Who Actually Provides the Workers’ Comp Benefits?

In the US, the system in place for providing compensation to employees who are injured while doing their job is called workers’ comp. Even though every employer in the country is covered by this system, many people do not know how it works. For instance, many people wonder who is actually responsible for providing workers’ comp benefits. Is it the employer who is responsible? If so, would this create a conflict of interest? This guide will answer all of these questions for you.

The Workers’ Comp System

Workers comp is a system that is handled on a state-by-state basis. The specific laws and regulations vary from one state to the next. There are two primary systems that provide workers’ comp, and every state uses one of these two systems:

  • State agency
  • Insurance

If workers’ comp is handled by a state agency in a particular state, then it is the state that provides the benefits to workers. If this is the case, then there is usually one agency for the entire state which accepts claims and evaluates every case.

Some states do not provide workers’ comp through a state agency. In these states, private insurance companies provide workers’ comp coverage instead, similar to any other kind of insurance. In these states, employers are free to shop around for different providers and choose a plan that suits their needs. The law does require every employer to have workers’ comp insurance, however. The first step in understanding the workers’ comp process you need to follow is researching which of these two systems your state uses.

Conflict of Interest

While it is never the employer who provides workers’ comp benefits directly, filing a workers’ comp claim would increase an employer’s insurance rates in states where workers’ comp is provided by insurance companies. So this actually may give an employer an incentive to not file the claim.

The law requires every employer to provide workers’ comp coverage. Further, if an employee reports an injury, the law requires the employer to file a workers’ comp claim. Even if it may cause his or her insurance rates to increase, the employer is obligated to file the claim. If an employer purposefully does not file the claim, or does something to sabotage the claim, there may be serious legal repercussions. The first thing you should do if you suspect your employer did this is speak with an attorney about your options. You may be able to file a lawsuit against your employer or appeal the case.

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