Montana Workers' Compensation Insurance

The Montana Supreme Court recently ruled in favor of two employees seeking workers’ compensation benefits. In the first case, a woman was injured in a car crash while on break time. In the other, a man received workers’ compensation benefits for an injury caused by a personal watercraft accident at a company picnic. 

In the first case, the court said that the employer had enough control and authority over the employee’s break time to consider it work time, and the employee was eligible for workers’ compensation benefits. 

In the personal watercraft case, the Court found that the employee was put in charge of the watercraft by his employer, and was therefore hurt “during the performance of his duties.”

Both of these cases highlight the need for workers’ compensation insurance, which paid for the employee medical expenses and other related costs, without a further liability burden for the employer. Montana workers’ compensation is necessary because it protects employees from the costs of work-related injuries and illnesses, and protects employers from being sued for additional damages. 

Montana Workers’ Compensation Laws

Under the Montana Workers’ Compensation and Occupational Diseases Act, employers must purchase workers’ compensation insurance in order to provide certain benefits to injured employees regardless of fault. Montana’s workers’ compensation law ensures worker safety, protects employees' rights if they are injured at work, and prohibits employees from filing additional civil lawsuits against the employer. 

The Basics of Montana Workers’ Compensation

Who Is Covered?

All employers who have one or more full- or part-time employee must purchase Montana workers’ compensation insurance. Sole proprietors, partners and LLC members are excluded from coverage, but can elect to be covered. 

Corporate officers are automatically included in Montana workmans’ comp coverage, but may elect to be excluded. 

Montana has numerous other exemptions from its workers’ compensation requirements, including agricultural employees, domestic employees, casual workers and professional athletes. An independent insurance agent can help you determine if you are required to purchase Montana workers’ compensation insurance. 

What Is Covered?

Montana workers’ compensation benefits include:

• Medical benefits
• Wage replacement
• Death benefits, including a burial allowance, for a surviving spouse and dependents

Where Can You Buy It?

Employers can purchase workmans’ comp insurance from insurance companies that are licensed to sell workers’ compensation insurance in Montana. Self-insurance is allowed with approval from the state. 

Montana has a state fund. It accepts higher-risk businesses that are unable to secure coverage from private insurance companies, but with higher rates. 

How Much Does Montana Workers’ Compensation Insurance Cost? 

Montana workers’ compensation insurance costs more for industries and occupations that have a higher risk of occupational injuries or illnesses. An employer’s premium is determined by how many employees it has, the types of jobs they perform, and its history of accidents and workers’ compensation claims. 

The National Council for Compensation Insurance (NCCI) assigns classification codes for each occupation. Each class code is given a recommended base rate for workers’ compensation insurance. To determine the total premium, an employer’s annual payroll at the beginning of the policy period is divided by 100, and then multiplied by the base rate.

Consider the following example:

• Classification Code 5183: Plumbing
• Base Rate: $5.03
• Employer payroll: $100,000
• Premium calculation: $5.03 per $100 of employer payroll (or 5.03% of payroll)
• Estimated annual premium: $5,030.00 

Most employers have employees in more than one classification. All applicable classifications and related premiums will be combined to determine the annual Montana workers’ compensation insurance premium.

Insurance companies in Montana must file their workers’ compensation rates with the Workers’ Compensation Regulations Bureau and the Montana Department of Labor and Industry. They may offer certain state-approved discounts and credits. 

Montana Workers’ Compensation 2016 Base Rate Examples

Workers’ compensation costs more in Montana than the national average, but rates have been declining in recent years. As recently as 2010, Montana had the highest workers’ compensation rates in the nation. Increasing competition is helping to lower workmans’ comp rates in Montana.

The NCCI sets a base rate for each Montana class code, but rates vary by insurance company underwriting standards. 

Consider the following sample base rates (rate per $100 of employer payroll) as of July 1, 2016:

• 0042 Landscaping: $5.72
• 5183 Plumbing: $5.03
• 5427 Carpentry: $7.35
• 8017 Retail Store: $1.82
• 8810 Clerical: $0.37
• 9082 Restaurant: $1.58

What Is Experience Rating and How Does It Affect Your Premium?

Experience rating allows employers with good safety records to get a credit on their Montana workmans’ comp premium. An experience modification factor, or experience mod, is applied to qualifying workers’ compensation premiums. It increases or decreases the Montana workmans’ comp premium for a given year.

Your experience mod is a numerical representation of your actual losses as compared to expected losses for similarly sized businesses in your industry. The mod is applied to your premium as a debit or credit.

• 1.0: Average mod. Does not impact premium.  
• Greater than 1.0: Debit mod. Losses were worse than expected, premium increases. 
• Less than 1.0: Credit mod. Losses were better than expected, premium decreases. 

The formula for experience-rated Montana workers’ compensation premium is:

• Base Rate X Payroll X Mod = Premium

Consider how the mod affects the premium in the examples below:

• 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

Montana employers can receive experience-rated workers’ compensation insurance premiums when they generate:

• $5,000 in policy premium during the last year or last two years, or
  
• $2,500 in average policy premium for more than two years

How to Find Montana Workers’ Compensation Insurance 

A Trusted Choice® agent can help you understand Montana workers’ compensation insurance and help you determine if you are required to purchase coverage. Workers’ compensation is complex, and the examples we have offered here are highly simplified. Failure to comply with Montana workers’ compensation laws can result in fines for your business. 

To obtain workers’ compensation quotes and learn more about how to protect your business and your employees, contact a local Trusted Choice agent. Start your search today.