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What every business owner should know about Workers' Comp vs. health insurance

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By Matt Crawford
Sep 19, 2020 min read

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

To best protect your business and your employees, you'll most likely need a combination of both. The distinctions might be small, but they are important for your business, especially if you or an employee get sick or injured while working.

Workers' compensation vs. health insurance

Workers' compensation insurance protects you and your employees from paying significant out-of-pocket expenses after a work-related accident or illness. For example, if an employee experiences an injury after slipping on some stairs, workers’ comp could help pay for a medical exam and treatment.

Unlike health insurance, many states require business owners to provide workers’ comp as soon as they hire their first employee. In some states, this even includes part-time workers and contractors. 

General contractors and other high-risk professions might be required to have coverage before they can start a job, even if they don’t have employees.

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 will help cover costs of doctor's appointments, medicine or even a hospital stay.

Unlike workers’ comp, your health insurance won’t cover lost wages — it only helps pay for medical exams, treatment and rehabilitation.

How workers' comp protects you and your employees

Workers' comp can help cover medical expenses, loss of income and retraining for you or 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 pass away while working.

Without this insurance, you could be responsible for paying the costs associated with workplace injuries out of pocket, which could easily run into tens of thousands of dollars.

With Next Insurance, you can get a quote online, explore coverage options and purchase workers' comp in a matter of minutes. Start an instant quote to see how much it will cost for your business.

Workers' compensation vs. disability insurance

Disability insurance is another benefit you could choose to offer as a small business owner. It provides coverage for people who can’t work because of an injury or illness that happened when they were not working, such as a weekend car accident. It won’t cover workplace accidents.

What does Workers' Comp cost vs. health insurance?

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

In most states, business owners have the option to share the cost of healthcare insurance with employees, paying for all expenses or not offering coverage at all.

Workers' compensation insurance is regulated on the state level, so exact costs depend on where your business and employees are located. Other factors that influences costs include:

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

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

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

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 Insurance can help you determine the different types of business insurance you might need to help you reduce your risk and help cover any potential costs, up to your policy limits.

WIth Next Insurance, you can get the workers' comp coverage you need, customized to your business, within minutes. Once you purchase your coverage, 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 standing by to help if you have any questions.

Matt Crawford image
By Matt Crawford
Matt Crawford is Associate Content Director at Next Insurance and a small business insurance specialist.
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