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Why Do You Need Worker’s Comp?
You need workers comp insurance coverage to protect your employees, their families, and your financial business assets. Workers’ comp is a no-fault insurance system that protects employees that get sick or injured in the course of their employment. The worker’s comp system guarantees medical care and income to replace most lost wages. In exchange, the employees give up their right to sue the employer for damages in civil court.
Buying Workers’ Compensation in Maine
Employers in Maine can get workers comp insurance coverage from any of four sources below listed sources.
The private market
The private market is the best place to get workers compensation insurance. There are more than 320 licensed providers in Maine. You can engage an agent or insurance broker to search the market and recommend the best combinations of price and coverage to meet your needs.
The State Department of Insurance must approve firms that wish to self-insure. Self-insured forms must demonstrate financial ability to cover their liability. They must also submit security deposits or assets and carry insurance for any necessary excess liability coverage.
The laws allow smaller companies to form insurance groups. Subject to state approval, these companies agree to be responsible for all of the group coverage liability. In group self-insurance, the member must pay an additional assessment to cover costs, any shortfall in coverage monies.
Assigned Risk Pool
The Maine Employer’s Mutual Insurance Company MEMIC is the official state agency for workers comp coverage. MEMIC covers those that cannot self-insure or find coverage on the private market. MEMIC offers policies in competition with the private sector, and it is part of a robust insurance market for Maine employers.
Instructions for Buying
Maine employers must buy or provide insurance coverage. When purchasing, you should compare prices on the open market with prices from the MEMIC. If using an agent or broker, you can rely on their professional efforts to provide responsive quotes for our coverage needs.
You will need to gather some information to prepare for buying insurance as described in the below listed items.
- A copy of the current or latest policy
- A list of employees by occupation
- A Loss run from the current or latest insurer to describe all claims
- Operating statements showing gross payroll and hours
If there are doubts about coverage for your company or for a given employee, the state of Maine has resources that can help by providing information and answering questions. You can call the Coverage Unit of the Maine Workers Compensation Board at (207) 287-3751.
What You Should Know About Worker’s Comp in Maine
Premiums use estimates to determine the amounts employers must pay to get and keep coverage. The insurer calculates the final premium amount based on an audit of payroll. At the end of the business year, the insurer audits the payroll to determine the hours worked and paid for each classification. If the amount exceeds the estimated premium payments, you have to make up the shortfall. If the estimated premium exceeds the amount of the audit, then you get a refund.
Is Your Business Required to Carry?
Every employer in Maine must have workers compensation coverage either by insurance or self-insurance. The below-listed workers or employers are exempt under the Maine Workers’ Compensation laws.
- Agricultural or aquaculture employers that employ seasonal casual labor are exempt if they have $25,000 or more in liability coverage and $5,000 or more in medical coverage.
- Agricultural and Aquaculture employers are exempt if they have six or fewer employees, and if they carry $100,000 in liability coverage per employee and medical coverage of $5,000 or more.
- Sole proprietors are exempt.
- Employers of domestic workers in private homes are exempt.
- Independent contractors are exempt, but the employer is liable until they are certified as an independent.
- Charitable organizations are exempt as are LLC owners, and 20 percent shareholders in shareholder-owned companies.
Where to Buy Insurance?
Maine employers can buy insurance from any licensed insurance provider, agency, or broker. Self-insurance groups admit members on the basis of financial strength and safety records. New businesses or those with a significant loss run may have to use the MEMIC to get coverage. Unlike some other states, the insurer of last resort is also an active private insurer that specialized in promoting workplace safety.
How Much Does Worker’s Comp Insurance Cost?
Rates depend on the occupational category of the employer and the occupational codes for each worker’s job. The insurers add risk factors based on the employer’s past record of claims. The record or MOD uses the number and costs of past claims to set rates, but the system does not simply look at the employee. The reference framework includes years of sampling of similar employers in similar lines of business.
What Is the Cost of Not Getting Worker’s Comp Insurance
The State Workers Compensation Board has broad powers under the law to regulate the system. They can charge companies with criminal violations and a wide range of civil and administrative actions. For example, the board can suspend or revoke a professional license, business license, or other authorization to conduct business in Maine. They can suspend articles of incorporation and shutter a non-compliant company.
Factors That Impact Coverage
In the State of Maine, there are some factors that affect coverage. One overriding factor is the Experience Modification which is an examination of the employer’s claim history. The purpose of the worker’s comp scheme in Maine is equally to pay for injuries and medical costs and to prevent accidents by improving safety and worker, and employer education.
Maine law requires nearly every employer to have coverage, and employer includes government entities. The Board can impose a penalty for uninsured employers. The law makes the willful failure to get and keep coverage is a class D misdemeanor. Civil penalties include revocation of charters and business licenses, fines, and liability for the costs of medical care and lost wages for injured and uncovered employees.
Prime contractors have ultimate liability for the coverage of all employees engaged in work they control. Subcontractors must cover their employees, but that does not relieve the prime contractor of the duty to verify subcontractor coverage.
Maine uses the NCCI system to classify occupations and set basic worker compensation rates. The general rule is that Maine rates the employer not the job, and for the basic employer categories, occupation codes have particular values, such as manufacturing occupational classifications. Safety is an important factor in rates. Many insurers offer standard or negotiated discounts for companies with superior safety programs and good safety records. Maine emphasizes safety as the preferred method to control workers compensation insurance costs. The program goals include fewer accidents and greater safety.
Other Helpful Tips
Maine has a generous and protective law concerning benefits and reinstatement. You must reinstate an employee to his or her position after they recover from a covered injury or illness. If their previous job is no available or suitable, then you must reinstate them to a job consistent with medical limitations.
Maine government has a philosophy on workers comp insurance that strongly favors the welfare of the employee and their families as the priority. The state proceeds with an idea of maintaining the dignity and respect for each person and maximizing the benefits for beneficiaries and their families.
Employer’s Guide to Maine Worker’s Compensation