The Difference Between State Fund Employers and Self-Insured Employers In Washington’s Industrial Insurance System
odin June 16th, 2010
In the State of Washington, workers’ compensation claims are administered in one of two ways. An employer can either opt into the state fund system, or they can opt out. An employer who opts into the state fund system pays insurance premiums to the Department of Labor & Industries. Claims for work injuries or occupational diseases will likely impact the employer’s premiums, much like having a car accident could increase a driver’s insurance rates. However, aside from the insurance premiums paid to L&I, state fund employers are not directly responsible for the costs associated with an employee’s workplace injury or occupational disease. The vast majority of employers in the State of Washington are state fund employers.
An employer that opts out of the state fund system is referred to as a self-insured employer. Some of the largest companies will have an in-house claim administrator, but most self-insured employers hire a third party claim administrator to handle their workers’ compensation claims (some examples of third party claims administrators include Eberle Vivian, Gallager Bassett, or Sedgewick CMS). These third party claim administrators are hired by the employer to handle the day to day activity on the claim, and presumably, to keep claim costs to a minimum. The Department of Labor and Industries oversees the self-insured employers’ claim processing.
Unlike state fund employers, self-insured employers are directly responsible for all of the costs associated with a workplace injury. For example, if the injured worker needs an MRI, the self-insured employer pays for the imaging study; if the injured worker needs a low back surgery, the self-insured employer pays for the orthopedic procedure; if the injured worker needs pain medication, the self-insured employer pays the pharmacy bills; and so on. In this situation, every dollar spent on a claim comes directly from the self-insured employer. Because of this fact, self-insured employers and their claims administrators sometimes cut corners, misinform workers regarding industrial insurance law, or otherwise act to deprive workers of their rights under the system (for example, directing the worker to a particular doctor rather than letting the worker know he or she can choose a treating doctor independently of the employer’s direction).
Whether state fund or self-insured, if you think something might not be right with the way your claim is being handled, it is best to talk to an attorney.