Workers Compensation Insurance provides benefits to employees who suffer injuries, illness and/or disease arising out of their employment.  Employers are typically required to provide this form of insurance coverage for employees at no cost to the employee and, in return, the employee gives up the right to sue their employer for additional compensation.

There are a number of exceptions to Pennsylvania’s compulsory coverage requirements.  The following are exceptions that do not need coverage for workers compensation insurance in Pennsylvania:

• Individual proprieters
• Partners of a partnership or members of a Limited Liability Company (LLC).
• Elected officers of the Commonwealth or any of its political subdivisions
• Executive officers of certain corporations that meet certain requirements involving remuneration and ownership
• Licensed real-estate salespeople/brokers affiliated with a licensed real estate broker that meet certain requirements (written agreement, commission only remuneration, status as independent contractor, etc. . .)
• Licensed insurance agents affiliated with a licensed insurance agency that meet certain requirements (written agreement, commission only remuneration, status as independent contractor, etc. . .)
• Domestic or casual laborers
• Outworker (person who cleans and repairs articles at home)
• Farmers with one employee that works less than thirty (30) days a year or earns less than $1200 a year
• Farmer’s spouse
• Farmer’s child under the age of eighteen (18) provided that the child’s employment was not engaged by the farmer under a written contract for hire that was filed with the Pennsylvania Department of Labor and Industry
• Elective for members of certain religious sects that elect not to be covered due to religious tenets that prohibit compensation from insurance provided the sect makes provisions for its members.

Workers Compensation Insurance provides payment for medical expenses and lost wages for injuries arising out of employment that result in disability or death.  With certain exceptions, benefits are payable at 66 2/3% of weekly gross wages but cannot exceed the state average weekly maximum for the year of injury.   In the case of death, compensation provides reasonable burial expenses (not exceeding $3,000) and a percentage of wages to certain dependents.

The short answer is “it depends on several factors.”  The cost of workers compensation insurance in Pennsylvania is determined by a multitude of different factors.  First, businesses in Pennsylvania fall into categories called class codes and each class code is assigned a corresponding  “Loss Cost.”  The State of Pennsylvania is unique in that class codes and standard rates are set by the Pennsylvania Compensation Rating Bureau (PCRB) as opposed to the National Council on Compensation Insurance (NCCI).  This means that the PCRB will assign a class code to a particular type of business or industry along with a corresponding “loss cost.”  The loss cost is a dollar amount per unit of exposure (typically $100 of payroll) and is set by the PCRB based upon the loss/claims of the various businesses that make up each particular class code.  However, workers compensation insurance carriers also have their own “Loss Cost Multiplier” or “Manual Rate” for each class code that must be filed with the state as well.  To determine how much workers compensation insurance will cost in Pennsylvania, you must multiply the insurance carrier’s rate times the amount of total payroll for the particular class code to determine the estimated annual premium.

However, the calculation doesn’t stop there.  Additionally, every individual business will receive either an Experience Modification or a Merit Rating, depending on the amount of workers compensation premium the business pays (businesses with more than $10,000 in premiums receive an experience modification, those with less receive a merit rating).  Each business will have one or the other but not both.  The experience modification and merit rating serve to either increase the premium, leave it the same, or decrease the premium by a certain percentage.  The experience modification or merit rating assigned to a business is determined by that particular company’s past claims experience.

Another factor affecting workers compensation insurance costs is “Schedule Rating.”  An insurance carrier in its sole discretion can further increase or decrease the premium for workers compensation insurance by up to 25% using schedule rating credits or debits.  These debits/credits must be computed by the carrier after experience modification but before any carrier premium discounts or expense constants.  Basically, this is a way for an insurance carrier to take certain factors into account when pricing work compensation insurance that may not be adequately reflected in the business’ experience modification or merit rating.

If the business maintains a Certified Safety Committee Program, then it will receive a further 5% decrease in workers compensation premium.  The 5% computation is applied after the schedule rating has been applied.

Additionally, for businesses in the construction industry (using construction classification codes) that meet certain minimum requirements, they may apply for the Pennsylvania Construction Classification Premium Adjustment Program (PCCPAP) premium credit.  Similar to the Certified Safety Committee Program credit, it must be applied after the carrier’s schedule rating computation.

Finally, a Premium for Terrorism, Premium for Catastrophe (other than certified acts of Terrorism) and an Employer Assessment are added to the Pennsylvania Workers Compensation quote.  This somewhat simplified explanation of determining how much workers compensation insurance costs in Pennsylvania is designed to help illustrate why a policy costs what it costs and hopefully explains how an employer may make changes to help affect their premiums such as adding a Certified Safety Committee Program.  It also explains why premiums can vary drastically between different carriers and why it is prudent for an employer to seek the services of a knowledgeable Pennsylvania workers compensation Insurance broker to help secure the best rates.

Depending on the facts, you may have to carry Ohio Workers Compensation Insurance.  The most important factors to consider are whether your employees reside in Ohio or Pennsylvania; whether they were hired to perform work in Ohio or Pennsylvania; and, whether they will be working in Ohio for more than ninety (90) days.  This PDF by the Ohio Bureau of Worker’ Compensation may provide some guidance.

The Pennsylvania Workers Compensation Act provides employers with the right to designate a list of health care providers.  So long as the employer has properly established a list of providers and meets all of the requirements of maintaining the list, an employee with a work-related injury or illness is required to seek treatment with one of the designated providers on the list for a period of ninety (90) days.  If the employee fails to do so and seeks treatment elsewhere during those ninety (90) days, the employer will not be responsible for payment of those services unless the employer failed to comply with the requirements imposed by the Workers Compensation Act with respect to lists of designated health care providers.

Can an Employee Seek Treatment from Providers Not on the List of Designated Health Care Providers?

Yes, there are situations where an employee may be able to seek treatments with providers that are not on the list of designated health care providers.  Employees may seek emergency medical treatment from any provider until the emergency situation has subsided.  During the first ninety (90) days following an injury, the employee may seek treatment from providers not listed as designated providers but the employee will be responsible for any services rendered during that ninety (90) day period.  Even where employees originally sought treatment with designated providers on the list, there may be situations where the employee ends up treating with physicians and other health care providers that are not on the list.  For example, an employee may seek treatment from a referral provider if referred to that provider by a designated provider on the list (the employer is responsible for treatment rendered by the referred provider).  When invasive surgery has been prescribed by a designated provider, the employee may seek an additional opinion from any health care provider of the employee’s choice regardless of whether they are designated on the list. If that second opinion differs from the opinion of the designated provider and provides a specific and detailed course of treatment, the employee will decide which course of treatment to follow so long as the course of treatment by the second opinion is performed by one of the designated health care providers on the list for ninety (90) days from the date of the first visit to the provider of the second opinion.  Following the ninety (90) day period, an employee may seek treatment from any health care provider at the employer’s expense so long as the treatment is reasonable and necessary.

Do I Still Have to Carry Workers Compensation Insurance if I Provide my Employees with Group Health Insurance?

Absolutely, even though you provide employees with group health insurance in Pennsylvania, you must still provide coverage for workers compensation.  This is still true whether or not you qualify as an Applicable Large Employer under the Affordable Care Act.