Workers' Compensation Coverage A: Benefits, Example & Key Details

What Is Workers' Compensation Coverage A?

Workers' compensation coverage A is the portion of a workers' compensation policy that meets state laws by providing no-fault benefits for employees injured or killed on the job. It covers medical care, disability, death, and rehabilitation benefits, with premiums usually based on payroll and the type of work performed.

In-Depth Look at Workers' Compensation Coverage A

When an employee is injured, disabled, or dies while on the job, the employee or their survivors are entitled to workers' compensation coverage A benefits. Under this type of insurance, the employer pays certain benefits such as medical care, lost wages, and rehabilitation costs.

The benefits of workers' compensation are generally awarded on a no-fault basis, as long as the employee is not under the influence of drugs, including alcohol. Employees are usually required to submit to a drug test following an on-the-job accident. Many workers' compensation incidents provide partial reimbursement of lost wages, and survivor benefits in the event the worker is killed while on the job.

Workers' compensation Part A satisfies state insurance requirements. It funds employees’ medical bills, related expenses, and lost wages in the case of a covered workers’ compensation loss. Payments made are normally based on predetermined schedules in the case of defined injuries. Expenses are paid accordingly as the adjuster calculates them.

What Employers Must Know About Workers' Compensation

Workers' compensation Part A has no policy limits, and the insurer instead pays all benefits required by the workers’ compensation law of any state listed in the declarations. However, the employer can be held responsible for payments made by the insurer that exceed regular workers’ compensation benefits. Under such circumstances, an employer would be responsible for such payments due to the following:

• Serious and willful misconduct
• Knowingly employing workers in violation of the law
• Failure to comply with health or safety regulations
• Discharge, coercion, or discrimination against any employee in violation of the workers’ compensation law

Under this misconduct, the employer is responsible for reimbursing the insurer for any payments that exceed regular workers’ compensation benefits.

Important Considerations for Workers' Compensation Coverage

Workers' compensation Part A is legally mandated in nearly every state in the United States and is a significant expense for employers. Employers may pay more if the company has had a certain number of previous claims, or if its employees have certain occupations that are deemed dangerous.

Comparing Workers' Compensation Coverage A and B

Workers' compensation Part B also covers medical care, lost wages, and rehab costs for employees who are injured on the job. But unlike Part A, Part B coverage covers employees when the employer is liable through negligence or otherwise, which is also why it's called employers' liability coverage.

While Part A covers state requirements, Part B pays additional damages up to certain limits, meaning that Part B includes Part A but goes beyond Part A's coverage. Payments for Part B are determined based on the type of injury, policy terms, and the insurer. Example Part B limits may look something like:

• Bodily injury by accident: $100,000 each accident.
• Bodily injury by disease: $500,000 policy limit.
• Bodily injury by disease: $100,000 for each employee.

Part B is not commonly used but there can be circumstances in which having this policy benefits the company. Most commonly these occur when the company is sued by a family member of the injured party or by a third party. Part B can also be needed if the damages owed go above and beyond Part A coverage.

Real-Life Scenario: Workers' Compensation Coverage A in Action

John works at Factory ABC, a company that makes steel pipes. The company is serious about safety and has implemented many safety standards that employees should follow. These include gloves when working with hot steel, boots that cover the entire foot and that also come with grips to prevent slipping.

One day, John is moving steel pipes down a ramp when he slips on a puddle of water that has accumulated from a leaky pipe. Despite wearing boots with grips, he still fell. He breaks his leg and damages nerves in the process. He requires surgery and needs to be out of work for six months.

John's health insurance pays for his broken leg and a portion of the surgery, but not all of the surgery. Factory ABC has workers' compensation coverage A as mandated by the state and the compensation coverage can pay for the remainder of John's medical bill as well as his salary while he is recovering for six months. The coverage also includes rehabilitation costs.

The Bottom Line

Workers' compensation coverage A is the state-mandated portion of a workers' compensation policy that provides medical care, death, disability, and rehabilitation benefits for workers injured or killed on the job, paid on a no-fault basis. It differs from coverage B, which addresses negligence-related claims beyond the benefits required under state law.