If your business has employees in the state of Alaska, you’ll need to make sure you adhere to Alaska’s Workers’ Compensation Insurance laws. Workers’ Compensation provides medical and financial benefits for employees who suffer work-related injuries or illnesses or for their survivors in the case of an employee death.

Who needs Workers’ Compensation Insurance in Alaska?

Alaska requires all employers with one or more employees to obtain Workers’ Compensation Insurance. In Alaska, an “employee” is generally defined as any individual who works for an employer under a contract of hire and is not an independent contractor.

The Alaska Workers’ Compensation Act (WCA) defines all of the requirements for Workers’ Comp in Alaska, and the Alaska Division of Workers’ Compensation (Division) monitors, enforces, and administers the program. Ensuring your company is in compliance is critical, as there are serious penalties and fines for those who fail to abide by state regulations.

What employees are covered under Workers’ Compensation in Alaska?

Almost all workers are covered under Workers’ Compensation in Alaska. If you provide work or services for an employer, and you are not an independent contractor, you will likely be eligible for Workers’ Compensation Insurance. 

The following are categories of employees that are eligible for Workers’ Comp coverage:

• Full-time and part-time employees
• Interns and apprentices
• Domestic workers, except non-commercial cleaners and part-time babysitters
• Most agricultural workers
• Minors

The following are categories of employees that are generally excluded or exempt from Workers’ Comp coverage:

• Independent contractors
• Sole proprietors
• Partners of a partnership
• Executive officers of a nonprofit organization
• Executive officers of a for-profit corporation or LLC who own at least 10 percent of the company (however, the company may choose to include these people in workers’ compensation coverage)
• Real estate salespeople
• Commercial fishers
• Harvest help and similar part-time/transient help
• Company drivers for transportation networks

What Workers’ Compensation benefits do employees receive?

Under Workers’ Compensation in Alaska, employers are required to provide the following benefits to employees who are injured in the course of employment:

Medical Benefits

• Employers must cover expenses for all medical treatments approved by a physician, including hospital and doctor visits, medicine, and prosthetic devices. 
• Employers must also pay for travel costs and mileage expenses the employee incurs when traveling to and from medical appointments. 

Temporary Total Disability Benefits

• Employees who are unable to work due to a work-related injury are eligible for Temporary Total Disability (TTD) benefits, which provides 80 percent of the worker’s spendable weekly wage (gross weekly earnings minus payroll deductions) before injury.
• The Division establishes minimum and maximum benefit amounts, which change yearly. For accidents that occurred in 2021, the maximum TTD benefit was $1,298 per week, and the minimum benefit amount was $286 per week.
• TTD benefits are payable until the worker reaches medical stability and no further improvement is expected or until the employee is able to return to work, whichever happens first. 

Temporary Partial Disability Benefits

• If injured employees are able to return to work in a partial or limited capacity while recovering, they may be eligible for Temporary Partial Disability (TPD) benefits. TPD benefits provide 80 percent of the difference between a worker’s pre- and post-injury spendable weekly wage.
• The Division establishes minimum and maximum benefit amounts, which change yearly. For accidents that occurred in 2021, the maximum TPD benefit was $1,298 per week, and the minimum benefit amount was $286 per week.
• TPD benefits can be paid until the worker reaches medical stability or for up to five years, whichever comes first. 

Permanent Partial Impairment Benefits

• Employees who recover from a covered injury but suffer a permanent partial impairment may be eligible for Permanent Partial Impairment (PPI) benefits.
• The number of benefit weeks available from PPI can vary based on the body part that was injured and the severity of the injury. The WCA’s schedule of injuries explains how long benefits will be paid and what benefits are available for different types of injuries.
• For accidents that occurred in 2021, the minimum PPI benefit amount was $286 per week.
• A physician will determine an impairment rating or percentage of loss for the injured worker. The amount of PPI benefits is determined by multiplying $177,000 by the employee’s impairment rating. The compensation is paid as a lump sum unless the worker is in the process of reemployment. Workers in the reemployment process will receive benefits every 14 days.

Permanent Total Disability Benefits

• Employees who are permanently disabled and unable to earn any wages may be eligible for Permanent Total Disability (PTD) benefits.
• Permanent disabilities include loss of both hands, arms, feet, legs, eyes, or any two losses of this type. Other cases are decided based on the type of injury, degree of impairment, and ability to work.
• PTD benefits provide 80 percent of a worker’s average weekly wage pre-injury, payable as long as the employee remains permanently and totally disabled and is unable to earn wages.
• The Division establishes minimum and maximum benefit amounts, which change yearly. For accidents that occurred in 2021, the maximum PTD benefit was $1,298 per week, and the minimum benefit amount was $286 per week.
• PTD benefits are payable until the disability ends or the employee dies. 

Death Benefits

• Employers are required to pay $10,000 for funeral expenses.
•  A worker’s surviving dependents are entitled to a payment of $5,000 as well as weekly benefits equal to up to 80% of the worker’s average weekly wage, up to the maximum amount allowed by the Division. For accidents that occurred in 2021, the maximum benefit was $1,298 per week, and the minimum benefit amount was $286 per week.
• Dependent children may receive benefits until the age of 19; benefits may be extended during the first four years of college or trade school. 
• If the deceased worker does not have a surviving spouse or child, benefits may be due to other relatives. 

What are the penalties for breaking Alaska Workers’ Compensation laws?

Failure to adhere to the Workers’ Compensation laws set out by the WCA can result in significant fines and even imprisonment. In order to avoid any costly penalties, it’s important to consult the WCA or your insurer to ensure you are in compliance. Below are the major ways in which companies can be penalized:

Failure to Secure Coverage

• Employers that do not secure Workers’ Compensation Insurance for their employees may be served with an order to stop work. Companies that continue to operate after a stop-work order will be fined $1,000 per day for each day of violation. 
• Courts may impose a fine of $10,000 and imprisonment of up to one year for employers that fail to maintain coverage. 
• Employers may be fined up to $1,000 per employee for each day employees worked without appropriate coverage. 

Failure to Pay Benefits

• Employers that fail to pay required compensation for amounts over $25,000 may be charged with a class B felony, punishable by up to 10 years in prison and a fine of up to $100,000. If the amount of unpaid compensation is $25,000 or less, employers may be charged with a class C felony, punishable by up to five years in prison and a fine of up to $50,000.

Failure to File a Report

• Employers that do not file injury reports may be charged a penalty of 20 percent of the compensation that would have been due to the injured employee if the injury had been reported.  
• Employers that fail to notify employees of the termination or suspension of compensation payments within 28 days may be fined $100 for the first day plus $10 for each additional day after the first day that notice was not given, up to a maximum of $1,000. 

Fraud

• Employers that commit Workers’ Compensation fraud may face class B felony charges punishable by up to 10 years in prison and a fine of up to $100,000 if the amount involved is over $25,000, or a class C felony, punishable by up to five years in prison and a fine of up to $50,000 if the amount involved is $25,000 or less. 
• Employers may be required to pay civil compensatory damages and an award of three times the amount of damages.

How much does Workers’ Compensation Insurance cost in Alaska?

According to the National Academy of Social Insurance Workers’ Compensation Report (November 2020), the average employer cost for Workers’ Compensation in Alaska was $2.25 per $100 of covered wages. This figure is estimated across all insurers and all industries, so the cost to your particular business may vary.

How does the Workers’ Compensation claims process work in Alaska?

Employees who suffer a work-related injury or illness must notify their employer in writing within 30 days; failing to do so may result in delays or claim denial. However, an employee’s failure to report an injury may be excused if the employer had knowledge of the injury and if there is an acceptable reason the employee could not give notice. Employers must report occupational injuries or illnesses to the Alaska Workers’ Compensation Division within 10 days of receiving notice of the injury. 

In the case of a dispute, employers may request an informal conference from the Alaska Workers’ Compensation Division. The Alaska Workers’ Compensation Board conducts formal hearings to resolve issues.  

Alaska Workers’ Compensation Insurance Resources

For more information on Alaska Workers’ Compensation laws and requirements, please visit the following resources:

• Alaska Division of Workers’ Compensation
• Employer Guide to Alaska Workers’ Compensation