Businesses are always trying to boost their bottom line and usually that means cutting costs somewhere. One of the options many turn to is excluding high level executives and partners from participating in the workers’ comp insurance plan. Doing this, however, could end up being a grave error with severe consequences.
Georgia Law
Georgia is considered an elective state when it comes to workers’ comp insurance t required unless you have three or more employees. However, strict reporting requirements are placed on the business owner with significant penalties for noncompliance.
In most states, Executive Officers and partners are included automatically for workers’ compensation insurance benefits. Unless they elect to opt out, that is. In Georgia,sole proprietors and partners are not considered employees and are excluded from coverage.However, they do have the choice to opt in and receive coverage. Corporate officers and LLC members are considered employees and are covered by workers’ comp unless they choose to opt out. “… Any officer or member of a limited liability company (maximum of 5) may exempt themselves from coverage by filing a Form WC-10 with their insurance company.”
Benefits of Workers’ Comp Insurance
There are many benefits to workers’ comp insurance which include payment for medical care, lost wages, and permanent disability. It also provides death benefits for dependents of employees killed in a work-related accident.
Many officers and business owners assume if they opt out of workers’ comp insurance that their medical insurance will be enough to cover them in the event of a workplace injury—or they assume they would never file a claim against their own company. However, a typical health insurance plan specifically excludes work-related injuries from coverage. Each health plan has its own policies but by and large, those type of expenses would not be covered. Furthermore, disability is generally not covered to the extent it would be under a workers’ comp policy.
The Risks of Being Excluded
It would be naive to assume a business owner or executive will never sustain a work-related injury. It doesn’t matter if you are working the assembly line or sitting behind a desk, everyone is subject to the same potential illness or injury. For example, an executive may try to help one of his staff out by carrying a heavy box, during which time he sustains a back injury that requires surgery. The executive may have personal insurance that will cover some extent of the injury but not all of it, or they may have insurance that specifically excludes work-related injury coverage. The amount saved in workers’ comp premiums will be nothing compared to the cost recovering from a back surgery denied by insurance.
If you have been excluded or plan to exclude yourself from workers’ compensation insurance, make sure you have all the facts. It is recommended you contact a workers’ compensation lawyer or workers’ comp insurance specialist to make sure you know your rights and properly file any required paperwork.