Self-insured workers’ compensation is a type of workers’ compensation plan that makes an employer financially responsible for paying out all workers’ compensation claims from employees. This option, also known as a self-funded workers’ compensation plan, is an alternative to purchasing a workers’ compensation policy from a third-party insurance provider or paying into a state-sponsored workers’ compensation fund that manages and pays the claims on the employer’s behalf.
While most employers purchase workers’ compensation from a third-party provider, more and more are opting for a self-insured plan. According to the California Department of Industrial Relations, California has the largest self-insured workers’ compensation program in the U.S. with nearly 7,000 self-insured employers.
Learn more about what this plan covers, what it’s like to file claims through a self-funded workers’ compensation plan, and how to determine what type of workers’ compensation coverage you have at work.
What Does a Self-Insured Workers’ Compensation Cover?
Employees who suffer an injury or illness as a consequence of their work are entitled to workers’ compensation benefits. Self-insured workers’ compensation must provide the same coverage as third-party workers’ comp insurance. That means you can file a workers’ compensation claim through your employers’ self-insured plan to receive:
- Covered costs for all medical care associated with the work-related injury
- Mileage reimbursements for traveling to and from medical appointments
- Temporary disability and/or permanent disability benefits
- Job displacement voucher and other benefits
- Death benefits, including compensation for lost income, outstanding medical bills, and funeral/burial costs
Note that not all employers are required to have workers’ compensation coverage, and not all employees qualify for workers’ compensation benefits. Factors that can impact whether you must be covered include your industry, your role’s function, and whether you’re a contractor.
How Do Companies Qualify for Self-Insured Workers’ Compensation?
Any employer seeking self-insured workers’ compensation coverage must apply through the Office of Self-Insurance Plans (OSIP). The OSIP oversees the approval process and enforces strict standards for all self-insured workers’ compensation plans.
The employer must be financially stable enough to pay out claims promptly. That’s why the OSIP reviews at least three years of accurate accounting records and credit ratings.
Depending on the business’s status and credit rating, an employer may also be required to pay a security deposit to the Self-Insurers Security Fund or the OSIP, per CA Labor Code § 3701.8.
Filing Claims Through a Self-Insured Workers’ Compensation Plan
When an employer purchases a workers’ compensation policy, the third-party insurance company handles all aspects of your claim. But when there’s no insurance company paying the claims, it can be challenging to determine whom you’ll work with to get your workers’ compensation benefits.
All newly self-insured companies must use a third-party administrator for the first three years. After that, they can manage claims on their own. If your employer has been self-insured for less than three years, a certified third-party claims administrator would manage your claim.
If they’ve met the three-year requirement, you may work with an in-house, OSIP-certified administrator instead. However, most self-insured employers continue to work with third-party claims administrators that manage every part of an injured worker’s claim. Self-insurance groups (SIG) — a group of independently insured businesses that share the financial responsibility of workers’ compensation claims — typically have a third-party administrator.
Does Excess Insurance Affect My Claims Process?
It’s also common for self-insured companies to purchase excess insurance from a third-party provider. Specific excess insurance coverage limits the amount an employer pays for a single claim self-insured retention (SIR) and reimburses the employer when a claim is adjusted for more than their SIR amount. Aggregate excess insurance kicks in when an employer gets multiple large claims in a single year.
Your employer interacts with this provider, not you or your workers’ compensation lawyer.
How Do I Know If My Employer Has Self-Insured Workers’ Compensation?
When you suffer an injury at work, you need to know how to access your workers’ compensation benefits. In many cases, your employer will give you information on workers’ compensation benefits when you report a work-related injury and begin the claims process. Your first step would be to review that paperwork closely to determine whether you’re covered under a third-party or self-insured policy.
Even if you see an insurance provider listed in your employer’s workers’ compensation information packet, they could still be self-insured. That’s because many third-party administrators work for insurance companies. If you see wording that states a claim is “administered by” or “managed by” a third-party administrator, then your employer is likely self-insured.
There are many other steps you can take to find out whether your employer is self-insured for workers’ compensation, including:
- Reviewing the workers’ compensation documentation you receive from your employer when you report a work-related injury and start the claims process
- Revisiting your employee handbook in the benefits section
- Speaking with your human resources department, especially if you weren’t given any workers’ compensation information after reporting an injury
- Requesting workers’ compensation benefits information directly from your employer
Get Help From a Workers’ Compensation Attorney on Your Self-Insured Workers’ Compensation Claim
The process of filing for workers’ compensation benefits and getting the amount you deserve can be difficult for many people injured on the job. That process can be even more challenging when your employer is self-insured. You can work with a Los Angeles workers’ compensation attorney who can help you accurately document your work-related injury, submit your claim to the right person, and ensure you get all your benefits promptly.
If you suffered an injury while at work, you may qualify for workers’ compensation benefits in California. Call and speak to a team member from KJT Law Group today. We offer free case evaluations to injured workers and can guide you on how to get the benefits you need. Call us at (818) 507-8525 or contact us online.