PA Workers Compensation Insurance: What You Need To Know

Worker’s compensation insurance covers employees’ medical expenses and lost wages after an injury at work.

Each state directs the scope of coverage and benefits to be provided, this is the case for PA worker’s compensation insurance.

Worker’s comp generally covers:

  • Medical coverage
  • Rehabilitation from injury
  • Disability benefits
  • Death benefits

The Pennsylvania Workers Compensation Act of 1915 under the PA Bureau of Workers’ Compensation details employer’s liability and employee benefits under the law.

PA Workers Compensation Act

What is the PA Workers Compensation Act?

The PA Workers Compensation Act defines all benefits that are available to workers in Pennsylvania. It also includes and the conditions under which they are payable and the modes of payment Under this act, with some exceptions, workers comp is mandatory to provide for most employers. 

Each state sets its maximum compensation rates based on state workers comp laws. Accordingly, Pennsylvania has seen a steady increase in rates over the last 5 years:

Year Max. Comp Rate % Change in Rate
2020 $1,081 2.96%
2019 $1,049 2.29%
2018 $1,025 2.93%
2017 $995 1.71%
2016 $978 2.76%

Workers comp rates over the last 5 years

PA workman’s comp laws don’t just provide for your employees who are injured on the job, or to boost worker morale. While it offers them a variety of accident coverage, it also protects you and your business.

With worker’s comp insurance, employees give up their right to hold you responsible for workplace safety and accidents. Not only does it cover risk, but also offers immunity from liability.

Benefits Payable Under PA Workers Compensation

1. Wage-loss benefits 

Wages lost while an employee was injured or recuperating need to be covered under the act. This coverage usually involves a payout of up to two-thirds or 66 2/3% of the pay. As of 2020, the maximum compensation payable under PA workman’s comp laws has increased to $1,081 per week. That said, the terms of the benefits employees receive depend on the class of the status of injury or disability. These include:

  • Temporary Partial Disability
  • Temporary Total Disability
  • Permanent Partial Disability
  • Permanent Total Disability
  • Medical
  • Death

The various classifications dictate how long you will have to pay compensations. As workman’s comp is no-fault in Pennsylvania, they will need to be paid regardless of who is at fault. Since you are protected from liability under the comp, this is to ensure workers are also secured.

2. Medical Care Benefits

Medical care benefits cover all medical expenses run-up in the treatment of the injury. Such benefits can include :

  • Health-care services
  • Surgical treatments 
  • Hospital treatment, services, and supplies
  • Medication
  • Physical rehab

All medical treatment that is deemed reasonable is covered under Pennsylvania workers compensation. 

3. Death Benefits

If an employee is killed on the job, or an injury sustained on the job results in the death of the employee, benefits are paid out to eligible dependents. The PA workers compensation provides for such benefits to be paid out to the next of kin. The amount paid out includes funeral benefits, as well as a percentage of the employees’ wages. This percentage varies based on who the benefits are given to. 

4. Specific-Loss Benefits

Specific loss includes the loss of an extremity, sensory function, or disfigurement. It can also include the loss of use of certain limbs. This form of compensation involves a set schedule for the weeks of payment in loss compensation.   

5. Disfigurement Benefits

Any permanent disfigurement resulting from injury at the workplace needs to be compensated. The employee is entitled to benefits if there is disfigurement of the head, face, or neck area. These benefits are paid out starting from the first week of injury up to 275 weeks. The PA workmans comp laws set not specific amount for such benefits.

How much do you have to pay?

Your several factors that determine how much worker’s comp will cost your business.

The Pennsylvania Compensation Rating Bureau (PCRB) classifies businesses based on their line of work. Businesses in the same classification code are subject to the same rate of pay. 

You can be classified in one of over 300 classification codes. This code has a corresponding premium and rate. You are likely to find yourself coded the same as your competitors, as coding is based on the type of business, rather than modes of operation. 

Such a system ensures businesses with low risk do not have to pay the same rates as businesses with higher risk potential.  



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Calculating Your Experience Mod

Your experience modification factor (EMF), experience mod, or mod, acts as an evaluation of your business’s performance in response to risk. EMF is a tool you can use to control your comp premiums and reduce costs of monthly payments.

According to PA workers compensation laws, businesses with a minimum of $10,000 in premiums can get an experience mod. Your premium is modified on the basis of your loss history. Loss history is the record of all past accidents and injuries which offer a precise measure of your risk exposure. It’s also suggestive of how well they have been financially managed in the past. 

Your experience mod is calculated with a 3-year history of loss, with the exception of the most recent fiscal year. Actual losses experienced during this period are divided by expected losses in the future. Actual losses, in this case, refer to employee claims, and expected losses include future spending on losses. 

Precise experience ratings rely on the ability of past loss history to accurately predict future losses.

The credibility factor (Z) included in the formula reflects the degree of confidence in your loss history as a predictor. Because lower credibility ratings reflect the uncertainty of estimates, they can result in inaccurate calculations and increased costs.

The nature, frequency, and severity of employee claims are all taken into account when calculating your experience rating. Usually, the frequency of losses has a greater impact on calculations and rating than the severity.

If you have experienced several smaller claims, they are likely to outweigh one large claim. This is because the frequency of claims can indicate issues with business operations that carry higher potential losses and riskier insurance.   

Who Conducts Experience Mods?

The PCRB calculates experience Mods for Pennsylvania-based businesses. 

For other states, the National Council on Compensation Insurance (NCCI) conducts experience mod calculations, or their own State Rating Bureaus or Advisory Organisations. You can conduct your experience mod audit using our free tool to better understand the cost of premiums, and ensure you are not paying more than you should.

Other Ratings That Can Benefit Your Business

1. Merit Rating Plan 

If your premiums are less than $10,000, which can be the case for smaller businesses, you can’t qualify for an experience mod. Instead, you are eligible for a merit rating plan. These are designed specifically for employers who do not meet the requirements for an experience mod. 

Under this plan, your loss experience for the past two years is assessed, based on which you can receive up to a 5% discount on premiums. This includes compensable employee lost-time injuries sustained during each loss. You can also suffer a surcharge in the event of two or more lost-time injuries.

No compensable lost-time injuries 5% discount
One compensable lost-time injury (no discount/surcharge)
Two compensable lost-time injuries 5% surcharge

Merit rating plans

Merit rating plans can help you take advantage of low premium costs and savings as a small business. They also encourage a safer work environment for your employees with zero-tolerance for risk.

2. Schedule Rating Plan

Schedule rating plans increase or decrease your premiums conditional on certain factors. These factors pertain to the amount of risk you have undertaken. The adjustments made reflect those risk factors that are not considered sufficiently represented in your loss history or current experiences.

You may receive discounts on certain risk-mitigating practices. PA Workman’s Comp Laws already include schedule rating within approved experience mods, but insurance companies can offer their own plans.

3. Retrospective Rating Plan

Retrospective rating plans offer a different type of premium adjustment than experience mods. Instead of predicting future losses, retrospective ratings will reflect your current loss experience. These rating plans calculate the eventual premium after the current policy expires. You can use several different types of ratings as they suit your business.

During the current policy year, you are liable to pay the full amount of the issued premium. Once it expires, the retrospective premium is calculated. This is subject to a minimum and maximum limit, reflecting the lowest and highest possible premiums irrespective of losses.

This retro premium is then compared to the policy premium, from which you may receive a return or a surcharge. Retrospective rating is one of the simplest ways to reduce risks and costs.    

How to Get Insurance Coverage

Insurance coverage is one of the most important aspects of your business. For this reason, you should take your time deciding how you need to be insured. In that regard, you have several options available, and any of these may work best for you based on your needs:

  • Self-insure your employees through a self-insurance plan
  • Consult insurance agents or brokers to purchase a policy
  • Purchase a policy from a private agency
  • Buy coverage from the State Workers’ Insurance Fund (SWIF)

If you’re confused or have questions, you can learn more about the process involved in getting insured. Before you decide on a carrier, there are certain factors you should take into account.

Choosing an Insurance Carrier

Accidents in the workplace are pretty much unavoidable. Even when you take every possible safety and security measure, it is impossible to predict how much would be enough to wipe out all likely risks. While that does not reduce the importance of such safety measures, it is important to ensure your employees are adequately covered under workers’ compensation insurance. 

As we mentioned above, if you have the financial resources, you can self-insure your employees. This can reduce expenses and third-party costs and charges, and gives you greater control over your premiums. When this is not possible, it is important to insure with a company that can provide ideal premiums and adequate workers comp.

Our detailed guide can offer more information on the best workers comp insurance companies. All these companies have something to offer, and a variety of options to choose from. Before you pick an insurance company, look to fulfill certain criteria:

1. What Premiums Do They Offer?

Many factors can influence what premium you end up paying. The classification code, with premiums and rates, assigned to you depends on the nature of your business

In addition to that, insurance companies charge different rates on premiums. They use cost multipliers to set the price of their premiums. The final rate companies offer is derived from different multipliers on different class codes. 

Lower rates are charged to companies that are assigned a lower multiplier. Look for an insurance carrier that offers lower multipliers on your classification code.

2. Inquire About Sub-Classification Rates

Insurance companies may place your business in a sub-category. These sub-classifications stem from the classification codes assigned by the PCRB. They further differentiate between the types of businesses in the same industry. 

For example, fine-dining and cafés both fall under the restaurant category, but an insurance company may choose to sub-categorize the two based on their different modes of operation.  These sub-classes are then charged a different rate than the classification code. 

Some businesses offer a higher risk potential than others in the same industry. You should always ask about any sub-classifications that may apply to your business.

3. Look for Higher Deductibles

Insurance companies offer deductibles ranging from $1000-$10,000 and higher. Deductibles set an amount of loss coverage you are responsible for before the worker’s comp kicks in. Higher deductibles mean you would be responsible for higher initial costs. What makes them useful?

High deductibles reduce your monthly premiums significantly. They are also a great risk-mitigation incentive, as you can continue to benefit from low premiums without incurring damage costs. Low-risk businesses can save costs with higher deductibles.

In Pennsylvania, you will only be offered deductible programs upon request. Make sure to ask about programs offered and how they may benefit your business.

4. Safety Committee Benefits

Under Pennsylvania Worker’s Compensation, you can become eligible for a 5% discount on installments on the establishment of safety committees. Safety Committees overlook hazardous operations, identify potential risks, and subvert accidents through proactive measures. 

This discount is a safety motivation to reduce risk among businesses with high potential. As lower monthly premiums reduce business costs, they can encourage owners to use safety precautions. Safety committees can not only help reduce premium cost, they are also a boost to worker morale, and can save on future costs of damages and treatments.

5. Look Out for Group Insurance Plans

If you are insured with the same carrier with 5 or more similar businesses, you can qualify for a discount. The insurance company decides this discount. Businesses under the same classification code will be able to enjoy lower premiums with the same insurance agency.

It may be a good idea to inquire about your competitors’ insurance companies. Not only would that offer guidance on good insurance plans, but can also offer group insurance benefits that lower costs.  

6. Make Use of Schedule Rating Plans

As we discussed above, many insurance companies offer schedule ratings. You can make specific inquiries about schedule rating plans offered by different carriers. How they pertain to your business can help you avail of a variety of discounts on premiums. They can also help you avoid surcharges. 

Understanding your needs is the first step in identifying the most suitable insurance carrier for your business. Your worker’s comp insurance should always be more than an afterthought. At Rogue Risk, we prioritize improved cash-flow and reduced costs with our proprietary RogueRisk365 process while maintaining all necessary coverage.

What Does It All Add Up To?  

PA workers’ compensation laws include all required aspects and features of insurance coverage.

To that effect, worker’s compensation is an essential responsibility of business owners. Where employee health and safety are a priority, it is also important to understand how worker’s comp can be managed usefully.

Even with several precautions, accidents, and injuries in the long-term are almost inevitable. A good insurance carrier should protect you and your employees at reduced costs

This is where we come in at Rogue Risk.

It is our goal at Rogue Risk to help you build safer work environments and enhance productivity with low-cost insurance plans.

We’re workers compensation specialists and can help you navigate market and workforce changes to make sure you have the coverage you without being overcharged.

You can start with a free Workers Comp Experience Mod Audit, or you can use the options below to get a quote today!

I look forward to introducing you to a new way of viewing your insurance program.

Thank you,

Ryan Hanley

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