Several employees in a Nevada office building became ill after it was discovered that the building was overrun by pigeons. Even after a chemical spray was used and the cooling system was replaced, employees continued to get sick. Whether it was the pigeons or the chemical spray that caused the illness remained a mystery, but the employer knew that it faced the potential for out-of-control employee medical expenses if the situation continued.
In order to reduce the inevitable workers’ compensation claims, the employer quickly moved employees out of the building. Nonetheless, the employees who had gotten sick needed help with expenses related to their illness.
This is a unique situation, and it highlights the importance of protecting your employees—and your business—from unforeseen circumstances. While it is not likely that your office be will taken over by pigeons, it is likely that accidents will occur in your workplace, no matter how safe it is.
Employers are obligated to help their employees pay for medical expenses if they are injured at work. Workers’ compensation insurance, which is required for most employers in Nevada, helps injured workers pay for medical bills and lost wages due to work-related injuries and illnesses.
Nevada’s no-fault workers’ compensation program provides benefits to employees who sustain work-related illnesses and injuries, and it protects employers from further liability when they provide the required coverage.
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Nevada Workers’ Compensation Law
Nevada’s workers’ compensation law provides a remedy for workers who are injured or become ill as a result of their job. The law also describes the process for filing claims and receiving benefits.
Workers may make a claim for Nevada workers’ compensation benefits if they are injured in a work-related accident. Injuries resulting from an employee’s intoxication or drug use will not be considered valid claims, nor will injuries that are self-inflicted or that arise from a failure to follow employer workplace safety policies.
Nevada workers’ compensation insurance also provides benefits for claims due to occupational illnesses—those that develop because of a worker’s repeated exposure to harmful conditions at work.
Employers who do not purchase Nevada workers’ compensation insurance as required may be subject to fines of up to $15,000. The Nevada Division of Insurance may also close the business and hold the company liable for all costs if there are any employee injuries.
The Basics of Nevada Workers’ Compensation
Who Is Covered?
Any employer in Nevada with one or more employees (full-time, part-time, seasonal, minor and non-citizen) must provide workers’ compensation insurance.
Sole proprietors and partners are excluded from coverage but may elect to be included. Sole proprietors with no employees are not required to maintain coverage for themselves, but can elect it. If there is even one employee, a sole proprietor must have Nevada workmans’ comp coverage for that employee.
Corporate officers and LLC members are automatically included in Nevada workers’ compensation coverage, but may exempt themselves.
Contractors must provide coverage for employees, subcontractors, and independent contractors and their employees. These entities are deemed to be employees of the prime contractor unless the subcontractor is an independent enterprise. The amount of control the employer exercises over the job being performed is more important than what the relationship is called when determining if Nevada workmans’ comp coverage is required.
The “independent enterprise” requirement does not apply to construction projects. There are no exceptions when the work being performed requires a construction license.
What Is Covered?
Employees are entitled to the following Nevada workers’ compensation benefits:
- Medical treatment
- Wage replacement
- Permanent partial disability
- Permanent total disability
- Vocational rehabilitation
- Dependents’ death benefits
- Other claims-related benefits or expenses (e.g., mileage)
Where Can You Buy It?
Employers can purchase Nevada workmans’ compensation coverage through private insurance carriers and agents who are licensed to sell it. Employers can also become certified by the Nevada Division of Insurance as self-insured employers or members of an association of self-insured public or private employers.
If you have trouble obtaining coverage from a private insurance company, you may buy it through the Nevada assigned risk program, which is administered by the National Council on Compensation Insurance NCCI).
How Much Does Nevada Workers’ Compensation Insurance Cost?
The NCCI assigns classification codes to every occupation. Each classification code is assigned a base rate for workers’ compensation insurance. High-hazard occupations have higher rates than low-hazard occupations.
Your Nevada workers’ compensation insurance premium is based on how many employees you have, your total payroll, your industry classification code, and your history of accidents and workers’ compensation claims. Your annual payroll at the beginning of the policy period is divided by 100, and then multiplied by the base rate for your class code.
- Classification Code 0042: Landscaper
- Base Rate: $4.66
- Employer payroll: $100,000
- Premium calculation: $4.66 per $100 of employer payroll (or 4.66% of payroll)
- Estimated annual premium: $4,660.00
A landscaping company is likely to have employees in more than one classification. All of its applicable classifications and related premiums are combined to determine the full Nevada workmans’ comp insurance premium.
Nevada Workers’ Compensation 2016 Base Rate Examples
Nevada has some of the lowest workers’ compensation rates in the U.S. Private insurance carriers may offer certain scheduled discounts and rebates, but all rates must be filed with and approved by the state.
The NCCI assigns base rates to each Nevada class code. Base rates vary by class code and the insurance company’s underwriting standards.
Here are some sample base rates (rate per $100 of employer payroll) as of March 1, 2016.
- 0042 Landscaping: $4.66
- 5183 Plumbing: $3.87
- 5427 Carpentry: $5.00
- 8017 Retail Store: $1.90
- 8810 Clerical: $0.24
- 9082 Restaurant: $0.77
What Is Experience Rating and How Does It Affect Your Premium?
Your Nevada workmans’ comp premium will be affected by your history of accidents and claims over time. If you have a safe workplace, experience rating will improve your workers’ compensation premium. If you have a poor claims history, experience rating will increase your premium.
An experience modification factor, or experience mod, is an additional factor that may be applied to your workers’ compensation premium calculation. It increases or decreases your workers’ compensation premium for a given year.
Your mod is a numerical representation of your actual losses compared to expected losses for companies of similar size in your industry (plumbers are compared to plumbers, restaurant workers to restaurant workers, etc.).
Employers in Nevada will receive an experience modification factor when they meet one of these requirements:
- $6,000 in policy premium generated during the last year or last two years, or
- $3,000 average policy premium generated for more than two years
If your workmans’ comp policy is experience-rated, your premiums are determined with the following formula:
- Base Rate X Payroll X Mod = Premium
Your mod represents a debit or credit that is applied to your workers’ compensation premium, as follows:
- All employers start out with a mod of 1.0. Does not impact premium.
- A mod greater than 1.0 means that losses were wore than expected, and premium goes up (a debit mod).
- A mod less than 1.0 means that losses were better than expected, and premium goes down (a credit mod).
Consider these examples of how experience rating affects Nevada 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
Most businesses cannot control their industry classification or how risky their employees’ jobs are. But by keeping claims and related costs low, you can control your mod and have an impact on what you pay for Nevada workmans’ comp insurance.
How to Find Nevada Workers’ Compensation Insurance
Purchasing Nevada workers’ compensation is complex and requires the help of a trusted advisor. We have provided only simplified examples and calculations in this article.
To make sure you purchase the right policy to protect your business and your employees, seek help from an independent insurance agent who can help you learn more about Nevada’s workers’ compensation laws. An independent agent can help you get quotes from multiple insurance companies so you can be sure you are making the right choice.
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