Missouri workers’ compensation insurance provides wage replacement, medical care, and death benefits when an employee is injured or becomes ill on the job. Workmans’ comp coverage compensates employees for their injuries, and protects employers from potentially devastating costs.
What are some situations in which workers’ compensation helps both parties recover from the costs of work-related injuries? Consider the following:
- A truck driver injured his back while making deliveries. After fusion surgery and rotator cuff surgery, he remained unable to return to work.
- A construction worker fell in a hole at a work site and fractured his leg. He was forced to retire due to permanent restrictions related to the injury.
- A repetitive motion injury caused a butcher to need several surgeries on his arm. The injury resulted in permanent restrictions that made him unable to return to work.
Missouri Workers’ Compensation Laws
Missouri’s first workers’ compensation law was adopted in 1925 in order to provide a simple remedy for injured workers and help them avoid having to hire a lawyer. Workers were entitled to medical and disability benefits if they were injured at work.
All Missouri employers with five or more employees are required to purchase workers’ compensation insurance. Those with less than five employers are encouraged to purchase workmans’ comp coverage, because they can be held liable for medical bills and lost wages for injured workers.
The Missouri Division of Workers’ Compensation oversees the state’s workmans’ comp program.
The Basics of Missouri Workers’ Compensation
Who Is Covered?
Missouri workers’ compensation insurance is required for any employer with five or more employers. This includes full-time, part-time, seasonal and temporary workers.
Construction contractors must buy Missouri workmans’ comp even if they have only one employee.
Sole proprietors and partners are automatically excluded from Missouri workers’ compensation coverage, but they can elect to be covered. Corporate officers are considered to be employees under Missouri law, and therefore are included. Corporate officers may not elect to exempt themselves form Missouri workers’ compensation coverage.
LLC members are automatically included in coverage, but they may elect to be excluded.
Missouri allows for a small group of additional exceptions from the workers’ compensation requirement:
- Farm laborers
- Domestic servants
- Certain real estate agents and direct sellers
- Volunteers in tax exempt organizations
- Sports officials or contest workers for interscholastic activity programs or amateur youth programs who are not employed by the sponsor of the event
- Members of certain religious sects or divisions
What Is Covered?
Missouri workers’ compensation insurance provides the following benefits to injured employees:
- Medical benefits
- Temporary total disability benefits and permanent partial or permanent total disability benefits
- Death benefits, including weekly benefits for certain surviving dependents and funeral expenses up to $5,000
Where Can You Buy It?
Missouri workmans’ comp insurance can be purchased from private insurance companies through insurance agents who are licensed to sell it. Missouri has an assigned risk pool that provides access to workers’ compensation policies for employers who are unable to find coverage from private insurance companies.
Employers can self-insure with approval from the Missouri Division of Workers’ Compensation.
How Much Does Missouri Workers’ Compensation Insurance Cost?
Missouri workers’ compensation insurance premiums are based on the number of employees an employer has, the types of jobs performed, and the employer’s history of accidents and workers’ compensation claims.
The National Council for Compensation Insurance (NCCI), an independent rating and data collection bureau, assigns classification codes to each Missouri occupation. A base rate for workers’ compensation insurance is assigned to each class code. To determine the employer premium, the annual payroll at the beginning of the policy period is divided by 100, and then multiplied by the base rate. For example:
- Classification Code 5474: Painting
- Base Rate: $7.18
- Employer payroll: $100,000
- Premium calculation: $7.18 per $100 of employer payroll (or 7.18% of payroll)
- Estimated annual premium: $7,180.00
A painting company may have employees in more than one classification, such as clerical or administrative staff. All of an employer’s applicable classifications and related premiums will be combined to determine its annual workers’ compensation insurance premium.
Missouri allows certain scheduled debits or credits to be applied to an employer’s workmans’ compensation premium. Premiums can be adjusted by up to 25% based on the employer’s years in business, management experience and location.
The Contracting Classification Premium Adjustment Program (CCPAP) provides a premium credit back to contractors when their average wages are higher than $18.00 per hour.
Missouri Workers’ Compensation 2016 Base Rate Examples
Missouri rates are higher than the national average and are increasing annually, in part due to the number of workers’ compensation claims in the state, the severity of the claims and the overall cost of medical care. Fortunately, insurance companies are allowed to compete for market share and can issue certain scheduled credits.
The NCCI sets a base rate for each Missouri class code. Here are some sample base rates (rate per $100 of employer payroll) as of January 1, 2016:
- 0042 Landscaping: $6.99
- 5183 Plumbing: $3.83
- 5427 Carpentry: $4.19
- 8017 Retail Store: $1.44
- 8810 Clerical: $0.16
- 9082 Restaurant: $1.30
What Is Experience Rating and How Does It Affect Your Premium?
Experience rating makes a significant difference in your Missouri workers’ compensation premiums after you establish a claims history. An experience modification factor, or experience mod, is an additional factor that may be applied to your workers’ compensation premium calculation. The mod increases or decreases your workers’ compensation premium for a given year.
An experience mod is a numerical representation of an employer’s actual losses compared to expected losses for the same industry (the employer’s losses are compared to losses for similarly sized businesses in its industry). Depending on the mod, a debit or credit is applied to the Missouri workers’ compensation premium.
- 1.0: Average mod; does not impact premium. All employers start out with a mod of 1.0.
- Greater than 1.0: Debit mod; losses were worse than expected. Premiums go up.
- Less than 1.0: Credit mod; losses were better than expected. Premium goes down.
Experience-rated workers’ compensation premium is determined using the following formula:
- Base Rate X Payroll X Mod = Premium
Here are some examples of how experience rating affects individual 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
Employers in Missouri are eligible for experience rating when they meet one of these requirements:
- $7,000 in policy premium generated during the last year or last two years, or
- $3,500 average policy premium generated for more than two years
How to Find Missouri Workers’ Compensation Insurance
Missouri employers need experienced and knowledgeable independent insurance agents to help them find the best workers’ compensation policy for their needs. The examples and calculations provided here are simplified; workers’ compensation insurance is quite complex. An independent insurance agent can help you obtain quotes and find the true cost of Missouri workmans’ comp coverage for your business.
Start protecting your workers and your business now. Find a Trusted Choice agent in your area.