workers' compensation owners

Why Workers’ Compensation isn’t for Workers Only

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Workers’ compensation was established to help workers get back to work after they’re injured on the job. But did you know that the owner of a company also can get coverage under workers’ comp?

workers' compensation owners

CCIG’s Steve Doss

Workers’ comp, of course, has been around for decades. The laws governing it were enacted in Colorado as a form of no-fault insurance in the early 1900s. The idea was to balance the interests of the worker by providing adequate medical and wage replacement benefits, while limiting an employer’s liability.

Workers’ compensation kicks in regardless of who is at fault, whether it’s an employee, the employer, co-workers, or even customers.

It pays for medical expenses, it covers part of a worker’s  income during periods of temporary disability, and, in some cases, provides permanent impairment benefits that, in Colorado, can come to nearly $50,000 a year.

Employers are required by law to provide workers’ comp for their employees. But there’s no such requirement covering the employers themselves.

That, however, doesn’t mean the owner of a company shouldn’t consider putting themselves on their company’s workers’ comp policy.

Often, owners will exclude themselves because, they say, they would never consider filing a claim that might cause their premiums to rise. They also rationalize that their medical insurance will cover the cost of getting back to work, or they opt to pay for their health care out of their own pockets.

Each of those reasons, however, has its flaws.

First, workers’ comp premiums are calculated based on your industry classification code and payroll. Premiums for what are considered dangerous activities are, naturally, higher. But the premium for a company owner is likely to be far less than their workers’ because owners often aren’t exposed to the same risks. In other words, the owner might often be classified as an office or clerical worker rather than someone who, say, is driving company trucks.

Regarding payroll, while owners might be drawing a higher salary, their premium is based on a maximum of $53,700 in Colorado.

Medical insurance, meanwhile, is designed to help pay for preventive care and other medical expenses not related to work. Leaving yourself with just medical insurance means you get none of the additional benefits that are part of workers’ compensation.

Relying on a company’s self-funded health plan is another option that makes little economic sense. After all, why pay those medical bills out of your own pocket when workers’ comp can cover it?

Beyond paying for hospital bills, workers’ comp does something else no health insurance plan does: If someone is fatally injured on the job, it provides weekly payments to the surviving spouse and dependents.

Finally, workers’ comp benefits, including income for life, are absolutely tax-free, while the premiums paid are tax-deductible.

Not a bad deal for a policy that, more often than not, comes to just a few hundred dollars a year.

Steve Doss is a CCIG Vice President. Reach him at steved@thinkccig.com or 720-212-2047.