Indiana workers' compensation insurance

Most businesses with employees in the state of Indiana must have workers’ compensation insurance. This policy covers the cost of medical treatment when an employee is injured on the job. Unlike workers’ comp laws in some states, the number of employees at a business has no bearing on the requirement in Indiana.

Indiana’s workers’ compensation laws apply to full-time employees, company executives, employees working outside the state (as long as they have an Indiana working relationship), part-time employees, minor employees, and certain students receiving federally funded on-the-job training.

Some employees are exempt from Indiana's workers’ compensation system and are also ineligible to elect optional workers’ compensation insurance coverage. These include:

• Railroad employees covered under the Federal Employees Liability Act
• Employees engaged in interstate or foreign commerce who have access to federal alternatives to state-based workers’ compensation (seamen, longshoremen, etc.)
• Real estate employees (i.e., real estate agents who work as independent contractors for real estate brokers)
• Independent contractors (based on a combination of IRS and state guidelines)
• Independent contractors in the construction trades
• Athletes on scholarship
• Prison inmates
• Volunteers
• Coaches for youth sports teams

In most cases, you must include yourself in your company’s workers’ compensation coverage in the Hoosier state. However, there are two key exceptions:

• If you’re a sole proprietor or independent contractor
• If you’re one of the parties in a partnership

In both of these cases, you don’t have to buy workers’ compensation for yourself, but it's still a good idea. Health insurance providers can deny work-related injury claims, which could leave you paying expensive medical bills if you're injured on the job.

Some people aren’t required to have workers’ compensation coverage, but business owners can elect to include them under their insurance policy. This option applies to:

• Local police officers and firefighters under some conditions
• Reserve police officers
• Volunteers working for hazardous materials response teams
• Executive officers of public or nonprofit corporations
• Owner-operators who provide their vehicles and driver services to a trucking company that transports freight
• Members and managers of limited liability corporations who actively work in the business
• Individuals entered into a township, municipality, or county roster of volunteers
• Volunteers who work at state-owned or operated psychiatric facilities
• Other employees such as casual laborers, household workers, and farm or agricultural workers

If you’re an independent contractor in a construction trade, those who hire you are not required to provide you with workers’ compensation insurance as long as you meet the IRS tests for independent contractor status. You can find these in IRS Publication 15-A, Employer’s Supplemental Tax Guide [PDF]. If you meet those tests, you must then fill out a Workers’ Compensation Clearance Certificate with the Workers’ Compensation Board of Indiana and pay a $20 filing fee.

These requirements also apply to independent contractors who are sole proprietors.

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, such as workers who move to Indianapolis for the tourist season, 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.

When an employee is injured on the job or develops an occupational disease, workers' compensation insurance pays medical bills and covers part of the wages lost during recovery (usually two-thirds of their average weekly wage).

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.

Workers' compensation benefits can include:

• Medical care (emergency room, hospitalization, prescriptions, physical rehabilitation, etc.)
• Temporary partial disability benefits
• Temporary total disability benefits
• Permanent partial impairment benefits
• Permanent total disability benefits
• Vocational rehabilitation
• Death benefits

The injured employee usually receives workers' comp benefits until they can return to work, or until they reach maximum medical improvement. The amount they receive depends on an impairment rating assigned by the doctor.

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

Some employers receive approval from the Indiana Workers' Compensation Board to self-insure their workers’ compensation claims. This means after a workplace incident they pay for their employees’ medical care and rehabilitation expenses out of their own pockets.

The level of risk associated with different positions at your business influences your premium. When your employees perform a variety of work duties, you could have a variety of workers’ compensation class codes. Insurers use these codes to determine your exposure to risk and your subsequent workers' compensation costs.

When an Indiana employee dies after sustaining a work-related injury or illness, their family can collect death benefits. Dependents are eligible for 500 weeks of lost wages at 67% of the deceased’s average weekly wage. Any medical benefits and up to $7,500 for burial expenses are also covered.

Dependents in Indiana fall into two categories:

Presumptive dependents receive death benefits divided equally among them. They include:

• Spouse (as long as they do not re-marry)
• Unmarried children under the age of 21 who are living with the employee
• Unmarried children under the age of 21 who are not living with the employee but for whom the employee has a legal support obligation
• Children over 21 who have never been married and are mentally or physically handicapped, or are keeping house for the employee and not otherwise gainfully employed

Dependents-in-fact are entitled to benefits if there are no presumptive dependents at the time of the employee's death. They include individuals related by blood or marriage who are dependent, either totally or partially, upon the deceased employee.

Under the Indiana Workers' Compensation Act, employees must inform their employer about any injury that occurs on the job within 30 days. The employer has the right to choose the medical provider. If the injury causes a permanent disability, such as a permanent back injury, the employee is entitled to a workers' compensation settlement.

The worker can file an Application for Adjustment of Claim and submit it to the Workers' Compensation Board if they wish to dispute a workers' comp claim.

Indiana has a two-year statute of limitations for workers' compensation claims. That means injured workers can file a claim up to two years after an incident occurred.

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