Workers Comp vs. Health Insurance: Know the Difference
When it comes to protecting employees, many employers want to know how to compare the benefits of workers comp vs. health insurance?
You may be surprised by how often the two get mixed up, but hopefully this article can provide some clarity. Workers comp and health insurance are two forms of coverage that have quite a few similarities, but especially when it’s time to start handing out benefits, it’s important that you know the difference.
What Is Health Insurance?
Before understanding workers comp vs. health insurance, you must first have an understanding of what each is. The term “health insurance” contains a wide umbrella of coverage. Health insurance covers medical expenses that incur from illness or injury or treatment for a pre-existing condition.
Health insurance can be provided by an employer through a third-party insurance provider, but it doesn’t have to be. Employers may research healthcare policies and choose a plan that best fulfills the needs of its employees, then the employee decides whether or not to participate in this plan.
When providing health insurance, the employer in many cases covers a portion of the premium cost for the employee. A great benefit to this type of insurance is that the contributions that employers provide aren’t taxed as income.
For an employer that cares about its employees, it’s better to offer health insurance. This boosts employees’ confidence in the company they work for and will contribute to work productivity overall.
What Is Workers Comp?
Workers comp, or workers’ compensation, is a type of insurance coverage that protects your employees if they are hurt while working.
Workers comp provides a source of income for the employee in the event that they can no longer perform their duties or will be temporarily out of work due to an injury on the job. It also covers the costs of medical expenses associated with that particular injury, including the expense of ongoing care or, in the event of an employee’s death, the funeral costs.
The Department of Labor provides a great list of the type of expenses that workers comp covers.
Workers comp typically doesn’t cover the following:
- Injuries that happen before or after an employee is at work
- Injuries that happen due to mishandling of materials or when employees fail to follow safety procedures or engage in fighting while at work
- Injuries caused by employees on themselves
- Injuries that happen while the employee is under the influence or violating company policy or doing an illegal act
- Stress or mental health injuries as a result of work
When thinking about workers comp vs. health insurance, know that workers comp does cover physical injuries that occur while an employee is on the clock. Workers comp is truly beneficial to employees, but that doesn’t exclude employers from the umbrella of protection that workers comp brings to them too.
As a business owner, this form of insurance can also provide benefits for the employer. Employers never want to be caught without workers comp insurance. Individual states have their own requirements for businesses to take out workers compensation insurance.
Depending on the type of work that a company does, an employee injury could mean a devastating financial loss for the employer. Coverage to compensate employees for loss of wages and medical treatment could put an employer in financial ruin.
Moreover, employers face the threat of legal consequences if they don’t have workers comp coverage. This could mean lawsuits from employees in civil court or noncompliance fines from the government.
An employer definitely does not want to be caught off-guard without workers compensation insurance.
Filing a Workers Comp Claim:
- The employee experiences an injury at work and reports the injury to the employer. An employer is the first point of contact for an employee and should immediately notify a supervisor of any injuries that occur while on the job site. This will help the employer be able to handle the situation swiftly and efficiently, and the employee can receive optimal care as quickly as possible.
- The employer gives the employee information about workers comp. Although this information should already be available to the employee, the employer should give the injured employee the necessary forms to file a claim and provide information on the process and the return to work procedure if it’s feasible.
- The employer files the claim with the workers compensation provider. Once all of the required documentation is submitted, the provider will decide if they will approve or deny the claim. All the employer has to do is submit the paperwork on their end. The employee’s doctors will also have to submit proof of the injury and treatment, along with costs. The rest of the claim is handled by the employee and the workers comp provider. Sometimes, the employer can act as a middleman for communication between the two, but once the paperwork is submitted, the employer’s main job is done.
Workers Comp vs. Health Insurance: The Difference
When evaluating workers comp vs. health insurance, the main difference is the location of the injury. If an employee is injured while not at work, their health insurance comes into play. This coverage could be their own personal plan or one that the employer provides, but it is not workers comp. Workers comp involves claims that specifically occur while an employee is working.
This type of protection is used to aid the employee for potential loss of wages and medical expenses related to an on-the-job injury. It is in place to relieve the financial burden off of the employee and the employer. Employers have enough to worry about when it comes to cost and productivity, they shouldn’t have to worry about workers comp vs. health insurance. The best way to ease the burden of managing workers compensation is to go with a third-party PEO.
Canal HR Knows the Difference
Canal HR is a PEO dedicated to providing premier service for employers and employees alike. We lower employers’ costs for insurance and benefits by handling administration, including human resources, payroll taxes, reviewing and maintaining OSHA compliance, and in the event of an injury, we completely handle the process of filing a workers comp claim.
Contact us today to set up your free consultation, and we can personalize a plan to best suit your company’s needs.