The Iowa Workers’ Compensation Act mandates that most employers have valid workers’ compensation insurance in place before employees start work. Employers pay an average of 92 cents per $100 of payroll in the state for workers’ comp insurance―an average that spans across industries.
Shopping for workers’ compensation insurance isn’t always easy. You have to provide a lot of information about your company to multiple carriers to see who can offer you the best rate. CommercialInsurance.net makes the process easy by having you complete one simple form and then shopping for your policy from among its more than 200 partners. Get a free quote today.
What Are Iowa Workers’ Compensation Requirements?
Iowa workers’ comp law is different from other states in that it doesn’t set a specific number of employees to trigger a requirement for workers’ compensation insurance. The law only says that most employers, with few exceptions, must carry coverage. This means that if you own an Iowa business with full-time or part-time employees, you need to carry a workers’ compensation policy or be self-insured.
Another provision of the law protects employers from lawsuits. Therefore, employers who have valid workers’ compensation insurance cannot be sued by employees for injuries that occur at the workplace. In exchange, employees do not have to show employers caused their injuries to receive benefits. This is known as a “no-fault” provision.
Who Doesn’t Need Workers’ Compensation Insurance in Iowa?
While Iowa law doesn’t elaborate on what it means by most employers, it does provide for certain exemptions from workers’ compensation requirements. An employer who has exempt employees is not required to maintain workers’ compensation insurance but may opt for coverage voluntarily.
For example, business owners do not have to get workers’ comp for employees who earn less than $1,500 annually. Additional exemptions include:
- Agricultural workers
- Relatives that are employees
- Casual employees
- Domestic employees
Moreover, business owners do not have to provide coverage for themselves, including:
- Sole proprietors
- Partners of a partnership
- Members of a limited liability company (LLC) with a status other than employee
- Independent contractors
If you have a question about the specific exemptions pertaining to workers’ compensation insurance, you can contact a workers’ compensation compliance administrator.
Where Can I Obtain Workers’ Compensation Insurance in Iowa?
Most Iowa employers will obtain workers’ compensation insurance through the private marketplace of insurance carriers licensed to offer workers’ compensation in the state. Those who are ineligible with private carriers may find insurance through the Iowa assigned risk pool administered by the National Council of Compensation Insurance. Some business owners may also be able to self-insure if they meet the state guidelines for self-insurance.
Top Workers’ Compensation Insurance Insurers in Iowa
Many business owners say that shopping for workers’ compensation insurance is stressful, but it doesn’t need to be. Commercialinsurance.net requires one simple application from you to shop your policy for you among its more than 200 partners. Best of all, small business owners can get workers’ comp coverage through CommercialInsurance.net often see insurance carriers’ lowest possible premium.
If you’re looking for reliability with an insurance carrier, The Hartford is our pick. It’s been in the insurance game for more than 100 years and is considered a small business insurance expert. We especially like that its workers’ compensation policies can be linked to most businesses’ payroll processing, so premiums are charged on accurate payroll numbers. This means employers who use The Hartford seldom see an exorbitant audit bill at the end of their policies.
Liberty Mutual might be best known for auto and home insurance but don’t overlook them for quality commercial insurance policies. This carrier spends a lot of time creating policies based on a business’s industry risks and can price policies reasonably because of it. We especially like Liberty Mutual for higher-risk but common industries, particularly foodservice where workers are around hot grills, sharp knives, and wet floors.
Chubb is an international insurance carrier with innovative underwriting and claims practices that help keep costs down by getting injured workers healthy sooner than later. It offers all lines of commercial insurance, but its workers’ comp claims process is particularly impressive. The company uses professional nurses as case managers to get the best insights into managed care and rehabilitation.
Cerity is disrupting how workers’ compensation insurance is underwritten. The company, a subsidiary of small business workers’ comp specialist Employers, is ideal for business owners who need a policy and an insurance certificate quickly. Cerity offers easy applications that can be completed online with proof of insurance sent in as soon as five minutes.
Can Businesses Self-insure in Iowa?
When you self-insure, you pay for all the medical costs and lost wages when employees get hurt. Therefore, Iowa employers must meet the minimum requirements set forth by the state to ensure that employees have adequate coverage. These minimum requirements include:
- Submitting financial documents to the insurance commissioner to prove they’re able to pay benefits
- Placing a security in trust so that funds are available should a claim arise
- Periodically providing proof of their financial ability to pay
Each company is reviewed on a case-by-case basis to see if they can self-insure without putting employee benefits at risk.
How Much Does Iowa Workers’ Compensation Insurance Cost?
The average Iowa workers’ compensation premium is 92 cents for every $100 of payroll, according to a report from the National Academy of Social Insurance. At 92 cents per $100 of payroll, the average employer pays $920 for every $100,000 of payroll.
However, the cost of workers’ compensation insurance varies widely among employers in the state of Iowa—as it does in most states. This is because premiums are contingent on several business factors that include the type of work employees perform, the amount of payroll you have, and the number of claims you’ve filed in the past.
Sample Iowa Workers’ Compensation Rates by Class Code
Industry Class Code
2121 Breweries-Craft Beers
7225 Towing Company
8742 Sales Professional
8810 Clerical - Office
8824 Nursing Home
8831 Animal Shelters
9063 Fitness Center
Iowa Workers’ Compensation Cost Example
Understanding how workers’ compensation premiums work is best done via an example. Let’s assume a towing company has five employees: three tow truck drivers and two dispatch clerks. The payroll for the tow truck drivers totals $300,000 and for the clerks, it totals $60,000.
Using the table above, we see that the low rate for the towing company (class code 7725) is $7.72 per $100 of payroll. Because dispatch clerks are not involved in using heavy equipment, their risk of work injury is lower, so they get a different class code (class code 8810) that’s priced at a lower rate: 21 cents per $100 of payroll.
The calculations for this portion of the business’ workers’ comp premium looks like this:
- Tow Truck Drivers: ($300,000 / $100) x $7.72 = $23,160
- Dispatch Clerks: ($60,000 / $100) x 21 cents = $126
Add the two together to get the total estimate: $23,160 + $126 = $23,286.
While this is a good starting point, it’s important to note that we haven’t accounted for claims history in the quote. Claims history is defined by a variable called the experience modification rate (EMR). A new business starts with an EMR of one, so it has no impact on the business’s workers’ comp costs. After two years, the business’s EMR is reassessed and may become higher or lower than one. A higher number indicated the business had more frequent or severe claims than similar businesses, so its rates go up.
Iowa Workers’ Comp Audit Requirements
Workers’ compensation premiums are based on payroll estimates because employers can’t know for sure how much they will pay employees with overtime, new hires, layoffs, and more. As such, the premium is estimated for the 12-month term of the policy. At the end of the 12 months, a premium audit is conducted to reconcile the payroll numbers.
This reconciliation gets the actual premium owed. When estimates are below the actual payroll, employers get a bill before the policy is renewed. If the estimated numbers were high, they receive a premium refund check. The new workers’ compensation policy uses the reconciled payroll to estimate the next term’s premium.
What Does Workers’ Compensation Insurance in Iowa Cover?
In almost every state, employees who suffer injuries or illnesses arising from their work can get workers’ comp. Iowa employees are entitled to a series of benefits that include:
- Medical bills: Covers bills for doctors, emergency care, physical therapy, prescriptions, specialists visits, and reasonable travel expenses; also covers wages for time off for treatments in some circumstances
- Disability payments: Pays a portion of injured employees’ spendable earnings, such as the wages available after payroll tax is deducted, if they are unable to work as a result of their injury or illness
- Healing period benefits: Pays benefits to an employee with a permanent disability while they’re recuperating; lasts until the employee returns to work, is medically capable of returning to similar employment, or has recovered as much as is expected
- Vocational rehabilitation benefits: Pays up to $15,000 to retrain injured employees who are unable to return to their own occupation due to a permanent disability.
- Death benefits: Pays up to 80 percent of the employee’s average weekly wage to dependent beneficiaries if an employee dies due to a workplace injury or illness.
Employees must wait three days before the insurer pays disability benefits. This waiting period is covered retroactively if an employee’s disability lasts longer than 14 days. There is no waiting period for a healing period or medical care benefits. This should happen as soon as possible for the proper care and rehabilitation of the employee.
For employees with permanent disabilities, Iowa provides a schedule of benefits that outlines how long compensation lasts based on the disability. Examples include:
- Loss of thumb: 60 weeks
- Loss of hand: 190 weeks
- Loss of arm: 250 weeks
- Loss of foot: 150 weeks
- Loss of leg: 220 weeks
- Loss of eye: 140 weeks
- Loss of hearing in one ear: 50 weeks
- Permanent disfigurement to face or head: 150 weeks
The current maximum weekly rate for temporary disability and healing periods is $1,864. The maximum benefit for permanent disability is $1,715 per week. This information is valid July 1, 2020, through June 30, 2021.
Iowa Workers’ Compensation Coverage Example
Joe works in a quarry where there is a lot of heavy machinery. Although Joe follows the required safety protocol, he is involved in a tractor accident and loses the use of his right hand. He spends a week in the hospital and is sent home to recover, but he’s unable to return to work due to his injury.
After a three-day waiting period, Joe is given disability payments equal to 80% of his spendable earnings. He recoups the wages he lost in that three-day waiting period after his 14th day of disability. After three weeks, his doctors determine that his inability to use his right hand is permanent. Based on the schedule of loss, Joe continues to get benefits checks for 190 weeks, and he is sent to vocational rehabilitation as he will no longer be able to work in the quarry.
What Are the Penalties for Not Having Workers’ Compensation Insurance in Iowa?
Not having workers’ compensation insurance in Iowa can result in civil and criminal penalties. These penalties include civil injunctions that include closing the business and revoking insurance or self-insurance privileges.
An employer who doesn’t maintain valid workers’ compensation insurance may face up to five years of imprisonment and anywhere from $750 to $7,500 in fines. Employees can also sue for damages that may be more than what would be paid in a workers’ compensation claim.
Employers also face penalties for not filing claims properly or timely. These include an assessment of $1,000 payable to the Second Injury Fund when injury reports are not filed properly. Another assessment may be charged for habitually failing to begin weekly benefits within 11 days. Delays in benefits can result in up to 50% of additional benefits paid to the injured worker.
How Do I File a Workers’ Compensation Claim in Iowa?
Filing a claim requires getting the right information to the right parties in a timely manner. An injured employee should immediately seek medical attention to address the injuries or illness. From there, employees have up to 90 days to notify their employer of a workplace injury. The 90-day period begins when the employee knows or should have known that an injury or illness is related to their work.
Once employers know about a workplace injury, they or their insurers have four days to file a First Report of Injury (FROI) with the Iowa Workforce Development Workers’ Compensation Division Electronic Data Interchange.
Should a claim be closed or denied, an employee may disagree and file a pleading with the Department of Workers’ Compensation. This is achieved with Form 100 – Original Notice & Petition.
Iowa Workers’ Compensation Deadlines
In addition to the 90 days that employees have to inform their employer of a workplace injury or illness, there are two other key deadlines for employees to know:
- Two-year statute of limitations: Employees have two years to either receive benefits or file for an application for attribution
- Three-year statute of limitations: Employees have three years from the date of their last workers’ comp benefit to receive additional benefits or file a contested case briefing
Failure to meet either deadline may impact the employee’s benefits.
Iowa Workers’ Compensation Resources
- Contact Information
- Iowa Workforce Development
Department of Workers’ Compensation
150 Des Moines St.
Des Moines, IA 50309-1839
- Iowa Workforce Development
- Key Forms
- Useful Links
Iowa requires employers with one or more employees to have workers’ compensation insurance. Otherwise, they face stiff civil and criminal penalties. Employers can expect to pay an average of 92 cents per $100 of payroll for workers’ compensation insurance, but this varies depending on the type of work, the company’s claims history, and the insurer’s ability to offer coverage. This makes shopping for the right policy very important.
CommercialInsurance.net is a marketplace where you will be paired with the best insurance provider for your needs. It’s partnered with more than 200 insurance carriers, brokers, and agencies to bring affordable workers’ compensation to small business owners. Get a free quote in minutes.