The In's & Out's of Workers Compensation
By: Jameson P. McShea
Workers Compensation is REQUIRED to be carried by any business entity in every state except Texas. There are some stipulations, but many businesses require a certificate of workers compensation insurance in order to proceed with business transactions regardless of these stimpluations. First, lets go over what workers compensation "workmans comp" is exactly.
Workers Compensation is the form of insurance that covers employee OR THE BUSINESS OWNER, if he/she or they are injured due to work related instances. It covers the costs for medical bills, rehabilitation costs, and some lost wages depending on your time removed from work.
Some things to note:
- In order to recieve compensation for your work, MOST states require you to be out of work due to the injury for 5 unconsecutive or consecutive days.
- The compensation you aquire is a different number from state to state but MA gives 60% of your average weekly pay after being disabled for 5 days or more
- Death Benefits are provided to your family on such instances
How does workers compensation apply to your specific company structure?
LLC- Not required to carry workers' compensation insurance for themselves. However, under a change to the law in 2002, such members may now choose to purchase workers' compensation insurance coverage for themselves. 41,300 used to calculate premium for included members effective 10-1-11, $42,700 as of 10-1-2012, $43,000 as of 10-1-2013, $44,200 as of 10-1-2014.
Sole-Proprietor- are not required to carry workers' compensation insurance for themselves. However, under a change to the law in 2002, such members may now choose to purchase workers' compensation insurance coverage for themselves. 41,300 used to calculate premium for included members effective 10-1-11, $42,700 as of 10-1-2012, $43,000 as of 10-1-2013, $44,200 as of 10-1-2014.
Corporations- Included in coverage/may elect to be exempt - Any corporate officer who owns at least 25% interest in the corporation may exercise their right to exempt themselves from the provisions of the Workers' Compensation Act by way of a signed Affidavit of Exemption for Certain Corporation Officers Or Directors. The affidavit is sent to the DIA office in Boston for approval. The 153 Form can be found here.
Although most companies in Massachusetts purchase a traditional workers compensation policy, there are alternative methods of coverage which include licensing as a self insurer, or obtaining gaining in a self insurance group.
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*For specific information pertaining to your own policy, please contact your agent. The details above are on general terms and should not be used to interpret your specific policy. The information above is meant for education purposes only.