Illinois Workers’ Compensation Insurance: Providers, Rules & More

Workers’ compensation insurance is required by law in most states. Policies cover injured employees’ medical bills and lost wages and death benefits if an employee dies from a workplace incident. In Illinois, employers must get coverage even if they have a single, part-time employee, and they pay an average of $1 per $100 of payroll.

What Are Illinois Workers’ Compensation Requirements

Workers’ compensation insurance requirements vary by state, but most mandate coverage for at least some employers. In Illinois, state law requires employers to carry workers’ compensation in almost every employment situation. Employers must carry workers’ compensation coverage even if they have only one part-time employee. If they don’t, they can face civil and criminal penalties, starting at $500 for every day without coverage.

Illinois workers’ compensation law does address a few unique work situations, including coverage for high-risk industries. For example, employers are required to have workers’ compensation for themselves if they are in construction or trucking at a construction site.

Who Doesn’t Need Workers’ Compensation Insurance in Illinois?

Illinois law does not require every worker to be covered by workers’ compensation insurance. Exempt employees and workers include:

• Business owners: Most sole proprietors, business partners, corporate officers, and members of a limited liability corporation may opt out of workers’ comp. They must notify their carriers in writing if they do
• Domestic workers: Workers’ comp is not required for household staff when they work less than 40 hours per week for fewer than 13 weeks a year
• Employees who are family members: Workers’ comp is not required for family members unless who live with the employer or are farmers with employees who work a total of fewer than 400 working days a quarter

While business owners, including independent contractors, freelancers, and sole proprietors without employees, typically are not required to have coverage, they may still want self-employed workers’ compensation to protect their businesses when a job-related injury keeps them from working.

Where Can I Obtain Workers’ Compensation Insurance in Illinois?

Most Illinois employers purchase coverage from private insurers. Those who can’t find an insurer to cover their business can enroll in what’s called a market of last resort operated by the National Council of Compensation Insurers (NCCI). Premiums in this market can be 50% higher than the private market.

Top Illinois Workers’ Compensation Insurance Providers

The Hartford

The Hartford is a small business insurance specialist with some of the broadest workers’ compensation insurance in Illinois. The company’s basic policy automatically includes six unique features other carriers usually charge for, including coverage for reasonable expenses you incur in your defense and coverage for employees and volunteers when state law doesn’t require it. This makes The Hartford the ideal choice for business owners who want broad coverage at a discount.

AP Intego

AP Intego is an online agency that uses technology to simplify commercial insurance for small business owners. Workers’ compensation insurance is its top product, and it can offer multiple quotes to compare. Not only can the company quote the coverage in Illinois, but it also offers a pay-as-you-go plan that integrates with your payroll service easily. This means premiums are based on accurate payroll information instead of estimates, reducing the likelihood of a bill at renewal.

Employers

Employers is a financially stable national carrier that specializes in workers’ compensation insurance for small businesses. Restaurants are the largest business class written by Employers, and the company was recently named as the preferred workers’ comp provider for the Illinois Restaurant Association (IRA). Members of the IRA can get a 5% discount on their workers’ compensation insurance.

WorkCompOne

WorkCompOne is an insurance agency that works with top carriers like Markel, Travelers, and CNA to bring workers’ comp to small business owners. The smaller your business, the harder it can be to find workers’ comp coverage. However, WorkCompOne’s relationships with multiple carriers allow them to get coverage for businesses even when they have 10 or fewer employees.

AmTrust Financial

AmTrust Financial has only been around for 20 years but, in that time, they’ve grown to be one of the largest commercial insurers. AmTrust Financial is an ideal insurer for startups because they’re one of the few carriers that will insure a new venture. Carriers usually shy away from new ventures because they have a hard time predicting the chance of paying claims, but AmTrust Financial can cover startups in multiple industries.

Additional Illinois Workers’ Compensation Insurance Options

Illinois employers have two additional workers’ compensation insurance options. The first is self-insurance. This means that they pay the costs of workers’ comp claims out of their own pocket or by entering a pool with other employers. Business owners who cannot self-insure or get coverage from a private company are placed in an assigned risk plan.

Illinois Workers’ Compensation Self-insurance Requirements

Employers who want to self-insure must submit an application to the Illinois Workers’ Compensation Commission (IWCC). The applicant must also provide current financial statements and a plan for how they will investigate, administer, and pay claims. There is a $500 application fee, plus there is a minimum security deposit of $200,000 required. Employers must apply for renewal every year.

The application process takes at least 60 days, and business owners with employees must have workers’ compensation and keep it in place until they’re approved as a self-insurer.

Illinois Workers’ Compensation Insurance Assigned Risk Plan

Business owners who cannot find coverage in the private market can turn to Illinois’ assigned risk plan, sometimes called a market of last resort. In Illinois, the assigned plan is administered by the NCCI. Typically, policies from the NCCI cost about 50 percent more than the ones purchased in the open market.

New ventures and startups, especially those in emerging industries, can have a hard time getting workers’ compensation insurance. However, businesses may also be declined if they’re in risky industries or if they have a history of claims. Once two insurers have declined coverage, employers can work with an agent to get workers’ comp through the NCCI.

Illinois Workers’ Compensation Insurance Costs

The average cost of workers’ compensation in Illinois is $1 per $100 of payroll, according to the most recent report from the National Academy of Social Insurance. Workers’ comp insurers come up with the total cost using your payroll and claims history plus the risk your employees face in their job. The basic formula insurers use to determine workers’ compensation insurance costs is:

(Payroll / $100) x classification code rate x experience modification rate (EMR) = Manual premium

Illinois uses classification codes developed by the NCCI. Each code has a rate, which represents the amount of risk employees face. Riskier jobs, like roofing, have a higher rate than less risky jobs, like sales. The EMR is a number that compares your company’s loss history and payroll to similar businesses. Fewer and less-expensive claims typically mean lower premiums for your company.

Sample Illinois Workers’ Compensation Rates by Class Code

Illinois Workers’ Compensation Cost Example

To understand rates fully, let’s calculate a workers’ comp premium for a sample company. Assume a towing company has three tow truck drivers and one dispatch clerk. To determine the company’s premium, we first need to identify the job classifications from the table above:

• Tow truck drivers: Class code 7225, rate $5.32
• Dispatch clerk: Class code 8810, Rate 7 cents

Next, we look at payroll. The total payroll for the drivers is $150,000, and the clerk’s is $35,000. These numbers get plugged into the workers’ comp premium formula so we can calculate premium estimates:

• Tow truck driver premium = ($150,000 / $100) x $5.32 = $7,980
• Dispatch clerk premium = ($35,000 / $100) x 7 cents = $24.50

We add these amounts together to get the company’s total estimate: $7,980 + $24.50 = $8,004.50.

The premium could be further multiplied by an EMR. EMRs start at one, which has no impact on the company’s premium. However, if the company has claims, its EMR will most likely go up. But a company that has fewer claims when compared to similar businesses may keep an EMR or one or lower, and that will cause its rates to go down.

Illinois Workers’ Compensation Audit Requirements

Insurers use a payroll estimate when they determine workers’ comp rates, which may mean a business is not charged the correct premium. To adjust this, insurers audit their workers’ comp policies to reconcile estimated payroll with actual payroll.

Premium audits can be a lot of work. Here are just a few of the documents you may need for a workers’ compensation audit in Illinois:

• Payroll journal
• Federal tax reports
• State unemployment tax reports
• Overtime payroll records
• Employee records, like timecards and position descriptions
• Description of your business operations
• Payments to subcontractors and casual laborers
• Certificates of insurance for subcontractors and independent contractors

Even worse? Audits often result in extra premium due at the end of your policy term. Plus, your insurer can charge up to 200% of your premium if you don’t comply. Illinois business owners who believe they’ve been treated unfairly during an audit can appeal.

What Illinois Workers’ Compensation Insurance Covers

Illinois workers’ compensation insurance covers the costs that come with occupational diseases and job-related injuries. This includes traumatic, repetitive stress, and mental injuries. Without workers’ comp, Illinois employers have to cover injured employees’ medical bills and lost wages out of their own pocket.

Specifics vary by situation, but workers’ compensation in Illinois usually covers:

• Medical benefits: All reasonable medical costs, including doctor visits, emergency care, and medications costs
• Disability benefits: Payments of up to two-thirds of the injured workers’ average weekly wage subject to state-mandated maximums and minimums; permanent total disability benefits continue for life; temporary disability payments are subject to a three-day waiting period and last until the employee returns to work or achieves maximum improvement
• Vocational rehabilitation: Job counseling and vocational retraining costs if an injured workers cannot return to their pre-injury position, plus maintenance benefits
• Death benefits: Payments of two-thirds of the deceased worker’s dependents for up to 25 years or $500,000, whichever is greater, plus up to $8,000 for burial costs.

Illinois workers’ compensation laws do not cover injuries that occur during recreational events or accidents in drug and alcohol rehab programs. They also don’t cover self-inflicted injuries or injuries suffered while an employee is committing a crime or violating company policy.

Illinois Workers’ Compensation Coverage Example

Mary works for a Chicago accounting firm as a data entry clerk, where she types in client data all day long. She begins to feel pain in her right wrist when working. It’s a throbbing radiating pain that her doctor diagnoses as carpal tunnel syndrome resulting from overuse at work.

Upon the diagnosis, Mary informs her employer that she has a work-related injury. Her employer opens a claim, and she can see a specialist about her wrist. She is prescribed physical six weeks of rest to allow the inflammation to settle and then physical therapy to build the muscle strength up surrounding the wrist joint.

Mary must wait three days for her disability payments to start. Because her absence is more than 14 days, she will ultimately receive compensation for those first three days. Her specialist and physical therapist visits are covered, as is a wrist brace prescribed by her doctor.

What Are the Penalties for Noncompliance in Illinois?

Failure to carry workers’ compensation coverage in Illinois is usually a misdemeanor. If the employer is shown to have knowingly failed to comply, then the charge is a felony. Employers can be fined up to $500 for every day of noncompliance. The minimum fine is $10,000.

In addition to the fine, employers who knowingly fail to carry workers’ comp lose the protections they have under the Illinois Workers’ Compensation Act (IWCA). Employees can sue them in civil court, plus the IWCC may order the employer to stop all operations.

How to File a Workers’ Compensation Claim in Illinois

In Illinois, as in most states, injured employees initiate workers’ comp claims. This is because they’re the ones seeking compensation from their employer or their employer’s insurer. The steps to an Illinois workers’ compensation insurance claim are:

• The employee alerts the employer of their injury or illness: This needs to be done promptly but no later than 45 days from the incident or 90 days from the diagnosis; oral notification is sufficient, but written notification is preferable
• The employer records the employee’s information: The state doesn’t supply an official accident report form, but employers are responsible for recording all workers’ compensation workplace injuries and occupational diseases and submitting reports to the IWCC electronically
• The employer provides instructions on obtaining medical care: Illinois workers have the right to select their medical providers unless their employer is in a preferred provider plan (PPP); then, they must select a doctor in the PPP network
• The employer either pays benefits or explains why they aren’t paying benefits: Workers’ comp benefits start when an injured employee misses three or more days of work; however, the employer or their insurer may withhold benefits; if they do, they need to send written notice explaining why or what information they need to begin payments
• The employee files a claim with the IWCC: Employees are not required to file a claim with the Commission, but many do, especially if their denied benefits or hope to protect their right to benefits in the future

The IWCC arbitrates disputed workers’ comp claims. In a dispute, employers do not have to disprove an employee’s claims. The employee has the burden of proof, so they must demonstrate they have a right to benefits.

Illinois Workers’ Compensation Insurance Deadlines

In Illinois, there are three main deadlines employers need to be aware of. The most important is to have workers’ compensation insurance in place by the time they hire employees. There is no grace period. Other significant deadlines for employers are notification requirements:

• Two days to notify the IWCC of work-related deaths
• One month to notify the IWCC of work-related injuries that cause more than three days’ absence

Employees also have deadlines to meet when an accident occurs. These are:

• 45 days to report an injury or risk losing out on their workers’ comp benefits, except in cases of radiation exposure, pneumoconiosis, asbestosis, or similar diseases
• Three years from the date of injury or two years from their last benefit payment, whichever is longer) to file a claim with the IWCC

Illinois Workers’ Comp Resources

• Contact Information
  • Illinois Workers’ Compensation Commission
    Chicago Office
    100 W. Randolph St., Suite 8-200
    Chicago, IL 60601
    312-814-6611
    wcc.infoquestions@illinois.gov
• Useful Links
  • Self-Insurance Details
  • Handbook on Workers’ Compensation and Occupational Diseases
  • Electronic Data Interchange (for accident reporting)

Bottom Line

Workers’ compensation insurance is expensive in Illinois, but it’s a requirement for most business owners. More importantly, it protects your business by covering costs that you would be liable for as an employer. Take steps to keep your costs down by emphasizing safety in the workplace and getting quotes from multiple carriers.

The Hartford can help Illinois business owners find affordable workers’ compensation insurance. Its application process takes minutes to complete, and it offers discounts for upfront premium payments.

Visit The Hartford