Workers’ compensation is a necessity for most businesses. It’s not just a smart move — it’s the law. That doesn’t mean what you spend on Workers’ compensation is entirely outside of your control. Keep reading to learn more.
When Does Wisconsin Require Workers’ Compensation Insurance?
If you’re a Wisconsin employer with three or more employees, you need to carry Workers’ compensation insurance. If you have fewer than three but have paid combined gross wages of $500, you also must carry Workers’ Compensation insurance. There are also special rules for farmers, that differ from other employers. Finally, if your business is based in Wisconsin and has employees in other states, you’d need to follow the local state’s rules for your out-of-state employees. Similarly, if you’re a business based outside of Wisconsin, you’d need to follow Wisconsin’s rules for your Wisconsin employees.
For other states, the worker’s compensation requirements are often based on the number of employees but not necessarily the same number as Wisconsin. There may also be different rules for different types of industries.
What Does Workers’ Compensation Cover?
Workers’ compensation covers most work-related injuries. This can range from a fatal construction accident to an office worker developing carpal tunnel syndrome. Workers’ compensation benefits can include medical bills, lost wages, and other ongoing expenses related to the injury.
How Much Does Workers’ Compensation Cost?
Workers’ compensation rates are similar to electricity and other public utilities in that they’re set by law. The Wisconsin Compensation Rating Bureau adjusts rates annually. Employers purchase coverage through private insurers, but there is little to no variation in what these employers can charge.
There are two main factors in determining what rate you pay.
- Industry and job class. All industries and each specific job fall under a class code based on their risk. A construction company would generally see higher rates than a law firm. The cost of an accountant would typically be lower than a delivery driver. All employers in the same industry receive identical base rates for each employee in the same job type.
- Claims history. Base workers’ compensation rates then increase or decrease based on your claims history. Like other insurance, if you have more accidents and file more claims, your rates will increase. You may also see a decrease with a long track record of safety.
What Goes Into Your Claims History?
Your claims history adjusts what you pay for workers’ compensation based on an Experience Modification Rate. The EMR gets multiplied by the industry and job class rate for your final rate. If you have the average number of claims, your EMR is 1.0, and you pay the average rate. If you have more claims than average, your EMR and overall rate increase. If you have fewer claims, your EMR and overall rate decrease.
Lowering your EMR is the best way to reduce your Workers’ compensation costs. The most important way to do this is by placing a greater emphasis on safety, including training and providing the proper equipment. If you have an injury, work closely with that employee to get them prompt medical care before the injury gets worse. Then, work with them on getting back in a reduced or different role to reduce the cost of their claim for missing work.
Talk to Your Insurance Agent
Your independent insurance agent at Strobel Insurance can help you find more ways to improve safety and reduce the cost of your workers’ compensation insurance. Contact us now to learn more.