Question

Medical Billing:

1) Discuss the Eligibility for Workers' Compensation Coverage

2) Explain the Classification of Workers' Compensation Cases.

Answer 1

Eligibility for Workers' Compensation Coverage

To be eligible for workers' compensation benefits (sometimes called workman's comp), there are two basic requirements:

• You must be an employee of a company who has (or was supposed to have) workers’ comp insurance.
• You must have been injured at work or as a result of job-related duties.

Let’s look at these requirements in more detail.

Am I an Employee for Workers' Comp Purposes?

Only employees are entitled to receive workers’ comp benefits. It doesn’t matter whether you are a seasonal or part-time employee, you’re still eligible for benefits. Generally, you don’t have to be employed for a certain amount of time before claiming workers’ comp benefits.

If, on the other hand, you’re an independent contractor, freelancer, or consultant, you aren’t eligible for workers’ comp benefits. If you work a lot of hours for your employer, under the close direction of the employer, and/or you work at the employer’s place of business, you are more likely to be an employee vs. an independent contractor.

If you are a “casual worker” or “temp,” whether you are covered by workers' comp depends on whether you are technically an employee or an independent contractor. If you are a sales person, you could be an independent contractor or an employee, depending on how independent you are from your employer. If your employer is withholding taxes from your pay, it is treating you as an employee. If your employer tries to treat you as an independent contractor to deny you workers’ comp benefits, and you think you may technically be an employee, you may want to contact a workers' comp attorney.

Volunteers generally aren't covered by workers' comp insurance policies. While some organizations do opt to cover their volunteers with workers’ comp insurance, if you were injured while volunteering, it’s not likely you’ll be covered by workers’ comp.

Is My Illness or Injury Covered by Workers' Comp?

Almost any injury or illness qualifies for workers' comp, as long as it’s job-related. You can be injured in an accident on the job; for example, straining your back by lifting, getting a finger caught in a machine, falling on a slippery floor, or getting hit by another driver. You can also become sick from unhealthy conditions on the job; for example, from contact with a hazardous substance or exposure to toxic fumes. If you become ill over a period of months or years, you can still qualify for workers’ comp. For instance, if you do repetitive work such as typing at a computer keyboard or operating a cash register, over time you may get a repetitive stress injury (RSI), such as carpel tunnel syndrome. Chronic illnesses like these, also called cumulative trauma disorders (CTDs), are fully compensable by workers’ compensation. Mental illness can also be covered by workers' comp if it’s a result of something that happened at work (although it can be quite difficult to prove stress-related injuries).

Does an Injury Have to Happen at Work?

Any time you are doing work for your employer, you are entitled to workers’ compensation benefits, whether you are at work or not. You are eligible for workers’ comp in any of the following types of circumstances:

• You leave work to pick up office supplies and you get in an accident.
• You are telecommuting from home and get injured on your computer.
• You attend the office holiday party and fall down a flight of stairs.

However, you aren’t eligible for workers’ comp for injuries that occur going to or from work or when you leave the office for lunch.

What If the Injury Was My Fault?

There is no requirement that the company you work for was at fault, because workers' comp is a no-fault system. Even if you did something to cause the injury -- for instance, you always type with your feet up on the desk and you get carpal tunnel syndrome as a result -- you are still eligible for workers’ comp. However, if you caused the injury by intentionally hurting yourself, or because you were using drugs or alcohol, your injury will not be covered.

There is a gray area around other situations where your misbehavior causes or contributes to your injury. If your injury is the result of goofing off, your injury may not be covered by workers' comp -- unless your employer has condoned this kind of behavior. And if your injury is the result of the fight between you and another employee, the main instigator of the fight will not be eligible for workers' comp. The above types of situations have been decided differently by different workers' comp judges in different states, depending on the specific facts of the situation. If your injury is the result of horseplay or violence and your workers’ comp claim gets denied, you should contact a workers' comp lawyer for advice.

Classification of Workers' Compensation Cases.

Your workers compensation premium is calculated by multiplying a rate times your payroll and dividing the result by 100. The rates you pay depend on the classifications assigned to your business and the state in which you operate. A workers compensation classification represents a group of employers that conduct similar types of businesses. Examples of classifications are Dairy Farm and Beauty Supply Store - Wholesale. All employers assigned to the same classification pay an identical rate (if they are located in the same state).

Purpose of Classification Systems

A workers compensation classification system is intended to distribute the cost of insurance equitably among employers. The system ensures that employers with high risks of worker injuries pay more for insurance than employers with low risks. If such systems did not exist, all employers would pay the same rate for workers compensation coverage. Employers with low risks of injuries would subsidize those with high risks.

Classification systems are used to categorize businesses, not individual employees. Employers with similar operations are assigned to the same classification.

Classification systems are based on the idea that workers employed by similar businesses are prone to similar types of injuries. For example, employees who install roofs are subject to injuries caused by falls, burns, sun exposure, and lifting heavy objects. The types of injuries these workers sustain are relatively consistent from one roofer to another. Thus, all employers whose business consists of roofing installation are assigned to the same workers compensation classification.

NCCI System Versus Independent Systems

The most widely used classification system was developed by the NCCI. This system is used in thirty-five states. In these states (called NCCI states), the insurance department has designated the NCCI as its official rating and statistical organization. The remaining fifteen states have devised their own systems for classifying employers. These states are referred to as independent states.

The NCCI classification system consists of written descriptions of business operations and four-digit classification codes (or class codes). Two examples are Plumbing NOC & Drivers, code 5183 and Restaurant Fast Food, code 9083 (NOC means not otherwise classified).

The classification systems developed by the independent states serve the same functions and have many of the same features as the NCCI's. For instance, most utilize four-digit codes. The exceptions are Pennsylvania and Delaware, which use three-digit codes, and Wyoming, which uses NAICS codes to classify employers. Many independent states utilize similar (or even identical) classification descriptions and numeric codes as the NCCI.

Classification Terminology

The NCCI has devised rules and procedures that workers compensation insurers must follow when classifying employers' business operations. These help ensure that businesses are classified correctly.

I. Basic Classification

Your company is assigned a Basic Classification that describes the nature of your business. The basic classification is determined by the type of business you operate. It does not reflect the operations performed or functions served by individual employees.

For example, say that you own a company that manufactures hard candy. You employ two workers that perform janitorial work. You also employ sixteen workers who make, sort and package candy. Your business is candy manufacturing, not janitorial work so all of your workers are classified as Confection Manufacturing, code 2041.

II. Standard Exceptions

Generally, the workers employed by your business are assigned the basic classification. However, some workers perform functions that are common to many types of businesses. These functions are assigned separate classifications called Standard Exceptions. Two examples are clerical office workers (code 8810) and outside sales employees or collectors (code 8742). Because clerical and sales employees perform low-risk work, they less likely to be injured on the job than other workers. Consequently, the rates assigned to the clerical and sales class codes are relatively low.

To be rated as clerical workers, employees must perform clerical duties only. An employee who spends half his workday filing and the remainder of the day boxing candy cannot be classified as a clerical worker. Also, clerical employees must be physically separated from other workers. This means that a clerical worker must be located in an office or behind a partition, not at a desk in the middle of the factory. Workers are classified and rated as outside salespersons if they spend their workday making sales calls or doing collection work away from the employer's premises.

Note that the standard exceptions don't apply to workers that are included in the description of the basic classification. For example, the phraseology attached to code 8723, Insurance Companies, specifically includes clerical workers and salespersons. As a result, workers who perform clerical or sales work at an insurance company are assigned code 8723, not 8810 or 8742.

III. Governing Classification

The term Governing Classification refers to the classification, other than a Standard Exception, which generates the most payroll. For a small business, the Governing Classification may be the same as the Basic Classification. The Governing Classification provides a description of the operations performed by the employer's business.

What if all of your employees are classified as a Standard Exception (clerical or outside sales workers)? In that case, the Standard Exception classification is your Governing Classification.

IV. General Exclusions

Some operations present risks that are not included in the Basic Classification. Called General Exclusions, these activities are separately classified and rated.

Examples of General Exclusions are aviation, new construction or alterations, and sawmill operations. Also considered a General Exclusion is a daycare center run by the employer for the benefit of employees.

V. General Inclusions

Some types of operations might appear to be separate but are included in the Basic Classification. Examples are an employee cafeteria and an on-site medical facility operated for employees. Employees that operate these facilities are assigned the Basic Classification.

State Exceptions

While the NCCI states have adopted the NCCI's classification system, each has implemented certain state exceptions. Examples of state exceptions are class descriptions, class codes, and experience rating rules that differ from the NCCI's. Some states have developed endorsements that deviate from the NCCI's. For instance, many states have devised their own endorsements for covering leased workers.