In March 2016, a grain elevator in Hinton, Iowa exploded and two employees at Central Valley Ag sustained life-threatening injuries. These men, who were both in their 20s, were taken to Mercy Medical Center in Sioux City and were then transferred to the University of Nebraska Medical Center for further treatment in their renowned burn unit. While the men ultimately survived this tragedy, their burns and injuries are likely to require a lot of long-term care. Fortunately, the company’s workers’ compensation policy enabled these injured employees to receive the extensive medical care they needed at no cost to them.
No employer wants their workers to be injured on the job, but unexpected accidents sometimes happen. Immediately following the grain elevator explosion, Carl Dickinson, CEO of Central Valley Ag stated, “We have two priorities at this point. Number one is to care for our employees, the two individuals who were injured on site, and all of our other employees who work at our Hinton location. The second priority is to identify what happened so we can do everything in our power to ensure it never happens again.” As an employer, it is important that you maintain a safe work environment and that your company is in compliance with Iowa workers’ compensation laws.
Iowa workers’ compensation laws require most employers in this state to provide coverage against accidental injuries and illnesses that their workers may suffer on the job. It is against the law to deduct employee earnings to cover workers’ compensation premiums.
All employees must be covered with a few specific exceptions. These include:
If you have questions about who you must cover and who is included in your list of exceptions, you can receive guidance by discussing your situation with a knowledgeable insurance agent.
What Is Covered?
Workers’ compensation insurance, or “workmans' comp,” as many people call it, is designed to cover medical treatment for injuries and illnesses suffered on the job. It also covers related expenses such as lost wages for employees who need to take time off to recuperate, future medical costs for illnesses and injuries requiring long-term care, and disability and lost wages for significant injuries that render the employee unable to obtain future work. Additionally, if a worker is killed on the job, whether because of an accident, an act of violence, or a criminal act by a third-party actor, your Iowa workers’ compensation policy can pay out death benefits to the employee’s family or beneficiaries.
Insurance companies will sometime deny coverage for workers’ compensation claims. Reasons for denials of coverage should be provided to employees in writing when they are hired. These reasons may include cases when the employee was acting under the influence of drugs or alcohol; was committing a crime at the time the injury occurred; or if if the employee’s injuries were willfully self-inflicted. When employees’ claims are denied, they have the right to challenge this decision by filing a contested case petition with the Iowa Workers’ Compensation Commissioner.
Who Benefits from Iowa Workman’s Compensation?
Workers’ compensation policies are beneficial to both employees and employers.
Employees benefit from knowing that they will receive adequate compensation for losses related to occupational illnesses and injuries. This compensation is usually made available in a timely manner without requiring that the injured employee seek legal assistance. The employees who were injured in the Central Valley Ag grain elevator explosion were given the best possible medical care immediately after the accident, and this ensured that they recovered quickly and with as few long-lasting repercussions as possible.
Employers benefit from the knowing that their valued employees will get good care and their companies are not likely to be sued for negligence related to these occupational injuries or illnesses. This is because when employees accept workers’ compensation benefits, they forfeit their right to sue their employers in matters related to the injury. Such lawsuits can sometimes result in multimillion dollar judgements.
Where Can You Buy an Iowa Worker’s Comp Policy?
In Iowa, employers can obtain workers’ compensation insurance coverage in one of three ways. These are:
When it comes to workers’ compensation insurance, the state of Iowa operates under the jurisdiction of the National Council for Compensation Insurance, or NCCI. This means that rates are based on the NCCI’s risk assessment for jobs in your company’s given industry or industries.
Your premium price will be calculated based on:
You can use the base rates listed in the next section to get an idea of how much coverage might cost for your business.
In Iowa, workmans' comp insurance rates are set by the Iowa Division of Workers’ Compensation. The rates in this state are very consistent with national averages. Listed below are some sample base rates (rate per $100 of employer payroll) as of January,1 2016. Keep in mind that not all employers qualify for the lowest rates, and that these rates are subject to change at the start of each year.
As you can see, it costs employers much more to insure workers in industries like construction, where work accidents are more likely and can have greater severity, than it is to cover workers in low-risk jobs such as office work.
In this state, many companies are assigned an experience modification factor, also referred to as an experience mod. If your business qualifies, your experience mod can significantly affect how much you pay for your coverage.
Experience mod ratings provide an indication of how a company’s workers’ compensation claims compare to those of other businesses of similar size and industry. Frequent and severe worker injuries will increase your experience mod, while long periods where your company remains accident-free can decrease it. A higher experience mod will translate to higher premium rates and a lower mod can earn you discount.
Not every business qualifies to be experience rated, and eligibility requirements vary by state. In Iowa, a workers’ compensation experience rating is mandatory for employers with either:
If your business is experience rated, your premiums will be calculated using the following formula:
Base Rate X Annual Payroll X Experience Mod = Total Annual
New companies start out with an experience mod of 1.0. Your modification rating is calculated by dividing your expected losses by your actual losses for each of the three previous years and averaging those three factors. Therefore, if your actual losses are the same as your expected losses, your factor will be 1.0, and if your actual losses exceeded your expected losses, your rate would be greater than 1.0.
Listed below are some examples of how an experience modification rating can affect Iowa workers’ compensation premiums:
The best way to keep your workers’ compensation rates on the low end is to maintain a solid safety record through safe practices and employee training. A good Iowa workmans' comp insurance company can assist you in this endeavor by providing your business with resources related to workplace safety.
The Central Valley Ag Cooperative in Hinton was covered by an insurance company that understands the risks faced by workers in the agricultural industry. In the same way, there are Iowa workmans' compensation providers that are particularly well-suited to meet the demands of your particular business. A Trusted Choice® insurance agent can help you find a provider that offers the coverage you need as well as the resources necessary to help you ensure the highest level of worker safety. Contact an independent agent near you to learn more.