Alaska workers' compensation insurance

Nearly all workers in the state of Alaska must be covered under a workers’ compensation insurance policy.

Workers' compensation benefits pay for the medical treatment of ill or injured employees when the cause is related to their job. It also provides death benefits in the event of a workplace fatality.

Employees who do certain types of work are exempt, including:

• Babysitters working part-time
• Noncommercial cleaning employees
• Workers hired to harvest crops and other similar part-time or transient employees
• Sports officials working amateur events
• Entertainers working under contract
• Workers engaged in commercial fishing
• Taxicab drivers working under contract
• Individuals receiving state temporary assistance benefits and who are engaged in required work activities
• Professional hockey team players and coaches as long as they have health insurance
• Real estate agents working under contract
• Transportation company drivers

Alaska employers who hire construction contractors or subcontractors must provide them and their employees with workers’ compensation coverage unless the contractor can provide proof of insurance.

If you hire a contractor or subcontractor who lacks workers’ comp insurance and one of their workers gets hurt, you may be liable for that person’s medical expenses under your own workers’ comp arrangement.

Business owners should always consider buying workers' comp for themselves, as your health insurance plan might deny a claim for a work-related injury. However, the requirements depend on your ownership status.

Sole proprietors and independent contractors don’t have to purchase workers’ comp insurance for themselves. However, they must comply with state law for covering employees. The same is true for partners in a business partnership.

Members of a limited liability company (LLC) who have at least a 10% ownership interest are exempt from coverage.

Executive officers of municipal or religious organizations or legally registered nonprofit corporations are exempt unless their corporation wants to cover them.

Executive officers with at least a 10% ownership share are exempt from workers’ comp coverage.

Although the above individuals can opt out of their firm’s workers’ comp plan, they must still maintain coverage for all of their employees, as well as for any family members or friends who work with them (subject to the exceptions listed earlier).

It's always a good idea to carry this coverage, as it can protect you from unexpected medical bills and provide part of the wages you'd lose while recovering from a work injury.

To save money on workers' comp insurance, it's important to make sure you classify your employees correctly. Employees with desk jobs or other jobs with a low risk of injury cost less to insure. This also helps you avoid misclassification fines.

In some cases, small business owners can choose to buy pay-as-you-go workers' compensation. This type of workers' comp policy has a low upfront premium, and lets you make payments based on your actual payroll instead of estimated payroll. It's useful for businesses that hire seasonal help or have fluctuating numbers of employees.

Finally, a documented safety program can help lower workers' comp costs. A safer workplace means fewer accidents, which helps keep your premium low.

Alaska business owners can compare quotes and purchase a policy from private insurance companies. Insureon offers this service with its online insurance marketplace.

If two nonaffiliated commercial insurers decline your workers’ comp application, you will be eligible to buy coverage from the Alaska Assigned Risk Pool, which is administered by the National Council on Compensation Insurance (NCCI).

Another option for securing workers’ compensation insurance is to simply pay for your own claims. This is called self-insurance. To qualify for this arrangement, Alaska employers must:

• Have done business in the state for at least five years
• Have 100 or more employees
• Have at least $10,000,000 in net worth
• Have the financial resources to meet current and future obligations under the Alaska workers’ compensation law
• Have implemented a safety / loss program
• Provide claims handling in Alaska either through its own employees or through independent, licensed adjusters doing business in the state
• Post any required security bond

An employer who meets these conditions may apply for a certificate of self-insurance by completing and submitting application Form 07-6129. The application must be accompanied by a number of supporting documents.

Visit the Alaska Department of Labor and Workforce Development's Division of Workers' Compensation to find out more.

Workers' compensation insurance pays for medical treatment and part of the employee's wages after a job-related injury or illness.

Workers' compensation benefits in Alaska include:

• Temporary total disability benefits
• Temporary partial disability benefits
• Permanent total impairment benefits
• Permanent partial impairment benefits
• Reemployment benefits
• Death benefits for fatal incidents

Policies usually include employer's liability insurance, which can help cover legal expenses if an employee blames their employer for an injury. However, the exclusive remedy provision in most workers' comp policies prohibits an employee from suing their employer if they accept workers' comp benefits.

Employers in Alaska who fail to maintain workers’ compensation insurance for their employees will be subject to a variety of civil penalties, including:

• Penalties of up to $1,000 per employee, per day in which they fail to provide workers’ comp coverage
• Being shut down by the state (stop-work order)
• Having to pay $1,000 in additional penalties for each day they violate a stop-work order
• Being barred from pursuing job contracts with the state of Alaska
• Being liable personally to pay benefits for sick or injured workers who should have had workers’ comp coverage at the time of their workplace injury or illness
• Possible criminal fines of $10,000 and one year in prison

The families of Alaska employees who died after sustaining a work-related injury or illness are entitled to receive a death benefit of $10,000 for funeral expenses and $5,000 for the employee’s surviving spouse and / or children.

In addition, workers’ comp insurance must pay weekly benefits to dependents. The total benefit must equal the deceased employee’s compensation rate for total disability. Widows, widowers, and children are considered to be dependents.

Children living in the worker's household or who had been supported by a deceased worker, regardless of parentage, are also handled as dependents. Unmarried dependent children are eligible to receive benefits until age 19 or older while attending high school or while in their first four years of trade, technical, or college education.

If there is no widow, widower, or child, then parents, grandchildren, or brothers and sisters who depended on the deceased worker become eligible for benefits.

All questions of dependency are determined at the time of injury or death.

A workers’ comp settlement, also known as a “compromise and release,” resolves a disputed workers’ comp claim. In exchange for an agreed-upon sum, employees agree to give up some or all of their claimed benefits.

In Alaska, lump-sum payments of permanent total disability benefits, which the state’s workers’ compensation board has granted, are not permissible unless the employee establishes that it is in their best interest.

If the state approves a settlement, employees can also consider receiving their payment in the form of a structured settlement. This involves splitting the payment into a series of installments over time.

Alaska law presumes that waiving future vocational rehabilitation or medical care benefits to which a worker is entitled is not in the person’s best interest. However, the state will allow waivers of future rehab or medical benefits if an employee shows it’s in their best interest.

The maximum time allowed for filing a workers’ comp claim other than those relating to occupational disease is four years from the date of injury.

If you are ready to explore workers’ comp options for your Alaska business, start a free online application today to compare quotes from top-rated insurance carriers.