What's covered by workers' comp (and what isn't)

Workers' compensation, often referred to as workers' comp or workman's comp, is a type of business insurance and a Colorado state-mandated employer-held insurance program. It protects both your workers and business by providing benefits when employees suffer a job-related injury or illness.

What Does Workers' Comp Cover?

There are two different types of coverage: Parts A (state-mandated) and B (employer's liability coverage).

Part A

Part A coverage refers to an insurance policy that protects employees under state laws. Coverage includes the following benefits when an employee is injured (or killed) while on the job in Colorado:

• Employee medical costs and care
• Lost wages
• Disability benefits
• Ongoing care
• Work-related injury legal fees (employer only)
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Under the course and scope rule, employees injured outside of the workplace can also be eligible for coverage. These exceptions include:

• The employee's contract includes transportation to and from work
• Walking to and from the place of employment while in a company parking lot during a designated time (right before or after the work shift starts)
• Company-sponsored events, such as sports functions or group meetings, where attendance is mandatory
• Work from home
• Traveling on company-sponsored business
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All compensation and benefits related to your state's workers' compensation laws are paid by your insurance company without regard to fault.

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Part B

Premiums are based on your payroll and the types of duties employees perform.

Part B covers:

• Medical care
• Lost wages
• Rehabilitation costs
• Damages up to certain limits
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The type of injury determines how much an injured party is paid. The most common injury types and limits are bodily injury by:

• Accident: $100,000 per accident
• Disease: $500,000 policy limit
• Disease: $100,000 for each employee
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Unlike Part A, Part B covers you in certain circumstances against liability to third parties who sustain damages as a result of an employee's injury that is caused by your negligence.

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What Isn't Covered by Workers' Comp Insurance?

Workers' compensation insurance doesn't cover everything. Some things not covered include:

• Volunteers (except certain government volunteers such as police and fire)
• OSHA fines
• Wages for replacement workers
• Injuries claimed after termination or layoff
• Independent contractor injuries
• Injuries caused on purpose by the employee
• Injuries resulting from a social or athletic event that is not mandatory
• Injuries resulting from horseplay
• Injuries resulting from activities outside of work hours or the scope of business. For example, happy hours and team events.

Injuries are covered, but may result in reduced compensation, when:  

1. The injury is caused by alcohol or drugs, or 

2. When the employee violates a known employer safety rule.

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Who Is Covered and Not Covered by Workers' Comp?

All businesses in Colorado that are not sole proprietorships with at least one employee must hold a workers' compensation policy. While nearly all employees must be covered, there are exceptions that include the following types of workers:

• Casual employees who earn less than $2,000 a year
• Domestic or maintenance workers employed privately by homeowners
• Inmates of correctional facilities
• Volunteer ski lift operators
• Railroad workers
• Independent real estate sales personnel paid solely by commission
• Independent contractors
• Employers and employees covered by federal law
• Employees of religious and charitable organizations who earn less than $750 a year
• Corporate officers and members of limited liability corporations who own at least 10 percent of interest may decide whether they wish to be covered.
• State and local governments may elect whether to cover uncompensated appointed and elected officials.

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What You Need to Know About Workers' Comp

An employee or an employee's survivors are entitled to workers' compensation coverage Part A when that employee is injured, disabled, or dies while on the job. These benefits are typically awarded on a no-fault basis. The exception is if the employee was under the influence and the substance(s) contributed to the injury or death.

Following an on-the-job accident, the employee is usually required to submit to a drug and alcohol test. If a worker is injured or killed while on the job, many fatal incidents provide partial reimbursement of lost wages and survivor benefits.

Part A satisfies the state insurance requirements. This is because it funds employees' medical bills, related expenses, and lost wages when there is a covered loss. Payments, as a rule, are made based on predetermined schedules when there are defined injuries. An adjuster then calculates and pays out expenses accordingly.

With workers' comp, there are no policy limits. Under Part A, your insurer pays all benefits required by the workers' compensation law of any state listed in the declarations.

Employers, however, can be held responsible for payments made by your insurer that exceed regular workers' comp benefits. Such circumstances would include:

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

‍How Does the Workers' Compensation Process Work?

The Colorado Department of Labor and Employment (CDLE) has a graphic that explains exactly how the workers' comp claim process works. There are seven steps:

1. Employee seeks emergency medical care (if necessary)
2. Employee notifies you in writing of the injury within ten days of the injury
3. Employee seeks non-emergency medical treatment from your designated provider list
4. Employee files a claim with form WC-15 with the Division of Workers' Compensation within two years of the injury
5. File a general admission or denial by a Notice of Contest. This must be done after receiving notice of an injury that involves lost time, permanency, a fatality, or an occupational disease within 20 days from when the claim is filed with the Division

• If you deny liability, the employee can request an expedited hearing but must do so within 45 days of your denial. Hearing will only address compensability and medical benefits. Hearing will occur within 60 days from application
• If you deny liability, the employee can request a standard hearing at any time for any issues listed on the application. Usually, the hearing will occur within 120 days from application. If the employee does nothing within two years, the claim closes

6. Medical care continues until the employee reaches maximum medical improvement (MMI)

7. You file a final admission within 30 days of the employee reaching MMI

• If your employee disagrees with the final admission, an objection must be filed within 30 days of the final admission
• At the same time, the employee must file for a Division Independent Medical Examination if they disagree with the MMI date and/or impairment rating or file an Application for Hearing for any issue other than MMI or impairment rating
• If the employee objects but does nothing for six months, their claim may be closed
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