Kentucky workers’ compensation insurance

Each state has different workers’ compensation laws, and in Kentucky, workers’ compensation insurance is mandatory for all employers with one or more employees.

Kentucky’s laws require virtually all public and private-sector employers to provide coverage for employees. Businesses that are not required to provide workers’ comp include:

• Agricultural businesses
• Any person or entity (with less than two full-time employees) employing domestic workers in a private home
• Employers with workers covered under federal workers’ compensation programs (e.g., railroad and maritime workers)
• Certain religious organizations
• Any homeowner employing a residential maintenance or repair person for up to 20 consecutive workdays

However, employees in all of the above categories may voluntarily participate in their organization’s workers’ comp program.

Conversely, eligible employees may elect to reject workers’ comp protection by signing a Form 4 Waiver (“Employee’s Notice of Rejection of Workers’ Compensation Act”). They must file this form with the Kentucky Department of Workers’ Claims. It will remain effective until withdrawn.

As in most states, determining who should be treated as an independent contractor can be a difficult issue.

The State of Kentucky workers’ comp department looks at four main factors to determine independent contractor status:

• The type of work the contractor is doing
• How much control the employer has over the details of the work being performed
• The professional skills of the independent contractor
• The intentions of both parties

If state regulators rule that your independent contractors are misclassified and should be considered employees, you will be required to provide them workers’ comp insurance.

In general, you have to include yourself in your company’s workers’ compensation coverage. The exceptions are if:

• You’re a sole proprietor, unless you have employees, in which case then you must provide workers’ comp for them.
• You’re part of a partnership that owns the firm.
• You’re a qualified member of a limited liability company (LLC), which means that you participate in making decisions and share in profits and losses.

All of the above individuals can elect to participate to receive the benefits of a workers’ compensation policy. It's recommended to that these individuals do so even when it’s not required, as medical bills can become expensive, and your health insurance company can deny an injury claim if it's related to work.

When an employee suffers a workplace injury or develops an occupational disease, workers' compensation covers the cost of their medical care. It also provides disability benefits while the worker is recovering or if they suffer permanent impairment or disfigurement.

Workers' compensation benefits [PDF] for injured workers in Kentucky include:

• Paid time off of work during recovery (usually around two-thirds of the employee's average weekly salary)
• Paid medical expenses (emergency treatment, prescriptions, physical therapy, and other required medical care)
• Temporary total disability benefits (TTD)
• Permanent partial disability benefits
• Permanent total disability benefits

The amount that the worker receives for disability benefits is usually dependent on the impairment rating that is determined by their doctor. Temporary total disability benefit payments continue until the employee returns to work or reaches maximum medical improvement.

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.

Policies usually include employer’s liability insurance which helps cover legal costs if a worker sues their employer over an injury. However, the exclusive remedy provision in most workers' comp policies prohibits an employee from suing their employer if they accept workers' comp benefits.

Kentucky business owners can compare quotes and purchase a policy from private insurance companies. TechInsurance offers this service with our online insurance marketplace.

If they’re unable to qualify, they can buy it from the state’s assigned risk residual market, the Kentucky Employers’ Mutual Insurance Authority. This insurance coverage is provided from a competitive state fund and is a last resort for any employers that are unable to qualify for standard insurance coverage due to a high-risk status.

Kentucky employers are able to self-insure their workers’ compensation claims, provided that they qualify for it. This means that they would pay for their own workers’ comp medical and rehab benefits rather than having them paid by an insurance company.

Because self-insured employers are responsible for all workers’ compensation costs, the state has a formal process in place for reviewing an employer's ability to self-insure their workers’ comp claims.

To apply for self-insurance status, businesses must submit their three most recent certified financial statements along with a completed Form SI-02, titled the “Employers Application for Permission to Carry His Own Risk Without Insurance.” This application must be filed at least two months prior to the inception date of the desired plan.

Kentucky businesses operating without workers’ comp insurance may receive fines of $1,000 per employee for each day in which they fail to provide the mandated coverage. Businesses who fail to purchase this coverage may be subject to additional penalties, which include:

• A cease operation order for your business until it is in compliance with the state’s workers’ compensation requirements
• Criminal penalties, which include fines, jail time, or both

A workers’ compensation settlement is an agreement between the injured employee, their employer, and the insurer that will resolve a workers’ compensation claim. This agreement will benefit both the employee and the employer.

Kentucky workers’ comp settlements may be reached either with or without a formal hearing, and they usually come in the form of a lump-sum payment. However, some settlements are paid over a specified period of time.

Workers’ comp settlements in Kentucky differ slightly from other states in that they don’t necessarily remove the possibility of receiving future payments once they are agreed upon. The state allows the claim of an injured employee to be reopened if the person’s condition deteriorates within four years.

All settlements are subject to the approval of the Kentucky Department of Workers’ Claims. To finalize a settlement, an employee must file a special form based on the nature of their injury or illness that precipitated the workers’ comp claim. You can contact the Kentucky Department of Workers’ Claims to request this form.

In the state of Kentucky, the statute of limitations for workers’ comp claims is within two years from the date of injury or within one year from the last voluntary payment of disability income benefits, whichever comes later.