Why workers' compensation insurance is in the best interest of Indiana employees and employers

Why is workers’ comp important for Indiana employers to understand?

Workers’ compensation insurance helps protect businesses and employees from financial loss when an employee suffers a work-related illness or injury. For workers it can provide medical coverage and partial wage replacement.  For employers, it offers legal protection should an employee decide  to sue for injuries or illness that are job-related.

Which Indiana businesses need to have workers’ compensation insurance?

Most businesses with employees In Indiana are required to have workers’ compensation insurance in order to provide protection against workplace injuries and illnesses. But unlike workers’ comp laws in some other states, the number of employees at a business has no bearing on the requirement to obtain insurance.

In addition, in most cases, the business owner or employer needs to include themselves in the company’s workers’ compensation coverage, unless the business is a sole proprietorship  or you are one of the parties in a partnership.

Some types or categories of employees do not need to be provided with workers’ compensation insurance coverage,  but business owners can elect to include them under their insurance policy, if they choose.

This option applies to

• Local police officers and firefighters under some conditions, reserve police officers
• Volunteers working for hazardous materials response teams
• Executive officers of public or nonprofit corporations
• Owner-operators who provide their vehicles and driver services to a trucking company that transports freight
• Members and managers of limited liability corporations who actively work in the business
• Individuals entered into a township, municipality, or county roster of volunteers
• Volunteers who work at state-owned or operated psychiatric facilities

In addition, casual laborers, household workers, and farm or agricultural workers do not need to be provided with worker’s compensation insurance under Indiana law.

Additionally, if you’re an independent contractor in the construction trades, those who hire you are not required to provide you with workers’ compensation insurance as long as you meet the IRS tests for independent contractor status. These requirements also apply to independent contractors who are sole proprietors.

Do any exemptions exist?

Some employees are exempt from Indiana workers’ compensation insurance and are also ineligible to elect optional coverage. These can include:

• Railroad employees covered under the Federal Employees Liability Act
• Workers engaged in interstate or foreign commerce who have access to federal alternatives to state-based workers’ compensation (examples include seamen or longshoremen)
• Real estate employees (i.e., real estate agents who work as independent contractors for real estate brokers)
• Independent contractors (based on a combination of IRS and state guidelines), independent contractors in the construction trades, athletes on scholarship, prison inmates, volunteers, and coaches for youth sports teams

Next, let’s look at how an employer obtains coverage to protect their employees and business.

How do Indiana employers purchase workers’ comp?

Workers’ compensation insurance can be purchased from private carriers. Or if the company is high-risk, the Indiana Assigned Risk Pool is an option.

Indiana employers can also self-insure, meaning they can pay their own workers’ compensation claims instead of submitting them to an insurance company.

In general, workers’ compensation is available for employers (no matter where they do business), in two different formats. These are typically referred to as pay-as-you-go or traditional plans.

Traditional policy

Premiums for traditional plans are calculated based on an estimate of a company’s annual gross wages. Once the insurer calculates the premium, employers are required to pay an upfront lump sum, sometimes accompanied by monthly or quarterly premiums over the rest of the year. At the end of the year, insurers audit the company’s payroll records to calculate the actual cost of the policy and any amount owed or due is either  refunded to — or collected from — the employer.

Pay-as-you-go

Pay-as-you-go premiums are calculated each payroll period, which ensures that businesses are paying exact amounts for their coverage. These plans eliminate the need for upfront lump sum payments and year-end audits and generally save employers both time and money. Learn more in our pay-as-you-go insurance guide.

Can Indiana employers without workers’ comp face penalties?

We never like being the bearer of bad news, but uninsured Indiana businesses could face civil and criminal liability.

• Civil penalties can cost uninsured employers up to $100 per day.
• Since failure to insure is a crime in Indiana, employers who willfully fail to obtain coverage can be charged with a misdemeanor and face up to one year of prison time and a fine of as much as $5,000.
• Indiana has a two-year statute of limitations for workers’ compensation claims. Meaning an employee can file a claim up to two years after an incident occurred.
• In addition,  an employer is required by law to post a notice in their place of business (that can easily be seen by employees) so that team members know the organization is covered by worker’s compensation. The notice needs to include the name, address, and telephone number of the employer’s insurance carrier or the person responsible for administering the employer’s worker’s compensation claims if the employer is self insured.

What happens if there’s an incident at the workplace?

Even though it’s the last thing anyone wants to have happen, per the Workers’ Compensation Board of Indiana, an employee should immediately notify their supervisor if a work-related injury or illness occurs. If workers wait longer than 30 days to communicate this information to their employer, there’s a chance the coverage could be forfeited.

More resources for Indiana employers

• Compliance information
• Penalties for noncompliance
• Workers’ Compensation Board of Indiana
• Workers’ Compensation Code
• Forms employers and employees should know

In addition, both employers and employees can always get in touch with the Indiana Worker’s Compensation System to understand procedures and what’s required in the state.

Worker’s Compensation Board of Indiana
Ombudsman Division
Address:
402 W. Washington St., Rm W196
Indianapolis, IN 46204

• Local phone number: (317) 232-3808
• Call tollfree: 1-800-824-2667