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 employers with one or more employees to carry workers’ compensation, and they typically pay between 12 cents to $26.39 per $100 of payroll.
Pennsylvania Workers’ Compensation Insurance Providers
Employers can purchase workers’ compensation insurance from more than 300 private workers’ comp insurance companies authorized to sell policies in Pennsylvania or 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
Small business owners who want flexible payment options for workers’ comp
Small manufacturers who want a regional carrier focused on great claims service
Midsized oil and gas companies with mobile workforces across multiple states
Top-tier construction, forestry, and transportation firms, or other high-hazard businesses
Mid- to large-sized manufacturers, including manufacturers of durable goods and food
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.
The Hartford, an industry leader, has created affordable products for small businesses and the unique risks they face. The Hartford works with businesses of all types and sizes, and the carrier offers workers’ comp for most industries it serves. Along with workers’ compensation insurance, The Hartford offers a full range of business insurance policies.
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.
New Jersey Manufacturers is a regional carrier that offers workers’ compensation in Pennsylvania as well as Connecticut, Delaware, Maryland, New York, and New Jersey. Rated an ‘A+’ (Superior) by A.M. Best, a leader in rating the financial stability of insurance companies, New Jersey Manufacturers is a top workers’ compensation provider in the mid-Atlantic area.
Travelers Group is the largest workers’ compensation insurance provider in the country, writing the most risks. It’s the best choice for small oil and gas companies with a mobile workforce or additional out-of-state offices. Travelers Group works with businesses of all sizes and in most industries, but they’re most competitive with companies that have 50 or more employees.
Despite its large size, Travelers Group is responsive as a national carrier with local claim professionals available, offering fast and easy service. The insurer also offers proprietary risk control services to help your business recognize and prevent accidents before they happen.
Employers in select high-hazard classes, such as construction, forestry, and transportation, may want to work with Eastern Alliance for its specialty risk option. 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 5 years of currently valued loss information.
Founded in 1997 in Lancaster, Pennsylvania, and licensed in 43 states, Eastern Alliance specializes in workers’ compensation insurance. The carrier offers risk management, holistic claims management, and pay-as-you-go payment options to its growing base of more than 10,000 policyholders. The workers’ comp-only carrier provides three coverage options: traditional, loss-sensitive, and specialty risk.
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. The company also offers general liability, commercial auto, and commercial package policies like a business owner’s policy, but for growing and larger businesses.
Although PMA Insurance Group serves fewer industries, it’s intimately familiar with the ones it serves, offering specialized risk solutions. 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 have the option to 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.
What Workers’ Compensation Insurance Is
Workers’ compensation insurance covers employees who are injured or become ill from work-related duties. Workers’ comp pays for medical treatment and care costs incurred from the occupational injury or illness while also covering the employee’s weekly wages during their recovery period. It can also pay disability settlements or funeral expenses if something more serious occurs.
While state workers’ comp requirements vary, most mandate limits of $1 million per incident with a $2 million aggregate. This means an employer’s policy can pay an injured worker a maximum of $1 million. If there are additional workers injured by the same accident or within the same year, no more than $2 million can be paid out for all the claims. Claims that exceed your policy aggregate could be subject to a civil lawsuit.
What Pennsylvania Workers’ Compensation Insurance Covers
Pennsylvania workers’ compensation insurance covers employees with a work-related injury or illness, providing them with the necessary medical treatment to return to work. It can also provide payments to an employee’s beneficiaries or dependents if the employee dies from a work-related accident as well as burial costs.
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 2 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.
For employers, workers’ compensation insurance in Pennsylvania covers financial liabilities for on-the-job injuries and illnesses as well as legal representation if an employee files a lawsuit. Regardless of who was at fault in an accident or injury, an injured worker may receive benefits.
What Pennsylvania Workers’ Compensation Doesn’t Cover
Workers’ compensation covers employees’ workplace injuries and illnesses by reimbursing a portion of their lost income and paying their care-related costs, such as medical bills. Employees only receive 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.
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
- Not following proper safety protocols or not wearing appropriate safety gear
- Under the influence of drugs or alcohol
Additionally, workers’ comp does not cover third party, or nonemployee, injuries. Those incidents are usually covered by general liability insurance.
Pennsylvania Workers’ Compensation Insurance Costs
Pennsylvania workers’ compensation insurance costs are determined by many factors, including payroll, work risk, and loss history. The average Pennsylvania employer pays $1.44 per $100 of payroll, according to the National Association of Social Insurance, but premiums range between 12 cents to $26.39 per $100.
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. Like the National Council on Compensation Insurance (NCCI), PCRB collects loss, premium, and payroll data, and recommends workers’ compensation rates.
The basic formula for determining workers’ comp premiums is:
Payroll (per $100) x Classification rate x Experience modifier rate = Premium
The employer’s experience modifier rate (EMR), or e-mod, 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 costs by state vary widely due to different classification codes.
Pennsylvania Workers’ Compensation Insurance Cost Example
The risk and nature of an employee’s work is 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 8810) has a rate of 36 cents per $100 of payroll. A typical office job is considered a relatively safe line of work. But rates tend to increase in industries with a higher risk of injury, such as construction businesses.
A carpenter in Pennsylvania (class code 651) has a rate of $18.99 per $100. Employers in similar high-risk industries can expect to pay higher premiums. Still, if you compare a commercial carpenter to a residential carpenter (class code 652), the rate jumps to $25.65.
Pennsylvania Workers’ Compensation Audit Requirements
Most insurance carriers require a premium audit at the end of a workers’ comp policy period because a business’s payroll and staff can change at any time. The audit is used to determine 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 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.
How to Reduce Pennsylvania Workers’ Comp Costs
Workers’ compensation insurance in Pennsylvania can be expensive, but it’s legally required for employers. An employer’s premium is based on its classification code, the insurer’s rate for the classification, and the employer’s annual payroll. Insurance rates vary across carriers, so employers should plan to obtain multiple quotes and ask questions to understand their rates.
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 2 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’ Compensation Insurance Laws
Generally, workers’ compensation insurance is mandatory in Pennsylvania for all employers who have one or more employees, whether they’re part-time or full-time, including family members. The Pennsylvania Workers’ Compensation Act is a no-fault system designed to compensate workers for lost wages and medical expenses after a work-related injury or occupational illness.
Certain exemptions exist, and an employer may be excluded from having to provide workers’ compensation insurance in Pennsylvania only if all of its workers fall into one or more.
Some workers might be exempt from Pennsylvania workers’ compensation if they are:
- 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.
Pennsylvania Workers’ Compensation Insurance 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 7 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.
Pennsylvania Workers’ Compensation Insurance Requirements
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 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
Additionally, Pennsylvania employers have the right to establish a panel of designated health care providers, and it must be properly posted in the workplace and acknowledged by all employees. Injured workers must seek treatment with one of the designated providers for 90 days from the date of the first visit.
After 90 days, employees must notify their employer of treatment by a nondesignated provider within 5 days of the first visit to that provider. The employer may not be required to pay for treatment rendered by a nondesignated provider prior to receiving this notification.
All businesses should also keep accurate records of any workplace injuries and report any incidents to their insurer and the bureau as soon as possible.
Pennsylvania Workers’ Compensation Insurance Penalties
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 7 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.
Pennsylvania Workers’ Compensation Self-insurance Requirements
Employers may self-insure if they secure approval from the Pennsylvania Department of Labor and Industry. You must submit your business’s latest audited financial statements. Self-insured employers are required to set aside funds to pay workers’ compensation claims and post-security for future claims. A self-insurance permit is only valid for a 12-month period, and you must re-apply no later than 3 months prior to the expiration of the current permit
Employers interested in self-insurance should be larger, financially healthy, and in operation for 3 or more years. As a prerequisite for retention of self-insured status, employers are also required to maintain an accident and illness prevention program, and they must 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.
How to File a Pennsylvania Workers’ Comp Claim
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 7 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 PA 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.
Pennsylvania Workers’ Compensation Insurance Frequently Asked Questions (FAQs)
Workers’ compensation insurance regulations vary widely from state to state, making it complicated for business owners to understand. Here are a few commonly asked questions about workers’ comp in Pennsylvania.
What is the maximum wage benefit for Pennsylvania workers’ compensation?
As of January 1, 2019, the maximum compensation payable by workers’ compensation insurance in Pennsylvania is $1,049 per week—an increase of 2.3% from 2018. Wage-loss benefits are equal to approximately two-thirds of an employee’s average weekly wage, up to a weekly maximum. Pennsylvania workers’ comp law does not allow for a cost-of-living increase.
Do family members and minors have to be covered by workers’ compensation insurance?
Pennsylvania state law requires employers to cover any employee, regardless of the number of hours worked per week or whether the person is your spouse or child.
How soon are wage-loss payments made to an employee?
Employees must be unable to work more than 7 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 7 days is received once employees have been off work for 14 days.
Can I stop paying wage-loss benefits to an employee if they receive a job offer?
You may offer an alternate open position to an injured employee, within their medical restrictions and in their local area, after they begin to receive benefits. Employees have the right to either accept or decline the job offer. If your employee declines the job offer, then you may petition a workers’ comp judge to either reduce or stop their wage-loss benefits based upon that job.
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.