Injured workers may have a lot of grievances with their employer, especially if their claim for workers’ compensation benefits is denied. An employee may try to argue that because their employer does not carry a separate workers’ compensation insurance policy, the employer is in the wrong and their claim should be approved. However, some employers in Pennsylvania have the option to be self-insured, meaning they do not need to carry a separate workers’ compensation policy.
Requirements for self-insured status
To be eligible for self-insured status, employers need to show they are financially able to pay all benefits they may be responsible for under the Workers’ Compensation Act and that they have an adequate program for the prevention of accidents and illnesses.
A self-insured employer must also post security that covers its liability. A self-insured employer must also purchase enough insurance to protect it and workers in the event of a large claim or catastrophe. Finally, self-insured employers must provide a means for the proper adjustment and administration of potential claims.
Factors considered to be self-insured
The Bureau of Workers’ Compensation will consider several factors when determining whether an employer is financially able to be self-insured. First, the bureau will consider whether the employer is financially able to easily liquidate funds necessary to cover the liabilities it may face. This includes examining the employer’s liquid assets, whether they could be exposed to significant losses and whether the employer has an excess in insurance protection.
In addition, the employer must be able to prove that its current long-term financial health and solvency shows it would be able to liquidate in the future as a self-insurer should they face liability. The bureau will examine audited financial statements and other information demonstrating the employer’s financial health.
One requirement for being a self-insured employer is to post security. The security must be as much or more than the employer’s outstanding liability for workers’ comp plus an additional amount determined by a bureau calculated formula.
Some employers can be self-insured
As this shows, if an employer is lawfully self-insured, a claim brought by an employee stating the employer is uninsured is baseless. If an employer meets all requirements, they can be self-insured rather than carrying a separate workers’ compensation policy.