Federal law requires all businesses to pay for the medical treatment and lost wages of employees who suffer job-related injuries or illnesses. In order to avoid crippling expenses in under this nation-wide requirement, companies purchase workers' compensation insurance policies.

Most states give businesses the choice of buying workers' compensation policies either directly from the state or from a private insurer. Each state determines its own system's payment schedules, employee eligibility requirements, and rehabilitation procedures.

Although provisions of each state's laws differ greatly, the underlying principle is the same: that employers should assume the costs of on-the-job injuries, illnesses, and deaths, without regard to fault, and partially replace wage income loss. While income replacement under workers' compensation is usually a percentage of the actual wage, it is counted as a transfer payment and thus is not subject to federal income tax for the employer or employee. Some state laws exempt certain categories of employees from coverage.

Each state will allow certain individuals to opt out depending on legal entity, size of organization, or nature of work.

Please contact us regarding your state’s requirements.