Kentucky workers' compensation insurance

Every state has different requirements for workers’ compensation insurance. Kentucky’s workers’ compensation laws require virtually all public and private-sector employers to provide coverage for employees. Employers that may be exempt from providing workers’ comp insurance include:

• Agricultural businesses
• A person or entity employing domestic workers in a private home (with less than two full-time employees)
• Employers with workers covered under federal workers’ compensation programs (e.g., railroad and maritime workers)
• Certain religious organizations
• Any homeowner employing a residential maintenance or repair person for up to 20 consecutive workdays

However, employees in all of the above categories may voluntarily participate in their organization’s workers’ comp program.

As in most states, determining who should be treated as an independent contractor vs. an employee can be a difficult issue.

The State of Kentucky workers’ comp department looks at four main factors to determine independent contractor status:

• The type of work the contractor is doing
• How much control the employer has over the details of the work being performed
• The professional skills of the independent contractor
• The intentions of both parties

If state regulators rule your independent contractors are misclassified and should be considered employees, you'll be required to provide workers’ compensation insurance.

In general, you must include yourself in your company’s workers’ comp insurance, but there are exceptions:

• If you’re a sole proprietor. However, if you have employees, you must provide workers’ compensation for them.
• If you’re a partner in the firm.
• If you’re a qualified member of an LLC (you participate in making decisions and share in profits and losses).

All of the above individuals can elect to participate to receive the benefits of a workers’ compensation policy. It's usually a good idea, as medical bills are expensive, and your health insurance company can deny an injury claim if it's related to work.

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

• A wholesale stocker develops a back injury from many years of lifting and moving heavy stock onto pallets and trucks. Workers' comp covers their attending physician fees and pain medication, as well as provides disability benefits to replace part of the wages they miss while they're recovering.
• A project manager trips on a cord while visiting a job site and breaks their wrist. Workers' comp covers the cost of the ER visit, surgery, medications, and then two months of physical therapy to help them recover.
• A nurse strains their back from lifting and rotating patients. Workers' comp covers their medical provider appointment and pain medication, as well as a reimbursement for any out-of-pocket expenses relating to the claim.
• 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.

Business owners in Kentucky 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. Kentucky employers who qualify can self-insure their workers’ compensation claims. Because self-insured employers are responsible for all workers’ comp costs, the state has a formal process for reviewing an employer's ability to self-insure their workers’ comp claims.
• The assigned risk residual market. If they’re unable to qualify, they can buy it from the state’s assigned risk residual market, Kentucky Employers’ Mutual Insurance (KEMI), a competitive state fund. This is the insurance coverage of last resort for employers that are unable to qualify for standard coverage due to their high-risk status.

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 other states, Kentucky 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.

When an employee suffers a workplace injury or develops an occupational disease (such as black lung disease), workers' compensation covers the cost of the employee's medical treatment. It also provides disability benefits for lost wages while the employee is recovering and unable to work.

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 for injured workers include:

• Pay for time off work during recovery (usually two-thirds of the employee's average weekly salary)
• Medical expenses (emergency treatment, prescriptions, physical therapy, and other medical care)
• Temporary total disability benefits (TTD)
• Permanent partial disability benefits (PPD)
• Permanent total disability benefits (PTD)
• Death benefits

The amount that the worker receives for disability benefits usually depends on the impairment rating established by their doctor. TTD payments continue until the employee returns to work or reaches maximum medical improvement.

If you operate your business without workers’ compensation insurance in Kentucky, you may be fined $1,000 per employee, per day in which you fail to provide mandated coverage. Other potential penalties include:

• Being ordered to close your business until you come into compliance with the state’s workers’ comp requirement
• Criminal penalties including fines, jail time, or both

If an employee dies as a result of a work-related injury or illness, the KY worker’s eligible family members may receive death benefits.

A person’s relationship to the deceased worker and the degree of financial dependence on that person are factors in determining eligibility.

In Kentucky, the following individuals are assumed to be dependent financially on the employee:

• A surviving spouse
• Children younger than 18 who live at home with the spouse
• Children younger than 22 who are enrolled in an accredited higher education program
• Adult children who are mentally or physically unable to support themselves or who depended on the deceased worker for financial support in the past

In addition, family members who can prove they depended on the deceased worker in the past may be eligible for death benefits. This includes:

• Parents
• Siblings
• Grandparents
• Grandchildren

Eligible family members can receive weekly death benefits amounting to no more than 75% of the deceased employee’s average weekly wages. This amount can’t exceed the average weekly wage across the state.

For partially dependent survivors, the weekly benefit will be based on how much the person provided for each dependent.

Whether wholly or partially dependent, survivors can receive benefits for no longer than 500 weeks.

In Kentucky, eligible family members can also receive a lump-sum payment for burial and other expenses as long as the worker died no longer than four years from the date of the injury. The lump sum is calculated on the basis of the state’s average weekly wage.