must fund the workers compensation program thru union dues
III. Disability income payments typically have a 180-day waiting period
IV. If the employee was "goofing off" by playing a practical joke and was injured on the job, they would need to file a claim under their medical insurance

A. I only
B. I and II only
C. I, III, and IV
D. I, II, III, and IV

Answer: A
The only correct statement is that workers compensation benefits are received tax-free by the employee with a payment on average of 2/3 of their normal pay. Workers compensation is funded by the employer only, has waiting periods of short durations (typically less than 30 days), and covers negligent acts of employees while at work.

Employer's Liability Coverage
These policies also provide Employer's Liability coverage that protects the company in the event that an employee alleges that the employer's negligence or failure to provide a safe workplace was the cause of the employee's injury or illness. (Protects against unsafe working conditions)
Introduction to Health Care Insurance

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