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- What is workers’ compensation?
- What does workers’ compensation insurance cover?
- Buying workers’ compensation insurance in Virginia
- What you should know about workers’ compensation in Virginia
- Where can you buy workers’ compensation insurance?
- How much does workers’ compensation insurance cost?
- What if you don’t get workers’ compensation coverage?
What is workers’ compensation?
Workers’ compensation insurance policies help protect you and your employees in cases of workplace-caused injuries and illnesses. In Virginia, the workers’ compensation program is managed and overseen by the Workers’ Compensation Commission.
The Virginia Workers’ Compensation Act requires that all employers with more than two employees to obtain an insurance policy to cover their employees. These policies ensure that any employee that becomes ill or injured as a result of their work is able to get the medical care that they require. Virginia law also prevents employees from suing their employers in the course of a workers’ compensation claim due to a workplace injury or illness.
What does workers’ compensation insurance cover?
Workers’ compensation insurance covers medical care, support for lost wages due to a workplace-caused illness or injury, and death benefits.
| Benefit | Description |
| Medical | Includes visits to specialists and primary care doctors, required medication, physical therapy, diagnostic tests, etc. Virginia’s workers’ compensation policies also cover some transportation costs for obtaining medical care. |
| Temporary and permanent disability (partial or total) | If approved, provides a percentage of an employee’s regular wages when a doctor has specified that the employee cannot return to work. Virginia maintains a state maximum benefit for this reimbursement, based on a state average weekly wage. |
| Death |
The family of an employee who has died as a result of their line of work in Virginia is legally entitled to:
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Buying workers’ compensation insurance in Virginia
Virginia does not maintain a state fund for workers’ compensation insurance. Instead, employees must purchase a workers’ compensation insurance policy in Virginia through any of the following four means:
- A commercial insurance company
- A registered Professional Employer Organization
- Self-insurance (must be authorized by the state of Virginia)
- A group self-insurance association licensed by the State Corporation Commission
Out-of-state companies that conduct business in Virginia must obtain a workers’ compensation policy to be in compliance with state law. In most cases, these companies will be able to add Virginia coverage onto their existing workers’ compensation policies.
What you should know about workers’ compensation in Virginia
The Workers’ Compensation Commission manages Virginia’s workers’ compensation program. The Commission’s role is to ensure that the state’s legislation is properly upheld by employers and licensed insurers in Virginia.
Is your business required to carry workers’ compensation insurance?
In most cases, you will need to obtain workers’ compensation insurance in Virginia if your business has more than two employees. Virginia’s Workers’ Compensation Act specifies that LLC members, subcontractors, and many other workers are considered to be employees. Employers must also include the employees of any subcontractors’ in the employee count used when determining if they must obtain workers’ compensation insurance.
Virginia’s definition of an employee is quite broad and includes any of the following types of workers:
- Contractors/subcontractors that work in your line of business or that are hired to complete a contract
- LLC managers
- Minors
- Seasonal, part-time, and temporary workers
- Immigrants
- Family members (e.g., those working on a family farm)
- Trainees
- Executive officers
Volunteers are not considered to be employees and you likely do not need to cover them in your workers’ compensation insurance. However, you may selectively choose to do so based on your company’s business and benefit policies. Similarly, Virginia does not require that officers operating a non-profit 501 (c)(3) organization to be covered by a workers’ compensation policy.
Note: If your business has two or fewer employees, you are not required to obtain workers’ compensation insurance. You also do not need to file a waiver or disclaimer with the state of Virginia.
Where can you buy workers’ compensation insurance?
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1
Commercial insurance
All insurance companies operating in Virginia must be licensed by the Bureau of Insurance. Ensure that you select a licensed insurer and that your policy is for workers’ compensation and not an alternative, supplemental policy. Failure to insure your business with an approved policy can result in fines up to $50,000.
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2
Self-Insurance
Virginia state law requires that those companies that wish to self-insure submit their financial records and other documentation for review by the Workers’ Compensation Commission’s office. To be approved to self-insure, a business must have significant financial savings and revenues. In addition, when a business is approved for self-insurance, they must pay a deposit of $750,000 to secure their workers’ compensation policy.
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3
Professional Employer Organization
A Professional Employer Organization is a workers’ compensation insurance group that provides insurance to a collection of employers. These groups are similar to commercial insurance companies and must be licensed by the Virginia State Corporation Commission.
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4
Group self-insurance association
When two or more employers wish to self-insure, they may form a group self-insurance association. These groups must be licensed by the Virginia State Corporation Commission.
How much does workers’ compensation insurance cost?
Employers in Virginia legally cannot deduct any of the costs of maintaining a workers’ compensation insurance policy from their employees’ wages. The cost of the policy is solely the responsibility of the employer.
When determining how much your workers’ compensation policy will cost in Virginia, an insurance company will use the following information:
- Line of work/industry of your business
- Your business’ history of workers’ compensation claims and losses
- The payroll amount for your employees
Companies that are in riskier lines of work will have higher premiums than companies that perform less dangerous work. For example, a commercial construction company’s risk rating will be higher than that of a business that performs IT consulting.
Virginia uses a set of standard classification codes to identify various professions. Insurance companies then use these codes to determine the level of risk that they might take on by insuring your business for workers’ compensation.
Your insurance premium will also increase if you have a history of workers’ compensation claims (referred to as an experience modifier). The amount of your employees’ payroll is also used to calculate the price, with a higher payroll being directly associated with a higher premium.
To keep your workers’ compensation premiums low, consider implementing a workplace safety training program. Adding a program to help injured employees return to work more quickly through light duty may also help you reduce your overall cost of your claims and lower your experience modifier.
Instituting a policy for a drug free workplace will also automatically lower your company’s premium by up to 5%. This reduction is required of all licensed workers’ compensation insurers in Virginia.
What if you don’t get workers’ compensation coverage?
In Virginia, most businesses MUST obtain workers’ compensation insurance coverage. In addition, your insurance policy must be workers’ compensation coverage; alternative policies, such as supplemental insurance, are not a valid form of workers’ compensation coverage.
For every day that a Virginia employer does not carry valid workers’ compensation coverage the Workers’ Compensation Commission will issue the company a $250 fine. An employer’s maximum fine for failing to maintain insurance is $50,000, plus other potential costs defined in the Virginia Workers’ Compensation Act (§ 65.2-805).
While maintaining workers’ compensation insurance in Virginia is mandatory, it is also a great benefit to both you and your employees. Employees can rest assured, knowing that they will get the necessary health care in the case of an injury or illness caused by their work, and employers also have piece of mind in knowing that they will not be subject to expensive and lengthy lawsuits from those employees.
References:
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http://vwc.state.va.us/content/insurance-department
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https://www.scc.virginia.gov/boi/co/pc/files/wcomp17.pdf