Illinois workers' compensation insurance
Workers' compensation insurance covers the cost of work-related injuries. It's required for all Illinois businesses that have employees, with limited exceptions. This policy provides medical benefits for workers who are injured on the job.
Who needs workers’ comp insurance in Illinois?
Each state has different workers’ compensation laws, and in Illinois, workers’ compensation insurance is mandatory for all businesses that have employees. This includes full-time employees and part-time employees. Illinois law requires employers to purchase a policy through an insurance company or obtain permission to self-insure.
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Do you need workers’ compensation if you are self-employed?
According to state law, sole proprietors, business partners, corporate officers, and members of limited liability companies (LLCs) are exempt from carrying workers' comp for themselves. Independent contractors are not eligible for workers' compensation benefits in Illinois.
The exception for this, however, are businesses that engage in hazardous work, such as construction workers. These businesses are required to have workers' compensation coverage for all individuals, regardless of whether they are independent contractors, owners, or sole proprietors.
However, even when it's not required by law, workers' comp is a wise choice because of the protection it provides. This policy would pay your medical bills and cover the cost of medical treatment for work injuries – which is crucial since health insurance can deny work-related injury claims.
How much does workers' compensation insurance cost in Illinois?
Estimated employer costs for workers’ compensation in Illinois are $0.82 per $100 of covered wages [PDF].
Your workers' comp insurance cost is calculated based on a few factors, including:
- Payroll
- Location
- Number of employees
- Industry and risk factors
- Coverage limits
- Claims history
How does workers’ comp insurance work in Illinois?
Employees are eligible for workers' compensation benefits when they suffer a work-related injury or any occupational diseases. Workers' compensation insurance can help cover the costs of medical treatment and some lost wages while injured employees are unable to work.
In Illinois, workers' comp coverage includes:
- Medical services (emergency treatment, physical rehabilitation, etc.)
- Permanent total disability benefits
- Temporary total disability benefits
- Permanent partial disability benefits
- Temporary partial disability benefits
- Vocational rehabilitation, if an injured worker is not physically able to return to work
- Death benefits in the event of a fatal injury
For example, if a software developer is diagnosed with carpal tunnel syndrome due to keyboard overuse, your workers' comp policy would pay for their medical treatment, including long-term medication and physical therapy.
Or, if an employee at your IT consulting firm trips in the office stairwell and suffers a concussion, then your workers' comp policy would pay for their ambulance ride and emergency room visit.
To receive compensation for medical expenses, employees must visit a health provider approved by their employer or its insurer.
Policies usually include employer's liability insurance, which helps cover legal expenses if an employee blames their employer for an injury. However, the exclusive remedy provision in most workers' comp policies prohibits an employee from suing their employer once they accept workers' compensation benefits.
Illinois workers' compensation claims
Employees are required to inform their employer within 45 days of getting injured at work.
After learning about the injury, the employer must inform the workers’ compensation insurance carrier or administrator of the event. If the injured employee cannot return for more than three work days because of the injury, the employer must then:
- Continue to pay the affected employee, even if the workers’ comp claim has not yet been made with the insurance company
- Provide a written explanation to the employee with any additional documentation or information that is required for their claim
- If the claim is denied, employers need to include the reason(s) as to why benefits are being denied in the written explanation to the employee
- File the “Employer’s First Report of Injury” with the Illinois Workers’ Compensation Commission (IWCC)
The IWCC facilitates workers’ comp claims for employers and their employees.
What are the penalties for not having workers’ comp insurance in Illinois?
According to Illinois workers' compensation laws, there are serious penalties for failure to comply with regulations for carrying workers’ comp insurance. Penalties under the Illinois Workers' Compensation Act include:
- An employer could be fined $500 for each day that it did not carry workers’ compensation insurance, at a minimum of $10,000.
- The offense can be declared a misdemeanor if the failure to carry coverage is found to be negligent.
- The offense can be declared a Class 4 felony if the failure to carry coverage is found to be knowing and willful.
- A felony conviction for failure to carry workers’ comp in Illinois is punishable by imprisonment for up to three years, with a fine that can equal up to $25,000.
- If the company fails to pay, a corporate officer could be liable for fines.
Illinois workers' compensation law for settlements
Most workers’ compensation settlements in Illinois result in a lump-sum payment. The state allows payment installments for a settlement in two different ways:
- A wage differential claim, which means that the employee would return to their job for less pay than they had before the injury, but also receive settlement payments equal to their previous pay.
- Permanent and total disability, which would an injured employee who is not able to return to work.
Although settlements usually mean that a worker has closed their rights to receive workers’ compensation benefits, occasionally medical rights are still kept open if the person is more than likely to require extensive future medical care as a result of the injury.
Workers’ compensation statute of limitations
The statute of limitations for the State of Illinois includes the following regulations for workers’ comp:
- Employees must provide first notice of the injury to their employer within 45 days of the event to receive workers’ comp benefits.
- A workers’ compensation claim must be filed with the IWCC within two years of receiving the last payment of compensation from an employer, or within three years from the date of the injury.
If the employee injury is resulting from ongoing or repetitive trauma, and not one specific incident, then the date of injury is considered to be the date that a person reasonably would have become aware of the injury and concluded that it was caused by their employment.
