Workers’ compensation basics
What is workers’ compensation insurance?
Workers’ compensation is state-mandated insurance that provides wage-replacement and medical benefits to employees who suffer job-related injuries and illnesses.
In general, an employee with a work-related illness or injury can get workers’ compensation benefits regardless of who was at fault — the employee, the employer, a coworker, a customer, or some other third party. In exchange for these guaranteed benefits, employees usually do not have the right to sue the employer in court for damages for those injuries.
Do I need to have workers’ compensation insurance?
Minnesota law requires employers to have workers’ compensation insurance if they have even one employee.
What is an experience modification factor (e-mod)?
Your experience modification factor (e-mod) is a number that shows how your organization’s workers’ compensation claims experience compares to the experience of other businesses similar in size and types of jobs.
The average for similar businesses is exactly 1.0. If your e-mod is less than 1.0, then your claims experience is better than the average. If it’s more than 1.0, then your experience is worse than the average and probably worse than many of your competitors.
Your e-mod number is a multiplier used in calculating your premium.
- Are mandatory for any company that qualifies to be rated
- Are calculated by the Minnesota Workers’ Compensation Insurers Association (MWCIA) or National Council on Compensation Insurance (NCCI), not by insurance carriers like Superior Point
- Include all businesses under common ownership and in all states of operations
- Are re-rated once a year, usually at policy renewal time
- Retained by employers even if they change insurance carriers
- Can be transferable to new owners if the business is sold
Do all employers have an e-mod?
No. You must meet certain criteria to qualify. Generally, you are eligible if you pay $5,000 in annual premium for two years of a three-year period, or $10,000 in premium in one year. The e-mod calculation is generally based on your last three years’ losses and payroll per classification excluding the most recent year.
How do I know if my business qualifies for an e-mod?
Ask your agent or contact the Minnesota Workers’ Compensation Insurers Association (MWCIA).
What if my organization doesn’t qualify for an e-mod?
If your organization does not meet the criteria stated above, then your organization receives a merit rating.