Colorado Workers’ Compensation

colorado worker's compensation text overlaying image of red rock mountains If you run a business and have employees, you’ll need to purchase Colorado workers’ compensation insurance. In fact, this type of insurance is a requirement in most states, including Colorado, with some exceptions. It helps pay your employees’ medical bills if they sustain an injury on the job. And limits your liability for workplace accidents, is a requirement in most states, including Colorado, with some exceptions. 

In Colorado, business owners pay an average of $0.97 per $100 of covered payroll. As an example, a company with a total annual payroll of $100,000 will pay around $970 a year. Or around $80 a month for workers’ compensation insurance. This is only an estimate, since your location, the different rates for staffing types (laborers vs office workers, for example). And your claims history can all have a significant impact on your rates.

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The probability of a work injury determines workers’ compensation rates. For insurance providers to accurately determine the risk of insuring their employees, most businesses will utilize a variety of workers’ compensation class codes. Each type of employee has a code to indicate what level of risk their jobs pose. Workers’ compensation costs may be higher for employees who perform more labor-intensive duties. Because they are more vulnerable to injuries.

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What’s Covered

If one of your employees is injured at work or becomes ill because of workplace conditions. Workers’ compensation in Colorado can help pay for their medical bills. The weekly average wage of an employee is used to calculate workers’ compensation benefits. The type of claim determines the exact amount.

The most important thing that workers’ compensation does is offer coverage for your injured employee’s medical treatment. This would include doctor’s appointments, hospital stays, and surgical procedures. Following a return to work, an employee may need ongoing care. Such as follow-up appointments or extra surgeries; workers’ compensation will also cover these medical bills.

Additionally, if the incident causes permanent or temporary disability, the employee will receive compensation in the form of weekly or lump sum payments. If your employee suffers a temporary disability, their injury is preventing them from performing their regular job while they recover. They have a permanent disability if a doctor determines that they will not fully recover from their injury. 

These two classifications fall into two subcategories:

  1. Temporary total disability (TTD) – These payments will be made if your employee is unable to work at all during their recovery.
  2. Temporary partial disability (TPD) – TPD payments will be made if your employee is still able to work, but with certain restrictions, such as requiring lighter duties or fewer hours. Even if your company does not provide work that meets these requirements, the employee may still be eligible for these payments.
  3. Permanent total disability (PTD) – If the accident or illness leaves your employee unable to work at all, even after recovery, they will be eligible for PTD payments.
  4. Permanent partial disability (PPD) – If an employee has permanent impairments but is able to work with those impairments, they will be eligible for PPD.


Colorado’s Workers’ Compensation Death Benefits

Dependents of a person who passes away from work injuries may be eligible for workers’ compensation death benefits. Dependents can be:

  • A spouse who was living with your employee at the time of their death.
  • Children under the age of 18, or under the age of 21 if they are full-time students.
  • Parents, adult children, or grandchildren may qualify as partial dependents if there is no spouse or dependent children. In that case, the family member must demonstrate financial dependency on the deceased worker.

In order for their dependents to be eligible for death benefits. Your employee must have died as a result of a work-related injury or illness. If the cause of death was unrelated, family members may be able to collect unpaid permanent disability benefits.

In Colorado, workers’ compensation death benefits are generally approximately two-thirds of your employee’s average weekly wages. Up to a legal maximum that varies each year. This is the total amount awarded to all dependents combined.

A spouse receives death benefits for life or until remarried. At which point their share is divided among remaining dependents. Children are eligible for benefits until the age of 18 (or 21 for full-time students). And partial dependents are eligible for benefits for up to six years.

If an employee under the age of 21 dies after a work-related injury or illness, their parents will receive a $15,000 lump sum instead of weekly benefits. The workers’ compensation insurer would also pay up to $7,000 for your deceased worker’s burial expenses.


Coverage Requirements

Colorado workers’ compensation coverage requirements state that employers must carry this type of insurance if they have at least one part-time or full-time employee. You must also display a Notice to Employee of Injury poster at all times, as well as keep track of all lost-time injuries and occupational illnesses. 

If an employee does get injured, you must file an Employer’s First Report of Injury within 10 days of the injury. When your employees return to work, they must file Supplemental Report of Accident forms with their insurer.


Colorado’s Workers’ Compensation Laws

The Colorado Workers’ Compensation Act of 1915 established the state’s workers’ compensation laws, and the system is now overseen by the Colorado Division of Workers’ Compensation (DOWC). Colorado requires all businesses with employees to carry workers’ compensation insurance, with very few exceptions. 

Exceptions to this rule include:

  • Self-employed
  • Corporate officers
  • Limited liability company members

Although they do not have to, these types of employees may still choose to obtain workers’ compensation.


How to Buy Workers Compensation Insurance

In Colorado, there are three options for purchasing workers’ compensation insurance.

First, workers’ compensation can be purchased from a licensed commercial insurance company. EZ offers a simple online application for comparing quotes from top insurance carriers, and licensed agents with insurance expertise for Colorado businesses.

Colorado’s state fund, a state entity that exists exclusively to sell workers’ compensation insurance, also allows you to purchase insurance. Colorado has a competitive state workers’ compensation fund; it actively competes for business with private insurers and effectively serves as the assigned risk pool for workers’ compensation insurance.

And lastly, you can self-insure your company, meaning you can apply to forgo traditional workers’ comp and pay for claims out-of-pocket as they come up. You must, though, meet certain criteria to qualify for self-insurance, including having at least 300 employees or $100 million in assets.

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How to Get the Most Savings

There are several ways you can lower the cost of workers’ compensation insurance. Putting in place a safety program is an excellent way to reduce workplace injuries, and thus your workers’ comp premiums. Regardless of your industry, it is essential to have safety and standard operating procedures in place to guard against any hazards. Employees with safety training in these safety protocols are less vulnerable to injury, lowering your workers’ compensation costs.

It is also beneficial to review your claims history. Regularly reviewing your claims history can assist in identifying and correcting patterns. You may discover that certain aspects of your business operations are causing frequent claims. Keeping an eye on potentially dangerous operations will help you save money.

One of the most effective ways to save money is to correctly classify your employees. Each employee function has a classification, and each classification has a different rate. For example, it will usually cost less to insure office workers versus laborers. You may also face fines if you fail to classify your employees correctly.


Colorado Workers’ Compensation FAQS

  • Are you required to have workers’ compensation insurance in Colorado?

Yes, you must have workers’ compensation insurance if you have any employees in your state. In Colorado, the penalties for failing to carry workers’ compensation insurance may include steep fines. In addition, if a business is found to be operating without proper insurance, the director of the Division of Workers’ Compensation may issue a cease-and-desist order, requiring your business to halt all operations until it obtains proper insurance.

If you are uninsured, you may face fines of up to $250 for every day you fail to maintain insurance coverage. And if multiple violations occur, the fine could be as much as $500 per day.

If a workers’ compensation settlement is reached prior to the penalty, benefits will be increased by 50% if you failed to maintain insurance.

  • How do workers’ compensation settlements work in Colorado?

In most cases, an injured worker will be offered a workers’ compensation settlement. If your employee accepts the settlement, they will receive a lump sum payment, and avoid the uncertainty of a workers’ compensation hearing. In exchange for a settlement, your employee foregoes the right to additional disability benefits. Occasionally, the insurer will agree to a limited settlement, allowing your employee to maintain the right to future medical expenses. 

Your employee could also be awarded a structured settlement, which allows them to receive payments in installments over time, such as monthly or yearly payments.

If your employee is entitled to permanent disability benefits, they may be paid in a lump sum. In this case, the insurance company will pay the present value of the benefits, which will be reduced by 4% each year. Colorado also has a cap on how much a lump sum can be, which changes each year.

Typically, an employee will not settle a workers’ compensation claim until they have reached maximum medical improvement, which means that their condition is stable and will not require further medical treatment.

  • What is the statute of limitations in Colorado?

In general, an employee who has been injured should file a workers’ compensation claim as soon as possible. If your employee is injured on the job, they must notify you in writing within four working days. The employee’s direct supervisor or the human resources department should receive this written notice. And if your employee is absent from work for at least three days, you are required to file a report of injury, and the statute of limitations deadline is established.

An injured employee’s claim can only be filed for up to two years after the injury occurs or the illness is diagnosed. 

If the injury is chronic (such as carpal tunnel syndrome) and not the result of a single incident, the statute of limitations begins when the employee first knew or should have known that a medical condition was caused by their working conditions.

Dependents of an employee who has died as a result of a work-related illness or injury have two years from the date of death to file a claim petition for death benefits.


Why Use EZ

We pride ourselves on our customer service, and we do everything we can to provide an easy and stress-free shopping experience. We give our customers our full attention by offering personalized service and fast results. As soon as you fill out our form, you will receive free quotes from your dedicated agent, who will understand your needs. We want to ensure that you make the best decision and get the best coverage for the best price. Our services are completely free so check your quotes today!

If you still have questions, feel free to give us a call at 877-670-3538. You will speak with a local insurance agent who can answer all of your questions. And help you find the workers’ compensation policy that works best for your business.

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About The Author:
Cassandra Love

With over a decade of helpful content experience Cassandra has dedicated her career to making sure people have access to relevant, easy to understand, and valuable information. After realizing a huge knowledge gap Cassandra spent years researching and working with health insurance companies to create accessible guides and articles to walk anyone through every aspect of the insurance process.

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