New Mexico workers' compensation insurance

Every state has different requirements for workers’ compensation insurance. All New Mexico businesses with three or more employees must provide workers’ comp coverage, and construction businesses of any size are required to carry coverage.

What determines the number of employees for the “three employees or more” benchmark? The state considers every individual who performs the business entity’s work to be an employee. If you’re a business owner and work in the business, then you are considered an employee for meeting the “three or more” test.

Business owners must also count part-time workers, seasonal workers, and out-of-state workers in the coverage requirement. Once you have three part-time employees, they must receive workers’ comp coverage.

New Mexico strives to maintain near-universal workers’ comp coverage. This means that all employees working in the state must be covered by workers’ comp insurance, except for:

• Household workers
• Real estate salespeople
• Federal employees covered by the Federal Employees' Compensation Act or other federal programs
• Independent contractors

The state of New Mexico encourages employers to voluntarily purchase insurance even when it's not required. This will protect their companies from lawsuits.

To secure voluntary coverage, employers in an exempt category must first file an Election to be Subject form [PDF] with the Workers' Compensation Administration.

For more details, visit the State of New Mexico Workers' Compensation Administration (WCA).

Nonprofits and religious organizations aren’t exempt. The coverage requirements are identical to all other employees, and employers should adhere to the same safety practices as any other employer.

Business owners should always consider buying workers' comp for themselves for the financial protection it provides.

For example, a sole proprietor's health insurance provider could deny a claim for a work-related injury, leaving them to pay for expensive medical bills out of pocket. Workers' comp helps pay for treatment and also supplies part of your lost wages while you're recovering and unable to work.

As for when it's required by law, it depends on what type of business owner you are. Here’s how New Mexico business owner requirements work:

Sole proprietors and partners can opt out, with approval. They can elect to include themselves in their firm’s insurance policy should they find it beneficial.

Corporate officers are also exempt. This applies to executives serving as chairman of the board, president, vice president, secretary, treasurer, or other executive officer and only to those owning 10% or more of the corporation’s stock. To activate an exemption, corporate officers must file an Executive Employee Exemption form [PDF] with the New Mexico Workers’ Compensation Administration.

Members of a limited liability company (LLC) also qualify for a workers’ comp exemption, as long as they own 10% or more of the LLC.

Even though owners and executives can qualify for an exemption, they must be counted as employees to determine whether their firm must provide workers’ comp to its other employees. For example, in a firm with one owner and two other employees, the owner must provide workers’ comp to the two employees.

Additionally, here's what your workers' comp policy won't cover:

• Injuries caused by intoxication, drugs, or company policy violations
• Injuries claimed after a firing or layoff
• Wages for a replacement worker
• Occupational Safety and Health Administration (OSHA) fines

Insurance providers use a specific formula for calculating workers' comp premiums:

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, New Mexico employers 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 an estimated payroll. It's useful for businesses that hire seasonal help or have fluctuating numbers of employees.

A ghost policy is a cheap option in some states, including New Mexico. A ghost policy is a workers' comp policy in name only. It provides no protection or medical benefits, but can fulfill contractual requirements for a workers' comp certificate at a reduced price.

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 insurance covers the cost of medical care for employees who suffer a workplace injury or occupational disease. In addition, it provides indemnity benefits for employees who miss out on wages due to injury or impairment.

The New Mexico Workers' Compensation Act provides benefits to injured workers regardless of who was at fault. These workers' compensation benefits include:

• Medical benefits (compensation for all medical bills related to the injury)
• Temporary total disability benefits
• Temporary partial disability benefits
• Permanent total disability benefits
• Permanent partial disability benefits
• Death benefits for fatal incidents

Policies usually 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.

Read the state's Employer Guidebook [PDF] for more details.

In New Mexico, a deceased employee’s survivors can receive death or survivor benefits if the worker has died as a result of a workplace accident. Death must occur within two years of the injury date.

The maximum death benefit is the amount the worker would have received in temporary total disability benefits for 700 weeks. In addition to this amount, New Mexico workers' comp death benefits include $7,500 for funeral expenses.

Only spouses, dependent children, or other family members who were dependent on the worker meet eligibility requirements and may receive death benefits.

A workers’ compensation settlement is an agreement between the injured employee, employer, and insurer that resolves a workers’ compensation claim. This benefits both the employee and the employer.

In New Mexico, many workers’ comp claims end in settlements. This means the parties to the claim – the injured employee, the company, and the insurer – must agree on a lump-sum payment in return for the employee (or the employee’s survivors) agreeing to forgo future payments.

Employees who wish to enter into an agreement to take a lump-sum payment in lieu of future benefits, including their right to future medical treatment, must file a Petition for Lump Sum Payment [PDF]. However, the state only grants this petition in a few specific situations.

The New Mexico Workers’ Compensation Administration must approve all settlements.

To comply with the rules under New Mexico's workers' compensation system, employees must file a workers’ comp claim within one year after the employer's insurance provider has started (or failed) to pay them.

If you are ready to buy a workers' compensation policy, start a free application with Insureon to compare quotes from top-rated insurance carriers. A licensed insurance agent will help answer your questions and explain your coverage options. Once you find the right policy, you can usually begin coverage and get your certificate of insurance in less than 24 hours.