Massachusetts workers' compensation insurance

The state’s workers' compensation statute is quite strict: every Massachusetts business with employees must carry workers' compensation insurance.

The only exemptions are for:

• Domestic service (household) employees who work less than 16 hours per week.
• Those who work on commission (such as real estate agents) on a buy/sell basis, under contract specifying they’re not employees under federal tax law.
• Those engaged in interstate/foreign commerce that is covered by federal law for compensation for injury or death.

Workers in the state of Massachusetts are 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 provide them with workers’ comp coverage if you can meet three tests:

• Prove that they do not work under your direct control or supervision
• Establish that they perform work that is outside the normal course of your business
• Document that they have their own independent business or trade doing this kind of work

For more information on working with independent contractors in the commonwealth of Massachusetts, refer to the state attorney general’s advisory.

In general, business owners must include themselves in their company’s workers’ comp insurance. However, there are three exceptions:

• You’re a sole proprietor of an unincorporated business.
• You’re a partner in a limited liability partnership (LLP).
• You’re a member of a limited liability company (LLC).

The above individuals can still choose to buy workers’ comp. Health insurance providers can deny medical bills and claims for work-related injuries, which makes buying workers' comp a smart business decision – especially if you work in a risky industry.

Even though certain business owners aren’t required to have their own workers’ compensation coverage, their employees still need coverage.

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

• A personal care aide develops a back injury from transferring and lifting patients, and can no longer perform their duties. In this instance, workers' compensation would also provide retraining benefits so they could learn the skills to take on a new job.
• 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 general contractor injures their hand while building a home addition. Workers' comp covers their doctor's appointment and pain medication, and provides disability benefits to replace part of the wages they miss while they are recovering.
• A fast food worker burns themselves while preparing an order for a customer. Workers' comp covers their medical treatment and pain medication.

Business owners in Massachusetts have a few 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. Massachusetts employers who meet certain requirements, such as having at least 300 employees and $750,000 in standard workers' compensation insurance premiums, as well as the capital to cover the costs of self-insurance, may be able to self-insure for workers' comp.
• Purchase coverage from the state risk market. If a business owner is unable to qualify for a workers’ comp policy, they can buy it from the Massachusetts workers' compensation system or WCRIBMA.. 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.

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. Unlike most other states that rely on the National Council on Compensation Insurance (NCCI) database, Massachusetts utilizes their own independent workers' compensation rating and inspection bureau.
• 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.

If an employee dies as a result of a work-related injury or illness, some family members may receive death benefits. These include weekly payments to cover a portion of the deceased employee’s income, along with funeral and burial costs.

Eligible family members include:

• The deceased worker’s spouse, who must have been living with the person at the time of death
• A child under age 18 or age 24 if going to school full time
• A child of any age who is physically or mentally disabled
• Other family members who fully or partially depended on the deceased worker’s financial support, determined on a case-by-case basis

The deceased worker’s dependent family members will receive death benefits calculated on the basis of the person’s pre-injury weekly pay.

Surviving spouses are eligible to receive weekly payments equaling 66% of the deceased worker’s average weekly wage, but not to exceed the state average weekly wage (SAWW) at the time the worker died.

Spouses are eligible for yearly cost-of-living adjustments (COLAs) once two years pass after the worker’s death.

If a spouse remarries, the deceased worker’s offspring will receive $60 a week, but not to exceed the spousal benefit.