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If your business has employees in the state of Iowa, you’ll need to make sure you adhere to Iowa’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 Iowa?
Iowa requires all employers with one or more employees to obtain Workers’ Compensation Insurance. In Iowa, an “employee” is usually defined as any person who has entered into or works under a contract of service or apprenticeship with an employer.
The Iowa Workers’ Compensation Act (WCA) defines all of the requirements for Workers’ Comp in Connecticut, and the Iowa Division of Workers’ Compensation (DWC) 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 Iowa?
Almost all workers are covered under Workers’ Compensation in Iowa. 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
- Apprentices and interns
- Undocumented workers
- Emergency medical service providers
- Real estate agents if they are not independent contractors
- Corporate officers who have not rejected coverage in writing
The following are categories of employees that are generally excluded from Workers’ Comp coverage:
- Independent contractors
- Domestic workers who earned less than $1,500 in the 12 months prior to an injury
- Casual workers who earned less than $1,500 in the 12 months prior to an injury
- Agricultural workers if their employers’ payrolls totaled less than $2,500 in the year before an injury
- Vehicle owner-operators who are classified as independent contractors
What Workers’ Compensation benefits do employees receive?
Under Workers’ Compensation in Iowa, employers are required to provide the following benefits to employees who are injured in the course of employment:
- Employers must cover all necessary medical expenses and medical equipment.
- Mileage reimbursement is provided for transportation to and from medical appointments, as well as payment for ambulance or taxi rides if required. Travel expenses can also cover meals and lodging if they are necessary to receive medical treatment.
- If employees must miss work to receive medical attention, employers may be required to cover their wages.
Temporary Total Disability
- Employees who are completely unable to work due to a work-related injury are eligible for Temporary Total Disability (TTD) benefits during their healing period. TTD benefits provide 80 percent of the worker’s average weekly wage before injury.
- Injured employees may not receive TTD for the first three days of their recovery period, but if their injury causes disability for more than 14 days, they are entitled to receive benefits for the first three days retroactively.
- The DWC establishes minimum and maximum benefit amounts, which change yearly. For accidents that occurred from July 1, 2020, to June 30, 2021, the maximum TTD benefit was $1,864 per week, and there was no minimum.
- Employees can continue to receive TTD benefits for as long as they are unable to work due to a work-related condition.
Temporary Partial Disability
- If injured employees are unable to return to their pre-injury work but are able to perform other work for pay while recovering, they may be eligible for Temporary Partial Disability (TPD) benefits. TPD benefits provide 66 and two-thirds percent of the difference between a worker’s pre- and post-injury gross weekly wage.
- The DWC establishes minimum and maximum benefit amounts, which change yearly. For accidents that occurred from July 1, 2020, to June 30, 2021, the maximum TPD benefit was 80 percent of spendable earnings, and there was no minimum.
Permanent Partial Disability
- Employees who recover from a covered injury but suffer a permanent partial impairment may be eligible for Permanent Partial Disability (PPD) benefits.
- The number of benefit weeks available from PPD 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. A physician will determine the extent of the disability.
- PPD benefits provide 80 percent of a worker’s weekly spendable earnings.
- The DWC establishes minimum and maximum benefit amounts, which change yearly. For accidents that occurred from July 1, 2020, to June 30, 2021, the maximum PPD benefit was $1,715 per week and the minimum was $326.
Healing Period Disability
- Employees who are awarded PPD benefits for an injury may be eligible for Healing Period Disability benefits (HPD). HPD benefits do not have a waiting period.
- After being awarded PPD, employees may undergo additional healing periods, such as if they reach maximum medical improvement but then have surgery and begin to improve again. In this situation, the employee would be entitled to HPD benefits while healing.
- HPD benefits have the same rates, maximums, and minimums as TPD. Employees cannot receive both HPD benefits and TPD benefits at the same time.
Permanent Total Disability
- Employees who are permanently disabled and unable to earn any wages may be eligible for Permanent Total Disability (PTD) benefits.
- PTD benefits provide 80 percent of a worker’s spendable earnings pre-injury, payable as long as the employee remains permanently and totally disabled and is unable to earn wages.
- The DWC establishes minimum and maximum benefit amounts, which change yearly. For accidents that occurred from July 1, 2020, to June 30, 2021, the maximum PTD benefit was $1,864 per week, and the minimum was $326.
- There are no limits to the number of weeks that PTD benefits are payable.
Death and Burial Benefits
- Employers must pay funeral expenses of up to 12 times the statewide average weekly wage at the date of death. The maximum burial benefit for deaths occurring between July 1, 2020, and Jun 30, 2021, is $11,184.
- Death benefits can be paid to a surviving spouse for life but will be terminated upon remarriage. Surviving spouses without dependent children are entitled to receive a single payment of two years’ worth of benefits if they remarry. Dependent children can receive benefits until age 18, or until age 25 if they are enrolled in an accredited educational program. Children with physical or mental incapacities could receive benefits for life.
- A worker’s dependents may be eligible to receive 80 percent of the worker’s spendable earnings, up to the maximum amount allowed by the DWC. For accidents that occurred from July 1, 2020, to June 30, 2021, the minimum weekly benefit was $326 and the maximum was $1,864.
What are the penalties for breaking Iowa 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 Maintain Coverage
- Employers in Iowa must obtain adequate Workers’ Compensation coverage for employees. Employers that engage in business without providing adequate coverage could be charged with a Class D felony, punishable by fines of up to $7,500 and up to five years in prison.
- If employers do not comply, they may be sued in a district court and served with an order to stop business until they obtain coverage. If they continue business operations, they could be charged with contempt of court, which is punishable by up to six months in jail and fines of up to $500.
- If employees are injured while working for a non-compliant employer, they have the option of suing the employer for damages.
- Non-compliant employers must also post a notice to employees informing them they have failed to obtain coverage. Failing to post this notice will add misdemeanor charges punishable by up to 30 days in prison and fines of up to $625.
Failure to Comply with Self-Insurance Requirements
- When employers apply to self-insure, they must provide comprehensive and factual financial information. Submitting false information may result in a Class D felony, punishable by up to five years in prison and fines of up to $7,500. Employers may also face civil penalties of up to $10,000 and lose their self-insurance status.
Failure to Record or Report Claims or File Notices
- Employers must keep records of work-related injury claims and provide a copy within 30 days upon request of the DWC.
- A First Report of Injury form must be filed within four days after an employer learns of an injury resulting in more than three days of disability from work, permanent partial disability, or death.
- Employers that fail to report may face a civil penalty of $1,000 per incident.
- Employers are required to file notices with the DWC regarding open claims, closed claims, and benefits payments. Employers that do not file property reports may face fines of up to $1,000 per occurrence.
- If required to file a First Report of Injury form, employers must begin paying benefits to injured employees within 11 days of the first day of the disability. Employers that fail to make payment on time may face a penalty of up to 50 percent of the amount past due, payable to the employee.
- If an employer can demonstrate that there was a reasonable cause for the delay, it can be excused from paying the 50 percent penalty, but would still be required to pay the injured employee interest of 10 percent on delayed payments.
- Employers that habitually delay payments may be required to pay an assessment to the state Second Injury Fund. The assessment is calculated as $10 multiplied by the number of injuries the employer reported and the average number of days of delayed payments.
Failure to Notify of Benefit Termination
- Employers must pay benefits either until injured employees return to their work or until they have provided the employee with 30 days notice that payments will be terminated. Employers who do not notify an employee before ceasing payments may be required to continue benefits payments, even if the cause for termination would otherwise have been valid.
Unreasonable Benefit Termination or Claim Denial
- Employers that terminate employees’ benefits or deny Workers’ Compensation claims must have a reasonable cause or excuse at the time of termination or denial. Employers that terminate benefits or deny claims unreasonably may face a penalty of up to 50 percent of any amount denied, payable to the employee.
How much does Workers’ Compensation Insurance cost in Iowa?
According to the National Academy of Social Insurance Workers’ Compensation Report (November 2020), the average employer cost for Workers’ Compensation in Iowa was $1.35 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 Iowa?
Employees should notify employers of work-related injuries within 90 days. For work-related illnesses, employees should notify employers within 90 days after the first appearance of symptoms.
Employers must notify insurance carriers or the DWC if an employee reports a work-related injury or illness that results in more than three days of disability from work, permanent disability, or death. Reports should be filed electronically within four days of the employer being notified. Employers must make this report regardless of whether they believe the claim is compensable.
Employers and employees are both able to resolve disputes informally by filing a request with the Commissioner. Employees who have not received benefits can file a contested case petition with the DWC within two years of their injury. Employees who have received any Workers’ Compensation benefits can file a petition within three years of the last payment date.