Unpacking New Mexico's workers' compensation insurance requirements

What makes workers’ compensation so important?

To put it simply, having workers’ compensation insurance can benefit both employers and employees. On one hand, workers comp insurance covers medical expenses, rehabilitation, and lost wages for any covered employee who is injured or becomes ill while on the job. However, workers’ compensation coverage protects business owners as well because, in most cases, it protects them from potentially costly lawsuits as well as penalties for noncompliance (which can sometimes even result in business closure).

Now that we have a better idea of how a workers’ compensation policy can help both workers and businesses, let us talk about which businesses are required to have coverage.

What employers in New Mexico are required to have workers’ compensation insurance?

New Mexico law says that has any employer with three (3) or more employees is required to carry workers’ compensation insurance. The three employees do not need to all work in New Mexico for this requirement to kick in, and workers are not required to live in New Mexico for benefits to be available. For example, if you have four employees and two work in New Mexico and two work in another state, you are required to purchase workers’ comp insurance for all four employees.

In New Mexico, an employee includes owners if they actively work in the business, part-time employees, as well as seasonal and temporary workers. New Mexico law also requires that agricultural employers as well as those involved in the construction industry all have workers’ compensation coverage.

Are there exceptions?

New Mexico does have some exemptions from coverage. These exemptions include:

• Independent contractors
• Real estate salespeople
• Executive employees
• Sole proprietors
• Federal employees covered by the Federal Employees Compensation Act
• Domestic workers
• Inmates
• Willfully negligent employees
• Casual workers

It’s important to note that workers’ comp regulations cannot be enforced on tribal lands, though each tribe has the option to enforce the requirement if they desire. Any business located on a Native American reservation or pueblo must follow the guidelines of that tribe, and any private business located on tribal land may have to resolve workers’ compensation issues in either a tribal court or through the State of New Mexico Workers’ Compensation Administration or WCA.

With coverage a must-have for most employers, let’s dive into the specific benefits it offers for on-the-job illnesses or injuries.

Common protections that workers’ compensation in New Mexico provides

In a nutshell, New Mexico workers’ compensation insurance covers all reasonable and necessary medical care related to a work-related injury or illness without out-of-pocket costs. New Mexico workers comp also offers indemnity benefits including:

• Temporary partial disability (TPD)
• Temporary total disability (TTD)
• Permanent partial disability (PPD)
• Whole body impairment
• Permanent total Disability (PTD)

New Mexico workers comp also offers death or survivor benefits including funeral expenses.

For employers who are unsure how to obtain a policy, let’s explore how most companies typically go about buying insurance coverage.

How can a New Mexico employer purchase workers’ comp insurance?

In New Mexico, businesses can purchase workers’ comp coverage from any insurance agency that is licensed to sell commercial lines of insurance. There are three types of coverage available:

1. Conventional coverage – for the voluntary, commercial market, this coverage is provided by an insurance company licensed by the New Mexico Office of the Superintendent of Insurance (OSI).
2. Assigned risk pool – for businesses in a high-risk industry or those with poor safety records, they can obtain workers’ comp coverage from the state high-risk pool, which also provides coverage for new businesses until they can obtain commercial coverage.
3. Self-insurance – for larger businesses and government entities that have the funds available to provide their own insurance coverage. Those interested in self-insurance must apply to the WCA for approval.

In addition to the premium for coverage, New Mexico employers must also pay a fee of $4.30 per employee per quarter, with employees responsible for paying $2 of the total fee. This fee is paid to the Taxation and Revenue Department quarterly.

What are the penalties in New Mexico for not having workers’ comp insurance?

When businesses are unable to present proof of adequate workers’ compensation coverage, the business will be referred to WCA’s Enforcement Bureau, who will contact a business directly to request voluntary compliance. If insurance is not purchased, the business can be shut down until insurance is obtained and coverage verified.

How are workplace-related injuries or illnesses reported?

Both the worker and employer are required to complete individual notification steps when an injury or illness occurs.

The worker:

• Must notify their employer within 15 days of accident or injury
• Must complete the Notice of Accident form or otherwise notify their employer in writing

The employer:

• Must sign and date the Notice of Accident form- providing a signed copy to the worker
• Must notify their workers’ comp insurance carrier within 72 hours
• Must follow up with the insurer to ensure timely submission of First Report of Injury (FROI) to WCA

How are physicians chosen for treating work-related injuries?

There is a specific process in place for choosing a healthcare provider after an accident or illness. If the injury is an emergency, the employee can seek treatment at any emergency department. However, follow-up care must abide by the authorized selection process.

Choosing a physician always starts with the employer, with the employer informing workers in writing where treatment should be sought should an injury occur. In some cases, employers may allow employees to make the provider selection themselves. Employees have the option to file a Notice of Change of Health Care Provider (HCP) after sixty days if desired, with the employer able to formally object to the change within 3 days of receiving the form.