A system that is designed by law to compensate employees for work related injuries, without regard to fault is referred to Workers Compensation. The “Industrial Commission” in Illinois is in charge of setting the rules and resolving the disputes of both the employers and the injured employees.

Coverage for employees starts immediately after hire. The Workers Compensation laws state that all injuries that are caused in whole or in part by the employee’s work are covered. This includes also preexisting conditions that are aggravated by work.

Benefits provided under workers comp include medical care required to cure the injury plus certain disability income benefits, as well as vocational rehabilitation benefits. There is also death benefit for surviving family members if the injuries lead to death of the worker.

All employers in Illinois need to maintain workers compensation coverage- self insured with permission of the Commission or purchase workers compensation coverage with a private insurer-. All employers must also pay 100% of the premium of the workers compensation insurance. All benefits that are paid to injured workers are not taxable to the employees. Employers must also maintain records of all work related injuries. All employers should post a notice in each workplace which must explain workers rights under the Workers Compensation Law and list details of employer’s insurance.

An employer who fails to provide workers compensation because of negligence is guilty of Class A misdemeanor for each day without coverage, punishable by up to 12 months in jail and a fine of $2,500. If the employer knowingly fails to provide workers compensation then the employer is guilty of Class 4 Felony for each day without coverage, punishable by up 3 years in jail and $25,000 fine. The state can also shut down the employer if the employer knowingly fails to provide workers compensation coverage.

The injured employee is required to report the work injury to the employer’s management in writing or orally as soon as possible but not more than 45 days of the injury date. Reporting the injury to another coworker is not sufficient. Employer is required to provide all first aid and medical care, must inform workers compensation insurance company, and must begin making disability payments if disability is expected to last more than 3 days. If the employer disputes the injuries, a written explanation must be provided to the injured employee.

Employers and employees who make fraudulent statements regarding workers comp claims are subject to a conviction of Class 4 Felony, which is punishable by up to 3 years in jail and $25,000 fine.

Premium of workers comp coverage is based on several considerations: (1) Payroll or wages of employees- it determines the amount of exposures of the insurer to potential future disability payments when there is an injury. (2) Nature of work – cost of workers comp for construction workers is significantly higher than office employees. (2) Wages- Payroll- it determines the amount of exposures of the insurer to potential future disability payments when there is an injury. (3)Historical Claims. Previous claims means potentially higher premiums or even rejection by certain private insurers- up to a limit. If insurance companies refuse to insure a particular employer because of past claims or because of the nature of the business, the employer may have to go to the workers comp pool (National Council on Compensation Insurance) to secure the needed coverage.

Premiums charged by insurance companies for workers compensation policy are always estimates, not final numbers. Because the insurance company will be covering all of your workers in the future, no premium can be exactly determined until the end of the policy term at the time when the insurance company audits the payroll. At the end of the policy term if the actual payroll that the employer paid during the policy term is equal to the payroll the employer reported as projected payroll at the time of purchasing the policy then there will be no changes in premium. However, if the employer over-projected the wages at the time of getting the policy then the company may owe the employer a refund. If the employer under-projected the wages at the time of signing up for the coverage, the employer may have to pay more premiums to the insurance company for past coverage.

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