• Workers' compensation laws may vary by state.construction workers image by Greg Pickens from Fotolia.com
  
  Workers' compensation insurance exists to provide no-fault medical and financial benefits to employees who become sick or injured during the course of normal job-related duties. This insurance is regulated by all 50 states, and some federal regulation exists as well. There are no laws that apply in all locations or circumstances, but most states' laws share some general principles.
  
  

Uncapped Medical Benefits

• Most workers' compensation insurance policies do not set a specific limit on medical benefits available for injured or sick employees. Rather, each case is evaluated by the insurance company and benefits are assigned as needed to return the employee to work as soon as possible. In cases of permanent disabilities, benefits can continue for life, though disability benefits do have maximum amounts defined by state law.
  
  

No-Fault Benefits

• Typically, workers' compensation benefits are "no fault," meaning that benefits are paid regardless of whose negligence caused the illness or injury. Most states have laws limiting or eliminating an employee's ability to sue the employer for costs beyond those covered by workers' compensation insurance.
  
  

Taxation of Benefits

• Consult your tax professional to determine how much, if any, of your workers' compensation settlement is taxable. Typically, medical costs are not subject to taxation but income replacement benefits may be.
  
  

Failure to Report

• If you are injured on the job and fail to report your injury in a timely manner, you may forfeit the right to collect benefits from your company's workers' compensation insurance policy. Many employers require immediate reporting of even minor injuries in order to prevent possible complications or larger-resulting injuries.
  
  

Requirements

• Typically, all businesses are required to carry workers' compensation insurance even if they have only one employee. In some states, like California, sole proprietors may be allowed to exempt themselves from coverage under the policy. Certain types of workers, such as independent contractors, are not required to be covered by this type of insurance in some states.
  
  

Distribution of Benefits

• The insurance company is ultimately responsible for controlling benefits in a workers' compensation claim. It may assign doctors for claimants, limit the number of doctor's visits available and determine when the employee is well enough to return to work. Employees generally have the right to list a physician of preference if they alert the insurance company prior to filing a claim. Some states, like New York, have laws allowing physicians to progress with treatment without insurance company authorization if a request for authorization goes unanswered for a certain period of time.