The Minnesota Workers’ Compensation Act mandates that all employers (with few exceptions) need to maintain a workers’ compensation policy for employees. This coverage provides medical benefits and pays lost wages to employees who are hurt at work. Employers in Minnesota pay an average of 99 cents per $100 of payroll in premium for workers’ compensation insurance.
Shopping for workers’ compensation insurance can be daunting with so many options, and prices vary. Make the experience of getting a workers’ comp policy easy by submitting one simple application to CommercialInsurance.net who shops the policy among its 200-plus partner providers.
What Are Minnesota Workers’ Compensation Insurance Requirements?
Workers’ compensation requirements vary by state. In Minnesota, workers’ compensation laws require that most employers maintain coverage for both full-time and part-time employees. According to a Minnesota Department of Labor and Industry fact sheet, “employers are generally defined as an individual or business that hires an individual to perform services.” The definition includes part-time workers, minors, and noncitizens. In some cases, volunteers can be considered employees.
Minnesota is a “no-fault” state when it comes to workers’ compensation. This means it doesn’t matter who is responsible for the injury; if it happens during work hours and arises from the worker’s course and scope of employment, it is covered by workers’ compensation insurance.
Who Doesn’t Need Workers’ Compensation Insurance in Minnesota?
While the statute maintains that most employees are to be covered by a workers’ compensation insurance policy, there are some exceptions. Employers do not have to provide workers’ compensation coverage for:
- Independent contractors
- Sole proprietors and their immediate family members
- Partners in business and farm operations
- Executive officers of closely held organizations
- Managers of limited liability company (LLC)
- Casual employees
- Household workers earning less than $1,000 in a quarter
When people are exempt from workers’ comp, business owners can elect to include them in a policy if desired. Additionally, those who are self-employed can get a self-employed workers’ compensation policy to cover themselves from costly work injuries.
Where Can I Obtain Minnesota Workers’ Compensation Insurance?
There are two ways to purchase workers’ compensation insurance in Minnesota. You can either buy it through an insurance agent or directly from a state-approved insurance carrier. Depending on your business profile, you may need to shop around for a carrier that will insure your industry and overall business risk.
Top Workers’ Compensation Insurance Insurers in Minnesota
CommercialInsurance.net is an online marketplace that helps business owners shop for insurance with ease. It has more than 200 insurance carrier partners ― some of the biggest names in small business insurance, including The Hartford, Liberty Mutual, and Progressive Commercial. Business owners can get a workers’ comp policy, along with other business insurance policies, and often at the carrier’s best price.
The Hartford has made a name for itself as one of the leading small business insurers in the nation. When it comes to workers’ comp policies, The Hartford includes more coverage without charging more premium. Some inclusions include extended reporting times and coverage for reasonable expenses during a claim.
Liberty Mutual is best known as a personal lines insurance carrier but also has a robust offering of small business insurance. One thing that helps Liberty Mutual stand out from the competition is that it tailors policies to the industry it is insuring. This is why we like it for higher-risk businesses like those in the restaurant or foodservice industry.
Chubb provides commercial insurance around the world. This carrier stands out for how it underwrites companies, expediting the process through smart technology. When it comes to workers’ compensation, we like how it uses professional nurses to manage claims cases. This helps ensure claimants get the right care to get back to work sooner than later, hastening the claims process in a way that saves everyone money.
SFM is a regional insurance carrier that specializes in workers’ compensation and focuses on providing coverage in Minnesota, Wisconsin, Iowa, Nebraska, and South Dakota. As workers’ comp experts, SFM understands Minnesota workers’ compensation requirements and the unique risks of your business. This allows the firm to tailor a policy to your specific needs. Business owners will especially like the employer portal that helps them maintain policies, including updates to payroll and claims management.
Can Businesses Self-insure in Minnesota?
Minnesota businesses have an opportunity to self-insure if they meet the requirements to get state approval. It’s important to note that self-insurance approval is only valid for two years and can be revoked at any time with 10 days’ written notice from the state.
The requirements to self-insure include:
- Audited financial statements showing an appropriate current assets-to-liabilities ratio
- A nonrefundable application fee of $4,000
- A nonrefundable initial application fee to join a group of self-insured employees of $400
- $500 annual report fee
Usually, self-insuring is not feasible for small businesses because of the difficult financial requirements. Instead, most small businesses buy insurance through the private market. Business owners who are declined by private carriers can get workers’ compensation from the Minnesota Workers’ Compensation Assigned Risk Plan.
How Much Does Minnesota Workers’ Compensation Insurance Cost?
The National Academy of Social Insurance (NASI) completes an annual report that collects key data on state workers’ compensation metrics. According to this report, the average premium for Minnesota is 99 cents per $100 of payroll. This average is for all businesses across all industries.
Actual workers’ comp rates vary based on the job classification code, total payroll, and claims history. Higher-risk occupations pay higher rates. For example, a roofer has a higher chance of serious injury while working compared to an office worker, so roofing businesses are charged a higher rate per $100 of payroll. Similarly, more claims suggest a company is at risk for more work-related injuries and will have to pay more for workers’ compensation insurance.
Sample Minnesota Workers’ Compensation Rates by Class Code
Industry Class Code
5183 Plumbing Contractors
7208 Towing Company
8742 Sales Professional
8810 Clerical - Office
8832 Medical Office
8831 Animal Shelters
9063 Fitness Center
Minnesota Workers’ Compensation Cost Example
To understand how workers’ compensation premium works better, let’s look at an example for a Minneapolis landscaping company. We’ll assume the company has 10 landscapers and one office clerk, and there have been no claims. The company pays all landscapers a total of $500,000 in annual payroll and pays the office clerk $40,000 per year.
First, let’s consider the landscapers’ portion of the premium. We divide the total payroll value by $100 and then multiply that number by the low rate for class code 0042 from the table above:
($500,000 / $100) x $4.31 = $21,550
Clerks have less risk because they are not dealing with tools and doing hard labor. As a result, their rate is lower. Again, we’ll use the low rate for the office clerical worker (class code 8810) from the table above:
($40,000 / $100) x 6 cents = $24
Once we have the estimated premium rate for each class code, we’ll add them together for the estimated premium:
$21,550 + $24 = $21,574
While our example assumes that the company has no claims, it’s important to realize that the estimate for premium is typically also multiplied by the business’ experience modification rate (EMR). This is a number that represents the business’ claims history. The more claims a company has, the higher the EMR. It is possible for a company with years of no claims to have an EMR that drops between 0 and 1, which ultimately reduces the company’s workers’ comp premium.
Minnesota Workers’ Comp Audit Requirements
At the end of the term of your workers’ compensation policy, you’ll receive audit paperwork. The paperwork will reconcile the payroll numbers estimated when you opened the policy to what you paid in payroll. This helps the insurance company charge what the true premium should be.
If you overestimated your payroll, you’ll get a premium refund six to eight weeks after the audit is completed. If you underestimated the payroll, you’ll receive a bill to cover the difference between the premium estimate and the actual premium.
Premium audits are important because they consider the real risk that employers have when it comes to workers’ compensation. Additionally, these audits are used to estimate the next year’s payroll for the renewal of the workers’ compensation policy. The more accurate that your payroll is, the less discrepancy you’ll find in the audit.
What Does Minnesota Workers’ Compensation Insurance Cover?
Workers’ compensation is insurance that pays benefits to employees who get injured or ill while working. In Minnesota, workers’ compensation pays for:
- Medical care: Costs associated with reasonable and necessary medical care to the injured or ill worker, including psychological, chiropractic, podiatric, surgical, and hospital treatment; certain medical devices and reasonable travel expenses can also be covered
- Wage loss: A percentage of an employee’s average weekly wage that is paid when the employee is unable to work due to a covered injury or illness for three consecutive calendar days; the first three days of wage loss are covered if the disability continues for 10 or more days
- Vocational rehabilitation: Retraining for injured employees; employees are eligible for retraining if they are unable to return to their original position with their employer or similar employment with another employer but may be able to find suitable, gainful employment with rehabilitation.
- Death benefits: Payments to beneficiaries of workers who die as a result of the injury or illness; specific amounts are predicated on the number and type of dependents at the time of the worker’s death and the worker’s weekly wage at the time of injury
Employers and employees work with the insurance carrier to determine what benefits should be paid based on the type and scope of the injuries or illness.
Minnesota Workers’ Compensation Coverage Example
Matt works for a restaurant. One day he slips on a wet floor while bussing tables and hurts his back trying to balance the heavy busing tray. He misses two weeks of work. While Matt receives immediate medical attention, he must wait for the three-day waiting period before his wage benefits start. After the 10th day of missing work due to his injury, Matt is compensated for the first three days he missed work.
What Are the Penalties for Not Having Minnesota Workers’ Compensation Insurance?
Workers’ compensation is required in Minnesota. Failure to provide benefits results in penalties and fines for the violating employer, including a penalty of $1,000 for each employee for each week coverage is not in place.
If an injury occurs where workers’ compensation should be in place but isn’t, the employer is responsible for 100% of the medical benefits as well as compensation benefits. The employer may additionally be assessed a penalty equaling up to 65% of the paid benefits. This means if $10,000 in benefits are paid, there may be an additional $6,500 penalty.
Employers who fail to file the First Report of Injury (FROI) will be assessed penalties depending on how many times they have failed to file and violated the statute. The penalties are:
- One violation within 12 months: $125
- Two violations within 12 months: $250
- Three violations within 12 months: $375
- Four or more violations within 12 months: $500
How Do I File a Workers’ Compensation Claim in Minnesota?
The claims process is straightforward and requires that employees and employers properly communicate the details about the accident and injuries. Employees should tell employers immediately about injuries, but they have 14 days to notify them.
When the employer gets the notice about the injuries, he will complete an FROI that documents:
- When the injury occurred
- The type and scope of the injury
- Where the incident happened
- Any witnesses’ contact details
The employer files the form with his insurance carrier, who also files the form with the state of Minnesota. Employees are allowed to seek medical attention from any provider they choose; the employer does not choose medical providers. However, the employer can request to have an independent medical examination (IME) to confirm the details about the injury.
Minnesota Workers’ Compensation Deadlines
Certain deadlines must be met to make sure a workers’ comp claim is paid according to state requirements. Some deadlines are the responsibility of the employee while others are the responsibility of the employer.
To get claims paid properly, the deadlines imposed by the Minnesota Workers’ Compensation Act include:
- Employees have 14 days to notify the employer about the accident or incident
- Initial reporting can be extended to 30 days if there was a disadvantageous delay, such as if the employee were unconscious
- Employees have three years to recover compensation
Throughout the course of the claim, employees will be sent forms with stated deadlines. These include wage medical assessments, prescriptions, and wage assessments. It’s important that employees file paperwork timely to prevent the claim from being closed early or denied.
Minnesota Workers’ Compensation Resources
- Contact information:
Minnesota Department of Labor and Industry – Workers’ Compensation
443 Lafayette Road N.
St. Paul, MN 55155
651-284-5005 or 800-342-5354
- Key forms:
- FROI: Employers are responsible for completing the FR01 and then filing it with their insurer and giving a copy to the employee and the employee’s local union office
- Request for Formal Hearing: Parties who disagree with a benefits decision have 30 days to file RF03 with the Office of Administrative Hearings
Minnesota employers are required to have workers’ compensation insurance for their employees. Failure to provide it can result in significant penalties and fines. You can purchase a workers’ comp policy from a private insurance carrier licensed to do business in the state.
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.