In New York and all other states, all employers are required to provide workers’ compensation benefits to their employees. However, employers have a choice between purchasing a traditional insurance plan from a private third-party insurer or using a self-insured workers’ compensation plan. While both options offer financial compensation when employees get injured on the job, they differ from each other significantly.
As an employee, it is important to be aware of which workers’ compensation plan your employer uses. If you are injured on the job and seeking financial compensation, your experience may vary depending on the plan. You can learn more about self-insured vs. private workers’ compensation plans and other work injury matters by contacting New York workers’ compensation lawyer Paul Giannetti.
What Is Workers’ Compensation Private Insurance?
Workers’ compensation private insurance provides monetary benefits and/or medical care when workers suffer injuries or contract illnesses that are directly related to their job duties. Employers who follow this system pay a monthly premium for workers’ compensation coverage, similar to how we pay monthly premiums for car insurance or health insurance. In exchange for this premium, the insurer agrees to cover cash benefits and medical benefits when needed.
Workers’ compensation in New York is a no-fault system, which means that employees are covered even if their injuries or illnesses were the result of their own negligence. The amount of benefits paid to the employee is not affected by the circumstances of the injury. They do not receive less money if the injury was the result of their own actions, and they do not receive more if it was the result of their employer’s negligence.
Although all employees are covered by workers’ compensation, successfully recovering these benefits is not always easy. An injured employee is required to file a claim and the insurance carrier will investigate to determine whether the injury or illness is work-related. Insurance carriers often dispute the validity of claims to avoid paying benefits.
What Is Self-Insured Workers’ Compensation?
Also known as a self-funded plan, self-insured workers’ compensation plans allow employers to accept the financial risk of paying out workers’ compensation benefits to employees who suffer work-related injuries. Rather than paying an insurance premium to a third-party insurer each month, the employer accepts the responsibility of paying these benefits out of pocket as they occur. Businesses must apply to become approved self-insured employers in New York.
For example, if an employee suffers a serious injury that requires extensive medical care and is a month away from work, their employer would pay their medical bills and lost wages directly. In a workplace with a private workers’ comp insurance system, the employee would be required to file a workers’ compensation claim to seek these benefits.
Self-insured employers have the option to handle workers’ compensation claims in-house or to outsource these claims to a third-party administrator. These third-party administrators can also help employers structure their workers’ compensation plans, handle excess insurance coverage, provide network contracts, and use review services, among other tasks.
Businesses have the right to pool together their resources with other companies to create self-insured groups. In a self-insured group, all businesses within the group draw from the same funds when they need to pay out worker’s compensation benefits to employees. The financial responsibility for covering these claims is shared among all members of the group.
Each member of the self-insured group is also responsible for calculating rates and premiums, which are paid into a pool. These rates may be computed based on the expected losses of the group. Most self-insured groups hire a third-party administrator to handle this process, along with claims and medical services.
Why Do Some Employers Choose Self-Insured Workers’ Comp?
Some employers view a self-insured workers’ comp plan as a way to control costs. In their view, paying as they go allows them to save money on premiums and only pay benefits when needed, which can maximize cash flow for the business. This approach is generally only viable for businesses that have high enough cash flow to cover these benefits as they arise.
Smaller companies with lower cash flow typically cannot afford to take the risk of using a self-insured plan. For these companies, an unexpected serious injury that requires major financial resources could be financially devastating. However, some small companies still use self-insured plans and purchase excess insurance, which reimburses them for claims that rise above a specific financial figure.
How to Find Out If Your Employer is Self-Insured
Since many self-insured employers use third-party administrators to handle their workers’ compensation plans, it may not be apparent if your employer is self-insured. These administrators are also often private insurers, so a self-insured plan can often appear identical to a third-party insurance plan.
You can find out which plan your employer uses by contacting the person who handles employee benefits or by reviewing your workers’ compensation paperwork. It is important to be aware of which plan they use, as your experience of applying for benefits will vary between the two. Self-insured employers often have an added incentive to avoid paying benefits to save the company money.
What Should You Do If a Self-Insured Workers’ Comp Claim is Denied?
Whether your employer is self-insured or insured by a third party, there is always the risk that a workers’ compensation claim will be denied. Both self-insured companies and third-party insurance carriers have a financial incentive to find ways to deny claims or limit coverage. These parties both prioritize their profits above all else and paying out benefits cuts into these profits.
If you believe that your workers’ compensation claim was unfairly denied, you have legal rights. A skilled workers’ compensation lawyer can help you take legal action against either your employer or the insurer who denied the claim. While you are not permitted to sue your employer in most cases, you can file an appeal and ask a court to reconsider the denial.
Contact Our New York Workers Comp Lawyers to Learn More
If you were injured at work and have either had your workers’ comp claim denied or were awarded insufficient benefits, experienced New York workers’ compensation lawyer Paul Giannetti is here to help. Paul is dedicated to helping his clients receive the benefits they are rightfully entitled to following a work injury. Contact Paul today to learn more in a free consultation.