Workers’ compensation insurance pays for employees’ medical costs and replacement income if they experience a work-related injury or occupational illness. Workers’ comp is required by law in most states. Pennsylvania requires business owners with one or more employees to carry workers’ compensation, and the average cost is $1.35 per $100 of payroll.
The Hartford is a small business insurance expert who can quickly underwrite workers’ compensation policies for most industries. It only takes a few minutes to get a quote, and you’ll be able to sign up for pay-as-you-go workers’ comp.
What Are Pennsylvania Workers’ Compensation Requirements?
Every state has its own laws for workers’ compensation. In Pennsylvania workers’ compensation insurance is mandatory for just about any employer who has employees, whether they’re part-time or full-time, including family members. The Pennsylvania Workers’ Compensation Act sets up a no-fault system designed to compensate workers for their lost wages and medical expenses regardless of who caused their work-related injury or illness.
In Pennsylvania, employers are required by law to post a notice containing the name, address, and telephone number of the party to contact regarding workers’ compensation claims or to request information. Employers found not in compliance or suspected of not providing workers’ comp insurance should be reported to the Compliance Section, Pennsylvania Bureau of Workers’ Compensation.
Employers are also required to take reasonable care and action for the safety of their employees by:
- Providing a safe place to work
- Providing an adequate number of workers and competent staffing
- Providing safe tools and equipment
- Warning the employee of inherent occupational dangers
- Making and enforcing rules for the safety of all employees
Who Doesn’t Need Workers’ Compensation Insurance in Pennsylvania?
While most employers need a workers’ compensation insurance policy for even a single part-time employee, some employers may be exempt from this obligation if all of its workers fall into one or more of the following categories:
- Federal workers
- Railroad workers
- Agricultural workers who work fewer than 30 days or earn less than $1,200 per calendar year from a sole employer
- Sole proprietor or general partners
- Employees who are granted an exemption due to religious beliefs or their executive status
- Licensed real estate salespersons or brokers and licensed insurance agents working on a commission-only basis and qualify as independent contractors for tax purposes
- Casual workers—those not in the regular course of the business of the employer
- Domestic workers who have not elected with the Pennsylvania Department of Labor and Industry to come under the provisions of the Workers’ Compensation Act
Coverage is also required for businesses with employees under a contract of hire made in Pennsylvania that could be injured outside of the state—even in another state whose workers’ compensation laws may not apply or outside the United States and Canada. Employers may elect to include domestic workers for workers’ comp coverage, and they may request an exemption for certain religious members and executive officers.
How Much Does Workers’ Compensation Insurance Cost in Pennsylvania?
Pennsylvania workers’ compensation insurance costs are determined by many factors, including payroll, work risk, and loss history. The average Pennsylvania employer pays $1.35 per $100 of payroll, according to the National Academy of Social Insurance.
The basic formula for determining workers’ comp premiums is:
Payroll (per $100) x class code rate x experience modifier rate (EMR) = Premium
To determine Pennsylvania workers’ compensation premiums, the Pennsylvania Compensation Rating Bureau (PCRB), a nongovernment agency licensed and regulated by the Pennsylvania Insurance Department, assigns each insured employer a classification code that most accurately describes its line of work. The PCRB collects loss, premium, and payroll data and recommends workers’ compensation rates for each class code. Work that entails more risk gets a higher rate than others.
Sample Pennsylvania Workers’ Compensation Rates by Class Code
Industry Class Code
0665 Painting Contractor
0815 Auto Body Repair
0951 Sales Professional
0953 Clerical - Office
0943 Home Healthcare
0959 Animal Shelters
0992 Septic Tank Cleaning
In addition to class code rates, employers may also have an EMR that may raise or lower their premium. An EMR is a numeric representation of the company’s claim experience. Generally, employers with less severe accidents than other similar businesses pay less in premiums.
Workers’ Comp Cost Example
The risk and nature of an employee’s work are the basis for classification codes. The more on-the-job risk means a higher workers’ comp premium for an employer. For example, in Pennsylvania, a clerical office (class code 0953) has a rate of 8 cents per $100 of payroll. A typical office job is considered a relatively safe line of work.
Rates tend to increase in industries with a higher risk of injury, such as construction businesses. A mason in Pennsylvania (class code 653) has a rate of $5.25 per $100 because they’re much more likely to suffer a workplace injury. Employers in similar high-risk industries can expect to pay higher premiums.
How to Save on Pennsylvania Workers’ Comp
Workers’ compensation insurance in Pennsylvania can be expensive, but it’s legally required for most employers. Here are five ways employers can reduce workers’ comp costs in Pennsylvania:
- Develop a certified workplace safety program: By establishing a workplace safety committee, certified by the bureau, employers are eligible to receive a 5% discount on their annual premium.
- Offer job openings to injured or ill workers: By law, employers are obligated to offer available positions to an injured worker if they’re capable of performing the job. By helping an employee return to work more quickly, you can save on wage-loss benefits.
- Build a list of designated medical providers: An employer may be relieved of its liability to pay for medical services if they post a list of six or more designated healthcare providers, and an employee chooses a nondesignated provider during the first 90 days of treatment. After the initial 90-day period, injured employees can choose their own healthcare provider.
- Strive for an injury-free workplace: Employers who have not experienced a compensable lost-time injury in the preceding two years may receive premium discounts for providing a safe working environment.
- Report suspected workers’ compensation fraud: Fraud affects more than just the business committing it — it contributes to the cost of doing business for everyone. Employers who commit fraud by understating payroll or misclassifying employees make it more difficult for honest employers to compete in the same market.
Pennsylvania Workers’ Comp Audit Requirements
Insurance carriers use a payroll estimate to calculate a business’ premium, so most require a premium audit at the end of the policy because a business’s payroll and staff can change at any time. The audit determines if your business is paying the correct premium by verifying your business’s payroll and evaluating your business operations.
An audit ensures the carrier hasn’t misclassified a business at the beginning of the policy period. The actual premium is then determined by the insurance company when the policy expires. Changes in business operations can result in a higher or lower premium, and an employer is billed or reimbursed for the difference.
Pennsylvania business owners can prepare for a premium audit by putting together relevant documents, including:
- Tax reports
- Payroll records
- Profit and loss (P&L) statements
- Cash disbursement journal
- General ledger
- Check register
- Certificates of insurance for subcontractors
- Corporate minutes, if applicable
Pennsylvania business owners may also be subject to a test audit by the state to monitor the accuracy and consistency of carrier premium audits. The test audit also verifies that the statistical data reported to the PCRB is accurate.
Where Can I Obtain Workers’ Compensation Insurance in Pennsylvania?
Employers who need workers’ compensation insurance can get a policy from more than 300 private insurance companies authorized to sell coverage in Pennsylvania. If multiple carriers refuse to offer coverage, then business owners can go to the state’s workers’ compensation fund. Businesses approved by the Pennsylvania Department of Labor and Industry may self-insure.
Top Providers for Workers’ Compensation Insurance in Pennsylvania
Flexible payment options
Small manufacturers who want great claims service
Mid-sized oil and gas companies with mobile workforces
High-risk businesses, including construction, forestry, and transportation
Mid- to large-sized manufacturers
A basic workers’ compensation policy with The Hartford is a great choice for Pennsylvania business owners who want flexible payment options. The carrier offers a pay-as-you-go option, which translates to lower upfront costs for your business. Breaking your premium cost into payments based on payroll can result in improved cash flow.
New Jersey Manufacturers
New Jersey Manufacturers is a good fit for smaller manufacturing employers seeking a local carrier familiar with the region and a better understanding of risks in certain industries. The insurer focuses on workplace safety by offering customers the tools they need to help with loss prevention efforts.
Travelers is the largest workers’ compensation insurance provider in the country, writing a wide variety of businesses. Because of its deep pockets and national presence, Travelers is the best choice for small oil and gas companies with a mobile workforce or additional out-of-state offices. The insurer works with businesses of all sizes and in most industries but is most competitive with companies that have 50 or more employees.
Employers in select high-hazard classes, such as construction, forestry, and transportation, may want to work with Eastern Alliance for its specialty risk option that allows the insurer a bit more flexibility in its policy options. However, certain requirements must be met. Qualifying companies must have a minimum premium of $50,000, a proactive risk management plan, operate in the carrier’s main service territory, and have at least five years of currently valued loss information.
PMA Insurance Group
PMA Insurance Group best serves mid- to large-sized businesses in a limited number of industries, including manufacturing. PMA has more than 100 years of experience helping businesses with workers’ compensation insurance. It also offers a tool called PMA Cinch, which allows clients to analyze risk trends to take quick corrective action and enhance their operating performance to lower costs.
Pennsylvania State Workers’ Insurance Fund
Pennsylvania employers also can obtain insurance from the State Workers’ Insurance Fund (SWIF). SWIF is required to provide coverage to all businesses in the state, especially those that may have difficulty obtaining coverage from a private insurance company, including new businesses with a lack of experience and businesses in high-risk industries.
Can Pennsylvania Business Owners Self-Insure?
Employers who want to save on the costs of expensive workers’ compensation premiums can opt to self-insure. This option is generally reserved for those with the financial resources to cover employee risk properly.
To self-insure in the state of Pennsylvania, employers must:
- Complete an application with the Bureau of Workers’ Compensation
- Pay the $500 nonrefundable application fee
- Provide three years of loss history
- Be in business for at least three years
- Purchase excess insurance
- Provide audited financial records
- Post a letter of credit, surety bond, or government securities as collateral
As a prerequisite for retention of self-insured status, Pennsylvania asks employers to maintain an accident and illness prevention program and to file an annual program report with their renewal application. Additionally, five or more similar employers with an aggregate net worth of no less than $1 million and a required amount of combined annual premium may be allowed by the bureau to form a group self-insurance fund.
What Does Workers’ Compensation Insurance in Pennsylvania Cover?
Workers’ compensation insurance in Pennsylvania typically provides coverage for employees in five areas of loss:
- Medical expenses: Covers the cost of reasonable and related medical care obtained for a work injury, including ongoing care costs, such as physical therapy. Preexisting conditions, known or unknown, that are aggravated by a person’s job are also covered.
- Partial disability benefits: Compensates an employee unable to work at full capacity, payable up to 500 weeks
- Total disability benefits: Compensates an employee when they are unable to work for up to 104 weeks. After two years, an employee may be asked to undergo an Impairment Rating Evaluation (IRE) by the workers’ compensation insurance carrier.
- Specific loss benefits: Pays for circumstances related to amputation or loss of various body parts, loss of hearing or vision, and scarring or disfigurement. Payments are equal to the total disability benefit rate.
- Death benefits: Provides funeral expenses up to $3,000 and compensation to a spouse or minor dependents if an employee dies from a work-related injury or illness within 300 weeks after injury.
Regardless of who was at fault in an accident or injury, an injured worker may receive benefits. After benefits begin, business owners may offer an injured employee an alternate open position that fits their medical restrictions and is in their local area. Employees have the right to decline the job offer, but the employer can then petition a workers’ comp judge to either reduce or stop the employee’s wage-loss benefits based upon that job.
For employers, workers’ compensation insurance in Pennsylvania usually includes employer’s liability to cover financial liabilities for on-the-job injuries and illnesses as well as legal representation if an employee files a lawsuit.
What Pennsylvania Workers’ Compensation Doesn’t Cover
Employees only receive workers’ comp benefits if their injury occurs in the scope and course of their regular work duties. If they’re injured outside of work, it typically won’t qualify for a claim. This means Pennsylvania workers’ compensation insurance usually doesn’t cover self-inflicted injuries or injuries sustained while:
- Commuting to or from work
- Committing a crime or violating company policies
- Ignoring proper safety protocols or not wearing appropriate safety gear
- Under the influence of drugs or alcohol
Pennsylvania Workers’ Compensation Coverage Example
Cindy works for a Pittsburgh dry cleaners. While working, Cindy burns her hands on one of the machines. She is rushed to the emergency room (ER) to be treated and is told later she won’t be able to return to work for eight weeks while her burns heal.
Her ER visit and subsequent doctor’s appointments are paid for by her employer’s workers’ compensation policy. Once Cindy is out of work for seven calendar days, her temporary total disability payments kick in and are approximately two-thirds of average weekly wage. These first seven days are covered retroactively for Cindy because she’s unable to work for eight weeks.
What Are the Penalties for Not Having Workers’ Compensation Insurance in Pennsylvania?
Failure to carry workers’ compensation insurance in Pennsylvania can present employers with civil and criminal risks. Misdemeanor convictions can result in a $2,500 fine and up to one year in jail for each day you’re in violation. Felony convictions can result in a $15,000 fine for each day you’re in violation and up to seven years imprisonment.
An employee can sue uninsured businesses for work-related injuries or diseases. Not only may an employee recover amounts in excess of those allowed under workers’ comp, but the employer may be criminally charged for each day’s failure to maintain continuous coverage. Additionally, the employer may be required to pay for all benefits awarded to an employee by a workers’ compensation judge.
How Do I File a Workers’ Compensation Claim in Pennsylvania?
If an employee experiences a workplace injury or occupational illness, everyone should follow carefully laid out protocols. This protects the rights of both the employees and the employer. Failure to comply with proper procedures while filing the claim can result in injured workers forfeiting claims or employers being subject to civil penalties and lawsuits.
The steps to file a Pennsylvania workers’ compensation insurance claim include:
- The employee seeks medical attention and notifies the employer of the incident causing injury within 21 days.
- The employer must electronically file a First Report of Injury within 48 hours for every injury resulting in death and within seven days for all other injuries that result in disability lasting more than a day, shift, or turn of work.
- The employer is required to report employee injury to their insurance carrier immediately or, if self-insured, to report them to the person responsible for managing the employer’s workers’ compensation program.
- Within 21 days from the date the employee provides notification of an injury, the employer or insurance carrier accepts or denies liability for the injury and gives notice to the employee and the Pennsylvania Bureau of Workers’ Compensation.
- Employers must use the Statement of Wages to calculate the employee’s wages and should send a copy to the injured employee. This form must be submitted to the bureau.
These timelines are subject to change based on various factors, and unique circumstances surrounding each claim will impact the flow. The Pennsylvania Department of Labor and Industries provides the complete workflow of a workers’ comp claim here.
Workers’ Compensation Deadlines
To ensure adequate coverage from the start, Pennsylvania employers should obtain workers’ compensation insurance as soon as they hire an employee, whether that person works full- or part-time. Coverage gaps can result in your carrier denying a claim, or you might face a penalty for failing to provide legally required benefits.
Here are some key workers’ comp insurance deadlines in Pennsylvania to know:
- Employees have 120 days to report an injury to their employer
- If employees do not provide notice within 21 days, they are not entitled to recover workers’ comp benefits until the date that they give notice, as long as notice is given within 120 days
- Employers must immediately report all work-related injuries to their insurance carriers, or if self-insured, the person responsible for the management of its workers’ compensation program
- Employers must submit a First Report of Injury electronically within 48 hours for an injury resulting in death or within seven days for any other condition
- Employers must file annual reports of any compensation paid to employees, due by April 15 each year
- Employers must pay all medical bills for work-related injuries within 30 days of receipt and pay compensation to an employee within 21 days
Talk to your insurance company to learn about deadlines you must follow to comply with the requirements of your specific workers’ compensation policy.
Employees must be unable to work more than seven calendar days, including weekends, before workers’ comp payments for disability are payable. Benefits for time lost from work are payable eight days after the injury. Retroactive payment for the first seven days is received once employees have been off work for 14 days.
Pennsylvania Workers’ Comp Resources
- Contact Information
- Department of Labor and Industry: Workers’ Compensation
United Plaza Building
30 S. 17th St., Suite 1500
Philadelphia, PA 19103-4007
- Department of Labor and Industry: Workers’ Compensation
- Useful Links
Workers’ compensation insurance is mandatory in Pennsylvania for all employers who have one or more employees. Workers’ compensation covers workers for medical expenses and lost income after a work-related injury or illness, and it protects your business from potential lawsuits. Keep your workers’ comp costs low by providing a safe work environment and stringent protocol.
The Hartford can help Pennsylvania employers find broad workers’ compensation insurance coverage while offering flexible payment options. The online application process takes just minutes to complete, and you’ll have the workers’ comp needed to cover you and your employees for work-related incidents.