Most often, employers carry workers’ compensation coverage through a third party insurance carrier and pay only premiums to ensure that, in the event that one of their employees gets hurt on the job, another entity is responsible for paying that employee’s medical bills and lost wages. Some employers do choose to self-insure, however, and are allowed to do so under the laws of Virginia.
Why might an employer choose to self-insure?
Well, unsurprisingly, it’s most often a financial decision. Self-insurance can provide a huge discount for employers who are capable of footing the bill for worker’s compensation benefits and enables them to better control their own claims process.
An employer that controls its own claims process can decide which claims to deny and which to approve, which treatments to deny, and which to approve. This way, employers can potentially keep their costs low, if what they end up paying in medical treatment and lost wage benefits in a year is less than what they would have to pay an insurance company in premiums.
Self-insurance is not without risks, and an employer who self-insures must feel pretty confident about its ability to foot the bill should one of its employees get hurt on the job. An employer cannot just decide to be self-insured. They do have to ask to do so.
To be self-insured in the Commonwealth of Virginia, an employer must apply under sections 65.2-801 and 65.2-808 of the Workers’ Compensation Act, meet certain legal requirements provided by the Act, and ultimately be approved to self-insure by the Commission. With so many barriers to self-insurance, it’s no surprise that it’s far more common for employers to insure their workers’ compensation claims through a third-party workers’ compensation carrier and pay a monthly premium instead.
What does it mean when my employer is self-insured?
Your employer, not an insurance company, will pay your medical bills and your weekly compensation while you are out of work and your employer, not an insurance company, will make the decision about accepting or rejecting your workers’ compensation claim. Your employer may also decide to hire a third party administrator, which means that you will be dealing with an insurance adjuster, but your employer will be paying the bills and making the decisions.
Does this mean my employer is footing the bill for my work injury that they are self-insured?
Not necessarily. Some employers are insured but have very high deductibles. For example, an employer whose workers’ compensation insurance plan has a $500,000 deductible that it must meet on each individual workers’ compensation claim before the insurer will start to foot the bill may very well pay all of an injured worker’s medical expenses and lost wages out of pocket. In this situation, the employer may as well be self-insured, as its insurance might never kick in if that very high deductible is never met. The injured worker will still deal with the insurance company and the adjuster, but the employer will be making the decisions.
Contact a Worker’s Compensation Attorney Today
If you have any questions about your employer being self-insured, please contact an attorney.
About the Author: Michele Lewane
The Injured Workers Law Firm is a Richmond, Virginia based firm solely focused on serving clients with workers' compensation claims in Virginia. If you have questions about your benefits or if you would like more information on the Virginia workers’ compensation system, order our book, “The Ultimate Guide to Workers’ Compensation in Virginia” , or call our office today (804) 755-7755.