Workers' compensation vs. health insurance

While workers’ compensation and health insurance have many similarities, there are key differences that are important to understand.

To best protect your business, your health and your employees, you might need a combination of both types of insurance.

Workers’ compensation

Workers’ compensation insurance helps to protect employees and employers from paying significant out-of-pocket expenses after a work-related injury or illness.

Many states require business owners to provide workers’ comp as soon as they hire their first employee. In some states, that requirement even includes part-time workers and contractors.

Workers’ comp benefits

Workers’ comp can help cover medical expenses, loss of income and retraining for an injured employee after a workplace accident.

It also provides benefits to employees permanently injured on the job and survivor benefits to an employee’s family members in the unfortunate event that they die due to a work-related injury or illness.

Without this insurance, a business owner could be held responsible for covering the costs associated with workplace injuries, which could easily run into tens of thousands of dollars. Business owners could also face fines and penalties for being out of compliance with state laws.

Does Workers’ Comp cover health insurance?

As a small business owner, an important thing to consider when understanding workers’ compensation vs. health insurance is that workers’ comp is only for work-related illnesses and injuries.

It doesn’t serve as a replacement for traditional health insurance for you or your employees.

Workers’ comp claims can help cover medical-related costs and lost wages.

A successful claim will not typically cover your monthly bill for health insurance.

Health insurance benefits

Health insurance helps cover personal illnesses or injuries that occur outside of work. For example, if you get sick with pneumonia, your personal health insurance can help cover the cost of doctor’s appointments, medicine or even a hospital stay.

Does health insurance cover work-related injuries?

You might be wondering: Can I use my own insurance instead of workers’ comp?

Your personal health insurance helps cover expenses if you get sick or injured, but it won’t always cover a workplace injury.

Unlike workers’ compensation, health insurance also typically won’t provide coverage for lost wages if you have to miss work because you are sick or recovering from an injury.

As a solo proprietor, it can be hard to justify paying for both workers’ compensation and health insurance premiums since you don’t have any employees — but you might need to have both types of insurance to maximize your coverage.

What does Workers’ Comp cost vs. health insurance?

It’s important to know that employers must typically pay the entire cost of workers’ comp coverage.

In most states, business owners can share the cost of healthcare insurance with employees, pay for all expenses or not offer coverage.

Workers’ compensation insurance is regulated on the state level, so exact costs depend on where your business and employees are located.

Costs also depend on a few other factors. These can include, but aren’t limited to:

• The number of employees in your business
• The type of work your employees perform
• Your overall payroll
• The industry your company is in
• Your claims history

Generally, businesses in higher-risk industries pay more in workers’ compensation premiums.

Employees and business owners often share a monthly premium with individual health insurance. That coverage can help with preventative care, plus the costs of needed medical procedures, such as surgeries.

Learn more about workers’ compensation costs.

Who pays for health insurance while someone is on Workers’ Comp?

Who pays for my health insurance while on workers’ comp? The answer can depend on the regulations within each state and how long your employee will be out of work.

If your employee is going to be out for fewer than three months, and meets the qualifications in the Family and Medical Leave Act (FMLA), their health insurance remains protected while they are out. For those out longer than that, COBRA Continuation is another option. However, it requires employees to maintain that coverage.

It’s best to look to your state regulations for guidance on how this could apply to you or your employees.

How NEXT Insurance helps protect small business owners with Workers’ Comp

Regardless of how careful and safe you are at work, there’s always the potential for accidents to happen.

NEXT can help you determine the different types of business insurance you might need to reduce your potential financial losses if something unexpected happens at your business.

With NEXT, you can get workers’ comp coverage customized to your business within minutes. Once you purchase your policy, you’ll have instant access to your certificate of insurance.

Start a free instant quote today to explore options for your business. Our licensed U.S.-based insurance advisors are  ready to help if you have any questions.