An accident in early March 2016 at Automated Routing near St. Meinrad left one employee dead. The Tell City man sustained a fatal head injury and was pronounced dead on the scene.
According to news reports, the employee had been sweeping the floor when he apparently lost his footing, tripped backward and hit his head on some machinery. Emergency crews and a medical helicopter were dispatched, but the employee had died by the time they arrived.
It was reported that the accident did not stem from any fault in the machinery or work environment. However, according to protocol, the Indiana Occupational Safety and Health Administration was contacted to investigate the matter, as they do in all deaths that take place in the workplace. This type of investigation determines whether the worker's family receives any workers' compensation benefits from the incident.
Workers' compensation is an accident insurance program, paid by an employer, which may provide employees with medical, rehabilitation and income benefits if they are injured on the job or become sick due to their work environment. These benefits are provided to help employees return to work. They also provide benefits to dependents if an employee dies as the result of a job-related injury.
Like most states, Indiana has a private insurance workers’ compensation system. Employers must carry insurance in order to cover their liability for injuries sustained by workers in the course and scope of their job. A small number of employers are “self-insured,” meaning they have received special approval from the Worker's Compensation Board to pay claims out of their own funds.
Who Must Purchase Workers' Compensation Insurance in Indiana?
All employers, no matter how many workers they hire or the size of their revenues, must purchase workers' compensation insurance in Indiana. A few exceptions exist, however, including
- Federal employees, including railroad workers (these employees are covered under federal workers' compensation programs).
- Independent contractors
- Real estate professionals, as long as they are not considered employees
The Indiana Department of Revenue issues Worker's Compensation Exemption Certificate Clearance to individual taxpayers who are independent contractors or otherwise not required to carry workers' compensation insurance on themselves under the Worker's Compensation Act of Indiana. To receive this certificate clearance, you must meet the following requirements:
- All returns must be filed and up to date
- All outstanding delinquencies must be paid in full
- All payments must be made in guaranteed funds
- Form WCE-1 must be filed, along with a $20 non-refundable application fee in guaranteed funds
An employer who fails to carry insurance coverage sufficient to meets its obligations under the Worker's Compensation Act may be ordered to pay reasonable medical expenses, double compensation, and reasonable attorney’s fees to an employee injured during the period in which the employer is uninsured. The state may also impose fines on the employer for failing to carry workers' compensation insurance.
What Does Indiana Workers' Compensation Cover?
For those Indiana employers who must purchase workers' compensation insurance, coverage begins the first day an employee is on the job. In Indiana, if an injured employee is unable to work (temporarily totally disabled), they will receive two-thirds of their average weekly wage for the past 52 weeks, but not more than $600 per week, for an accident that occurred on or after July 1, 2006.
The Indiana workers' compensation system recognizes injuries occurring from workplace accidents as the primary type of injury that is covered by an Indiana employer's workers' compensation insurance. Workers' compensation insurance does not, however, cover injuries resulting from:
- an employee's drug use;
- alcohol consumption; or
- failure by an employee to perform a statutory duty.
For example, an employee who is injured due to an equipment malfunction would be covered under workers' compensation. However, if the injury is a result of the employee working while intoxicated, the claim will be denied.
Occupational illnesses that result from contact with hazardous conditions on the job also fall under the workers' compensation umbrella in Indiana and can be compensated through workers' compensation benefits. Finally, when an employee's work-related injury or illness causes untimely death, relatives or other dependents are entitled to death benefits.
Workers' compensation insurance will pay medical providers directly for all medical treatment necessary to treat the workers' occupational illness or work-related injury. This may include doctor appointments, hospital bills, and prescriptions, among others. This allows you, as the employer, to focus on getting your business back on track following a workplace incident.
How Are Indiana Workers' Comp Insurance Rates Calculated?
The Indiana Compensation Rating Bureau (ICRB) is a statutory rating organization. It is a private non-profit, unincorporated association of all insurance companies licensed to write workers' compensation insurance in Indiana.
A 2015 report issued by the National Council on Compensation Insurance indicated that Indiana employers paid $848 million for workers' compensation insurance premiums in 2014. That is a lot of money, but the good news for Indiana employers is that they pay some of the lowest workers' compensations insurance premium rates in the country. In fact, workers' comp premiums for Indiana employers are an average of $1.06 per $100 in payroll, the second lowest in the nation, beaten only by North Dakota's rates.
The premiums you pay are impacted by the type of work your employees do, identified by the employee classification. A marketing company in Fort Wayne whose employees are all office workers will have a lower rate than an Indianapolis construction company whose employees work with dangerous equipment on a daily basis.
Your rate is also affected by your workers' compensation claims history, or experience modifier. An employer who has never filed a claim will pay lower rates than one who has had several claims in their past. Various insurance companies may also offer discounts on workers' compensation premiums for employers who choose to implement certain risk avoidance measures such as employee drug testing.
To find your workers' compensation premium, simply calculate:
Base Rate X Payroll X Modifier = Premium
Experience modifiers are calculated by the NCCI or by another independent agency in some states. Your mod represents a debit or credit that is applied to your workers’ compensation premium.
A mod of 1.0 is considered to be average and does not impact your premium. All employers start out with a mod of 1.0. A mod greater than 1.0 is a debit mod. This means that your losses were worse than expected, and your premium goes up. A mod less than 1.0 is a credit mod. This means your losses were better than expected, and your premium goes down.
Here are some examples of how experience rating impacts Indiana's workers’ compensation premiums:
- Premium: $100,000
- Mod: 0.75 (25% premium credit)
- Premium with mod credit applied: $75,000
- Premium: $100,000
- Mod: 1.0
- Premium is not adjusted
- Premium: $100,000
- Mod: 1.25 (25% premium surcharge/debit)
- Premium with mod debit applied: $125,000
For example, in Indiana, a plumbing outfit with a claims-free past will pay workers' compensation premiums at a rate of $1.32 per $100 in payroll. A retail shop with several claims in its history will pay a premium at the rate of $1.34 per $100 in payroll.
The base rate depends on your employee classifications and can fluctuate slightly from year to year. Here are more examples of Indiana's 2016 low rates and high rates depending on employee classification and claims history:
- 0042 Landscaping: low $4.17 vs. high $5.76
- 3632 Machine Shop: low $1.60 vs. high $2.20
- 3821 Salvage Yard: low $3.85 vs. high $5.32
- 8006 Gas Station: low $1.45 vs. high $2.01
- 8017 Retail Store: low $0.97 vs. high $1.34
- 8742 Outside Sales: low $0.24 vs. high $0.33
- 8810 Clerical: low $0.12 vs. high $0.16
Where Do I Purchase Indiana Workers' Compensation Insurance?
Some employers make the mistake of believing that because workers' compensation rates are regulated by the state of Indiana, all policies are created equal. While it is true that coverage must be the same no matter which insurance company is issuing the policy, you may pay different rates by choosing workers' comp from Company A rather than Company B. Insurance companies are permitted to offer various discounts for risk avoidance measures such as employee drug testing, or for bundling your other business insurance needs with the same company. That's why it's important to shop around for the best rates.
Independent insurance agents are always available to answer any questions you may have about the Indiana workers' compensation system. These experienced agents can locate a variety of quotes from a number of insurance companies, ensuring that you can choose a policy with the most competitive rates.