WORKERS' COMPENSATION

Workers’ compensation provides benefits to injured employees for accidents or occupational diseases arising out of, and in the course of, their employment. Compensation coverage is available through private insurance carriers licensed by the state, but self-insurance is allowed in both states with approval from the states’ Division of Workers’ Compensation.

Costs vary for individual businesses and are dependent upon type of employment (occupational risk), estimated annual remuneration, and the company’s loss experience.

All businesses with five or more employees (excluding agricultural or domestic labor) must provide workers’ compensation insurance to protect their workers in case of job-related injury, illness, or death. Construction employers with one or more employees must provide workers’ compensation insurance. Companies can offer this protection through a private insurance carrier or they can become self-insured. Premium rates vary depending on the risks associated with special occupations and on the employer’s loss (or injury) experience. Beginning in 1994, insurance rates are set by each insurance company on a competitive basis and employers have the opportunity to shop around for the lowest rates.

As in most states, the premium rates apply to an employee’s total annual salary. The maximum weekly benefit for temporary total disability payments of up to two-thirds of his or her average weekly wage. Additional payments are required if the employee has a permanent impairment or cannot return to work. If the injury results in death, benefits are paid to the employee’s surviving dependents. Missouri’s maximum weekly benefit for the period July 1, 2003 through June 30, 2004 is $662

Missouri’s workers’ compensation rates compare favorably with those of other states. Deregulation of rates, the introduction of competition, and other recent workers’ compensation insurance reforms have lead to dramatic decreases in premiums. Missouri’s rates dropped by 9.4% in 1999 and 7.2% in 2000. In 2001, rates increased by 3.6%. Since 1994, Missouri employers have saved $175 million in premiums. Losses paid have dropped from $605.4 million in 1991 to $487.2 million in 2000.

An additional employer cost related to workers’ compensation is a premium tax to finance the expenses of the Missouri Division of Workers’ Compensation (up to 2%) and a premium surcharge to finance the Second Injury Fund. Both of these charges may be suspended or reduced depending on the amount needed for the administrative costs of the Division or the amount needed to maintain the proper balance of the Fund. During 1994 through 1997 both rates were either suspended or were reduced by 50%. The rates were in effect at their full amounts in 1998 and 1999. During Calendar years 2000 and 2001, the premium tax was suspended, but the surcharge on premiums was 3% and 2.5% respectively. During the calendar year 2002, the state of Missouri will assess a workers’ compensation administrative tax of 1%, and a Second Injury Fund surcharge of 2.5%. In calendar year 2003, the administrative tax is assessed at 2.0% and the Second Injury Fund surcharge is assessed at 4.0%.

To aid in shopping among insurers, the state has set up a toll-free number for employers (888.200.1697). Information on companies with the lowest rates as well as the high, medium, and low rates for any particular class code is faxed back or mailed to the employer shopping for coverage. Additionally, employers can use the web version of the hotline, which provides the insurance rates for all carriers.

The Missouri Divison of Workers' Compensation is on the web at http://www.dolir.state.mo.us/wc/index.htm.