Iowa workers' compensation insurance

In Iowa, almost every business that has employees is required to purchase workers' compensation insurance. However, certain categories of employees are exempt from workers’ comp coverage. Exemptions include:

• Domestic and casual employees making less than $1,500 from their employer in the 12 consecutive months before the injury
• Agricultural employees in companies with a cash payroll of less than $2,500 in the calendar year before the injury
• People working for a relative
• Exchange labor in agriculture
• The president, vice president, secretary, or treasurer of a family farm corporation and their spouses, along with the parents, brothers, sisters, children, stepchildren, and their spouses of either the officers or their spouses
• Police officers and firefighters who are entitled to benefits under a firefighter pension fund
• Employees who are entitled to benefits under any rule of liability or method of compensation, for federal employees, established by the Congress of the United States

Even when it's not required by law, it's a good idea to carry workers' comp for the protection it offers. Health insurance providers can deny claims for work-related injuries, so you may decide to purchase this policy for yourself, especially if your work involves physical labor.

When it's required depends on your ownership status. For example:

• A sole proprietor or partner who is actively engaged in the proprietor’s or partner’s business on a substantially full-time basis is exempt from workers’ comp coverage.
• Members of a limited liability company (LLC) are also exempt.
• Independent contractors are exempt from coverage.

What’s more, the president, vice president, secretary, and treasurer of a corporation (other than a family farm corporation) may exempt themselves from coverage. But no more than four corporate officers can do so. They must also file a Rejection of Workers’ Compensation or Employers’ Liability Coverage with Iowa Workforce Development.

Here are several examples of how workers' compensation insurance coverage helps pay expenses for injured workers:

• A retail store employee slips on a wet floor and hits their head. In this instance, workers' compensation would cover their emergency room trip, head MRI, and any following medical expenses during their recovery.
• A barista burns themselves while preparing a hot beverage for a customer. Workers' comp covers their medical provider appointment and pain medication.
• A truck driver is injured in an auto accident and hospitalized, but never recovers enough to return to work. They receive permanent disability payments, in addition to compensation for their medical expenses.
• A registered nurse develops a shoulder injury from lifting and turning patients. Workers' comp covers their surgery, medications, and physical therapy. It also provides temporary disability benefits until they have recovered.

Business owners in Iowa have three choices when it comes to buying a workers' compensation policy:

• Private insurance companies. You could contact each workers' compensation insurance carrier independently to compare their products and rates, but that's where agents and brokers like Insureon come in. As the nation's leading digital insurance agency, Insureon partners with 30+ top-rated insurance carriers to deliver the right coverage for your business. Fill out an easy online application to get started.
• Self-insurance. Iowa employers who meet certain requirements may be able to self-insure for workers' comp. Those who qualify can self-insure their workers’ compensation claims. This means they’ll pay for their own worker medical, rehab, and death benefits rather than submit them to an insurance carrier. In order to self-insure, the employer must submit proof to the insurance commissioner of their ability to pay the required benefits, as well as hold a security in trust so it's available should any work make a benefits claim.
• The assigned risk pool. Employers who are ineligible for the above can get insurance through the assigned risk pool, which is administered by the National Council on Compensation Insurance (NCCI). You can access this “last-resort” coverage through your local insurance broker after providing written proof of two insurance company declinations.

Here's a breakdown of this equation:

• The classification rate reflects your employees' risk. Each worker has a classification code for the type of work they do. Insurers look up those codes in a database to find the associated rate, which is lower for office workers and higher for carpenters, tree trimmers, and others with a higher rate of injuries. Like most other states, Iowa relies on the National Council on Compensation Insurance (NCCI) database.
• The experience modification rate (EMR) reflects your business's risk. The average experience modification rate is 1.0, which means a business is similar in risk to others in its profession. Higher EMRs reflect higher risks, such as a history of claims. The EMR only comes into play for annual workers' comp premiums of at least $5,000, so it's not a factor for many small business owners.
• The insurer multiplies these numbers with your payroll divided by 100 to come up with your workers' compensation rate. Workers' compensation audits are typically done each year to ensure your business pays the right premium for this coverage.

Violating Iowa’s workers’ compensation statute is a serious matter. If an employer fails to maintain workers’ comp insurance or to pay required benefits from its self-insurance account, the state may apply multiple civil penalties, including:

• Civil injunctions
• Revocation of insurance and self-insurance privileges
• An assessment of up to $1,000 payable to the Second Injury Fund of Iowa for not properly filing employee injury reports
• An assessment payable to the Second Injury Fund of Iowa for habitually failing to begin paying weekly benefits within 11 days
• An award to the employee of up to 50% of additional benefits for delaying or denying weekly benefits