Maine workers' compensation insurance

Every business with employees in Maine is required to have workers’ compensation insurance. Even sole proprietors should consider buying coverage, as your health insurance provider might deny a claim for a work-related injury.

The state's workers' compensation statute is quite strict. It requires virtually all public and private-sector employers to provide workers’ compensation insurance. The law defines employers as follows: “private employers, the state, counties, cities, towns, water districts, other quasi-public corporations, municipal school committees, and design professionals.”

Employers that are exempt from workers’ comp requirements include:

Firms involved in agriculture or aquaculture that employ seasonal or casual workers, as long as they maintain at least $25,000 in employer's liability insurance and at least $5,000 in medical coverage.

Employers in the above industries that have six or fewer laborers, as long as they maintain employer's liability insurance with at least $100,000 in coverage for each full-time equivalent employee (FTE). They must also have $5,000 in medical payment coverage for each FTE.

People who employ domestic servants in their homes.

In general, you must include yourself in your company’s workers’ comp insurance, with three exceptions:

You’re the sole proprietor of a business that has no employees. You don’t need to file a waiver form to secure this exemption. But if you have employees, you must carry workers’ compensation for them.

You’re the parent, spouse, or child of a sole proprietor, a business partner, or a bona fide owner of 20% of a firm. If any of these situations apply, you’re allowed to waive workers’ comp by making a written request.

You’re a member of a limited liability company (LLC). No written waiver is needed to opt out. The parent, spouse, and / or the child of an LLC member who is also employed by the company may waive the firm’s workers’ comp insurance by filing a written waiver.

Corporate officers who own at least a 20% interest in the outstanding voting stock of a corporation can file for an exemption with the Maine Workers’ Compensation Board.

Workers in the state of Maine are normally considered employees for tax purposes. This means you will be required to provide them with workers’ comp coverage.

However, if you hire independent contractors, you won’t have to give them workers’ comp insurance if the worker is not under your essential control while they perform duties on your behalf.

To protect yourself, you should ask independent contractors to provide written documentation that they have workers’ compensation. Asking for a certificate of insurance will meet this test. 

Important: If you don’t do the prior step, your workers’ compensation insurer might consider the contractor’s employees to be your employees and include them in your payroll for workers’ comp premium-calculation purposes.

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.

Workers' compensation coverage helps pay medical bills and provides partial wage replacement when an employee is injured on the job or develops an occupational illness.

Most policies include employer's liability insurance, which helps 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.

Under the Maine Workers' Compensation Act, workers' compensation benefits include:

• Medical treatment for injured workers
• Total incapacity benefits
• Partial incapacity benefits
• Vocational rehabilitation
• Death benefits

The employer is allowed to choose the employee's healthcare provider for the first 10 days. After that, the employee can choose their own provider. For details, visit the Maine.gov workers' compensation FAQ.

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

If they’re unable to qualify, they can buy it from the state’s assigned risk residual market, the Maine Employers’ Mutual Insurance Company (MEMIC). This is the insurance plan of last resort for state employers that can’t find standard coverage due to their extensive number of past workers’ comp claims.

Maine employers who qualify can self-insure their workers’ compensation claims. This means they’ll cover their own workers’ comp medical and rehabilitation costs rather than submit them to a workers’ comp commercial insurer. Because self-insured employers are responsible for all workers’ comp costs, the state recommends that only large employers consider self-insurance.

To apply for self-insurance status, firms must file an application with the Self-Insurance Division of the Maine Bureau of Insurance. To qualify, they must be financially sound and able to guarantee future workers’ comp claims and administrative expenses.

If you operate your business without workers’ compensation insurance in Maine, you may be liable for penalties.

You may be liable for workers’ compensation medical and death benefits out of your own pocket. Lacking insurance does not relieve you of this liability.

Furthermore, failing to provide workers’ comp may result in you:

• Being charged with a Class D crime
• Being hit with a civil penalty of up to $10,000 or 108% of the premium you would have normally paid for workers’ comp insurance (whichever is larger)
• Losing your corporate charter and / or your business license

Finally, if you encounter legal trouble for failing to maintain workers’ comp, your commercial liability insurance policy will provide no coverage for your defense.

If an employee dies as a result of a work-related injury or illness, the worker’s surviving spouse and dependent children will be eligible to receive death benefits. These include weekly payments to cover a portion of the deceased employee’s income, along with funeral and burial costs.

In Maine, the surviving spouse and dependent children are treated as “wholly dependent” when it comes to determining workers’ comp benefits. That means they automatically get a certain percentage of the deceased worker’s earnings.

Other family members are considered either wholly or partially dependent. The latter will only receive benefits if there are no wholly dependent surviving family members.

To be considered wholly dependent, the surviving spouse and children must have been:

• Living with the deceased employee when the injury occurred
• Living apart for a just cause or because the employee deserted the spouse
• Dependent on the deceased employee’s earnings

For children to be considered wholly dependent, they must be:

• Younger than age 18
• Younger than age 23 as long as they’re a full-time student
• Of any age, but also physically or mentally incapable of earning a living

Eligible survivors can get weekly death benefits amounting to two-thirds of the deceased employee’s average weekly wages. This amount can’t exceed the state’s average weekly wage.

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 Maine, dependents can also receive payment for reasonable burial costs, to a maximum of $4,000. The employer is also liable to pay for incidental expenses totaling $3,000 to the deceased employee’s estate.

In Maine, the statute of limitations for workers’ comp claims is within two years from the time an employer is required to file a First Report of Injury for an employee missing one or more days of work. If no first report is required, then the statute of limitations is the date of the injury.

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