What employers need to know about Massachusetts Workers’ Compensation
If you are a Massachusetts employer with one or more employees, workers’ compensation is mandatory business insurance coverage. An employer can be an individual, a partnership, a corporation or any other form of ownership that has employees. Failure to provide workers’ compensation coverage may result in immediate termination of employment and fines for each day no coverage was available.
Besides being the law, here’s why you need it: Workers’ compensation is basically a no-fault system designed to protect both employers and employees should a workplace injury or illness occur. Your workers’ compensation insurance would cover payment for medical care related to the employee’s injury and would pay compensatory benefits, also known as “compensation benefits.” In exchange for these benefits, the workers’ service rather than the courtroom becomes the employee’s exclusive remedy.
Who runs the MA workers compensation system?
Individual states have jurisdiction over their own systems so specific regulations and benefits vary by state. In Massachusetts, the Department of Industrial Accidents (DIA) manages the Massachusetts Workers’ Compensation system. MA DIA decides any disputes or appeals that arise. The Massachusetts Workers Compensation Rating and Inspection Bureau sets rates.
How do you get coverage?
Most employers secure their workers’ compensation from an insurance agent. Large employers sometimes self-insure, but must overcome several regulatory issues to qualify for self-insurance.
If two or more insurance companies refuse to insure your organization, you may need to seek coverage on the MA Residual Market, also known as an “assigned risk pool.”
Workers’ compensation insurance can be canceled by the insurance company, but only for the following reasons: non-payment of premium, fraud or material misrepresentation, or a significant increase in the risk being insured. Your insurance company would have to give you 10 days written notice of termination.
How workers’ compensation rates are set
The cost of the insurance is based on expected claims experience and consists of two basic components.
- Manual Premium: The cost of your workers’ compensation policy is determined by your payroll and the classification of the work your employees perform. The more risky the work, the higher the price for the class code. There are thousands of class codes set by the Workers Compensation Rating & Inspection Bureau (WCRIB) in Massachusetts. You can look up class codes for your company on WCRIB Employers who have drivers will have higher class codes assigned to their payroll than, say, computer analysts. In very simple terms, the rate for the appropriate class code is multiplied by the payroll/100 to determine the manual premium: Class Code Amount x Salary/100 = premium.
- Modified Premium: After you have purchased worker’s compensation for two years, if the sum of the premiums for two years is $11,000 or more, your policy will be subject to experience rating. The Manual Premium is multiplied by an experience rating factor (or “e-mod”) that reflects your specific organization’s loss history. Much like the experience rating system used by many states to develop auto insurance rates, one bad year will affect an employer for years to come, as three previous years of experience are used to develop a workers’ compensation e-mod. This is a complicated subject. Learn more about experience ratings in Massachusetts.
What benefits does worker’s compensation provide to the injured worker?
Here’s what workers’ compensation provides:
- Unlimited healthcare costs
- Lost wages (also called “wage compensation” and “compensation”.
- Rehabilitation costs
- Maintenance and burial expenses up to state limits
The amount and duration of wage and medical benefits varies according to each state’s law. Generally, the injured worker does not face any medical costs. Learn more about Massachusetts workers’ compensation benefits for employees who have a work-related injury or illness.
Your workers’ compensation liability as an employer
- Obtain workers’ compensation insurance. Failure to carry coverage may result in stop work orders and daily fines during the time not covered.
- Show proof of that coverage by posting a notice in a public and visible place that all employees use. (Access the MA Notice to Employees poster in different languages.)
- Provide a safe workplace, as required by OSHA.
- If an employee is injured, send them to medical attention. In MA, you have the option of choosing a doctor for the first visit.
- Report a medical-only injury (one without expected lost time) to your insurer.
- Report a workplace injury with 5+ days of absence or death to the Massachusetts Division of Insurance. You must submit Form 101 – Employer’s First Report of Injury/Death
Recommended best practices to keep costs to a minimum.
You can lower your workers’ compensation costs by working to the lowest possible e-mod. There are two variables that you should work to control: The frequency of injuries, or how many work-related incidents occur; and the severity of workplace injuries, or the length of time away from work. Here are best practices to help you control both and to help you get the lowest possible e-mod experience.
- Maintain a safe and healthy workplace. The least costly damages are those that never occur! Control frequency by setting expectations for an injury-free workplace, training employees to work safely, requiring personal protective equipment and conducting regular walk-through audits. Your insurance company can often provide safety resources.
- Have an injury response plan. A quick, caring, non-judgmental response to a work injury will help set the course for a positive outcome for everyone. Make sure employees and managers know what to do if an injury occurs. Escort the injured worker to medical treatment.
- Collaborate with a nearby company doctor or medical clinic. Massachusetts allows employers to choose the first medical contact. Choose a top quality doctor or clinic with experience in workplace injuries. Your insurance company may have a good network.
- Quick reporting of damage to your insurer. Early reporting is extremely important – many studies have shown that the earlier injuries are reported, the better the outcome. Aim for same-day reporting.
- Prepare for return to work. It is important to get employees back to work and into the team as soon as possible to help prevent disability syndrome. Plan for a transition period or modified duties to help employees adjust and work harder at their regular job.
This guide is an overview of workers’ compensation insurance, intended as a plain language explanation of the main concepts that MA employers need to know, but it is not exhaustive. Learn more about workers’ compensation in Massachusetts.
Contact us: 800-675-6695
If you’re looking for insurance to protect your business and understand what you’re buying, Encharter can help. If you already have insurance and want to know if you have the right cover and if you can pay less, Encharter can help. We’ll show you the best options and let you decide what coverage you need to satisfy any loan requirements or just to help you sleep better at night. We are a female company that represents over 40 insurance companies. Get ready for the best insurance experience you’ve ever had!
Read more
