State Workers Compensation Funds

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What the State Workers Compensation Fund is All About:

Workers Compensation is a type of insurance that provides employees and self-employed individuals with benefits and compensation in the event of injury. These benefits include wage replacement, medical treatment, rehabilitation services and disability leave. Employees exchange their ability to sue their employer in exchange for access to these benefits and compensation. Workers Compensation insurance is available through both states and private insurers.

However, it is not always easy for certain workers to obtain Workers Compensation insurance through a carrier. A State Workers Compensation Fund provides those who are having trouble getting Workers Compensation with a way to get covered.

A State Workers Compensation Fund is a public enterprise fund that was initially created by the state of California. A public enterprise fund is used by governments to deal with commercial affairs. California has used a State Workers Compensation Fund to provide Workers Compensation insurance that, while governed by the state, also has limited autonomy.

Read on to see if you can benefit from a State Workers Compensation Fund.

What is a Competitive State-Run Workers Compensation Fund?

A Competitive State-Run Workers Compensation Fund is run by a given state and used to provide employees and self-employed individuals with Workers Compensation insurance. In states with Competitive State-Run Workers Compensation Funds, the state competes directly with private insurance companies. Employers and self-employed individuals have the option to obtain insurance from either the state fund or a private insurer.

These state funds are created with assistance from a given legislature that allocates the initial financial and logistical resources necessary for establishment. In turn, the fund eventually becomes self-sufficient and can function with more autonomy. Competitive state-run funds are created to limit the extent to which private insurers increase the costs of coverage for employers. Other states either have Monopolistic State Funds or funds set up in conjunction with the National Council on Compensation Insurance (NCCI).

The states that have competitive state-run funds are Arizona, California, Colorado, Hawaii, Idaho, Kentucky, Louisiana, Maine, Maryland, Minnesota, Missouri, Montana, New Mexico, New York, Oklahoma, Oregon, Pennsylvania, Rhode Island, Texas and Utah. State-run funds may not always provide the most comprehensive coverage for employers to invest in and therefore, can be considered a backup option for insurance.

What is a Monopolistic State Workers Compensation Fund?

A Monopolistic State Workers Compensation Fund is found in states that require employers to either obtain Workers Compensation Insurance from a state fund or identify themselves as self-insured. Wyoming, Washington, North Dakota, West Virginia and Ohio are states with Monopolistic State Workers Compensation Funds. In these states, employers that use compulsory state funds or are self-insured are not subject to the rules and regulations required in others by the NCCI. Instead, each state has its own rules and regulations regarding Workers Compensation.

If you own a business in a state with a Monopolistic State Workers Compensation Fund, it is important to have a strong understanding of the specific rules and regulations of your given jurisdiction. As private insurance is not permitted in monopolistic states, you may encounter difficulties with the lack of standardized work classifications and manner in which a state handles disputes. If an employee carries out work in another state where a Monopolistic State Workers Compensation Fund does not exist, there may then be issues surrounding coverage. Finally, there may be Employers’ Liability Insurance for states with Monopolistic Workers Compensation Funds. If this is the case, an employer should consider purchasing such a policy in order to protect themselves in the event an employee is injured.

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