If you have an employee working for you (like a nanny, housekeeper, senior caregiver, etc.), having workers’ compensation insurance is like any other insurance — it offers protection in the unlikely event that you need it.
You never know when your employee may get injured on the job. Your nanny could trip over a toy and sprain her ankle. Your housekeeper could fall down your stairs. Your caregiver could pull a muscle trying to lift your mother from the bed. The unhappy possibilities are endless.
The insurance, which typically costs a household employer less than $1,000 per year (in some states it’s less than $300 for an employee), pays for 100 percent of an employee’s medical care if they’re hurt on the job and a percentage of their lost wages while they recuperate. Without insurance, those totals can run into the tens of thousands of dollars.
Care.com HomePay’s workers’ comp. program, HomeStaff Protect, provides free quotes and access to a top-rated workers’ compensation insurance provider for families.
Check out these answers to five common questions families have about this type of insurance.
- Why Bother?
Only about half the states in the country require employers to have workers’ comp coverage. As a result, many employers think if it’s not required, they probably don’t need it. Workers’ comp is a safeguard for the employee, but, more importantly, it’s financial protection for the employer. In addition to providing benefits to the employee, having a workers’ compensation policy also allows the employer to find short-term help. “The money paid to your employee for lost wages and medical expenses doesn’t come out of your pocket when you have a workers’ compensation policy,” says Tom Breedlove, Director of Care.com HomePay. “Instead, you can set aside the same amount of money you would’ve normally paid your caregiver to find quality back-up care while she recovers.”
- How Can I Sign up?
No matter what anyone might tell you, workers’ compensation isn’t usually offered under any homeowner’s policy (California is the most common exception). As an employer, you can easily access workers’ compensation coverage through HomePay or you can find an agent who specializes in commercial insurance and offers workers’ compensation insurance for smaller companies.You’ll need to provide basic information, including your name and the address where your employee normally works (although it covers an employee who is not at the normal work site – for instance at a vacation house or the park). You’ll also need an employer identification number (EIN), which you should have already from paying employment taxes.
Once the policy is created, it goes into effect almost immediately. It’s common to receive an audit within 30 days after your annual policy expires. You should answer these questions about your payroll and number of employees to keep your renewed policy from being cancelled.
- What Happens If My Caregiver Gets Hurt?
If your employee gets hurt, notify your carrier and include all the pertinent information, like date, time, location, names and contact information. The carrier will generally pay the medical bills directly and send payment to the employee for lost wages.The insurance company will also likely call you, your employee and the person who provided medical treatment. They could even come out to your house (or where the injury occurred) to piece together the details.
Learn more about How Nannies Can File for Workers’ Compensation.
- What If My State Requires It and I Choose Not to Buy It?
If you live in a state that mandates workers’ compensation insurance coverage and you don’t buy it, you’re leaving yourself open to risk if your employee ever gets hurt and files a claim. If that does happen, you might be subject to fees and penalties from the state that could begin retroactively to the employee’s start date.On top of that, you’ll still be responsible for paying your employee’s medical bills and lost wages out of pocket. It’s a scenario no family wants to be presented with, and one that is easily avoidable by knowing the law. To see if workers’ compensation is required where you live, check the requirements in your state.
- Why Can’t I Just Pay the Doctor’s Bill?
Well, it isn’t exactly the correct way of doing things. And just offering your employee a cash payout to take care of the injury so you avoid a claim can come back to haunt you. If your employee’s injury recurs or flares up, you could face even more bills.
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Julia Quinn-Szcesuil is an award-winning freelance writer and a mom to two girls. She lives in Massachusetts and has written for local and national publications.
* The information contained in this article should not be used for any actual caregiver relationship without the advice and guidance of a professional advisor who is familiar with all the relevant facts. The information contained herein is general in nature and is not intended as legal, tax or investment advice. Furthermore, the information contained herein may not be applicable to or suitable for your specific circumstances and may require consideration of other matters.
