Healthcare businesses face a lot of risks every single day, and that includes nurse staffing agencies. Because of these risks, it’s crucial to have workers’ comp for staffing agencies. This insurance will protect your employees while protecting your agency in the event of a work-related illness or injury.
Finding the right workers’ comp insurance for staffing agencies can be intimidating if you aren’t well-versed in the area. This guide will give you all the information needed to help you find the insurance policy that works for your business.
Most states require all employers to provide workers’ comp insurance for their employees. Even though staffing agencies work differently than traditional employers, they are still required to provide this insurance. However, special determinations decide which employees you provide coverage for.
United States law requires workers’ comp insurance to provide the following benefits:
Wage replacement benefits
Medical treatment coverage
Vocational rehabilitation coverage
Additional benefits, based on the specific situation
When you pursue workers’ comp insurance for staffing agencies, a few factors go into determining your premium. Part of the calculation is based on how many employees you have, including 1099 employees. The other significant factor is the level of risk in your field, reflected in your Experience Modification Rate (or Ex-mod).
You can do various things to lower your premium, which can help reduce the cost of your workers' comp insurance. One of the best things you can do is ensure your employees are coded correctly with your insurance company.
Many companies have a single governing class code that determines the risk factor of their field of work.
However, staffing agencies are different in this regard. Your staff members will likely have different class codes based on where they work and how much risk they’re exposed to.
You must get each employee’s class code correct. These class codes help determine the cost of covering the employee with workers’ comp insurance and ensure each employee has the proper amount of coverage.
Not providing the correct class code can lead to an employee being under-covered or you overpaying for their coverage.
For example, many nurse staffing agencies staff a combination of skilled nursing facilities (SNF), assisted living facilities (ALF), hospitals, correctional facilities, clinics, doctor offices, and biotech labs.
Each location has unique risk levels, and workers’ comp insurance should reflect that. The best way to clarify this information to your insurance company is by providing the correct codes while obtaining a quote.
Pennsylvania handles insurance codes differently than other states. A “2” is added to the beginning of all insurance codes for staffing agencies. For example, if you’re a staffing agency looking for workers’ comp coverage for a nurse working in a Pennsylvania nursing home, the code will go from 0960 to 2960.
Some insurance companies will have limitations on the type of nursing they will cover.
For example, many insurance carriers won’t provide workers’ comp insurance for staffing agencies that send nurses to correctional facilities due to the added risks associated with the location.
Other carriers may only like assisted living and skilled nursing facilities, not hospitals. This is why it’s crucial to be upfront about the type of nurses you have at your agency.
If your nurse staffing agency is focused on traveling nurses, there’s an added complication to getting workers’ comp insurance. When the nurses live in different states and are not staying put for an extended period, it’s harder for them to be covered under your workers' comp insurance, and some companies won’t insure them.
While obtaining quotes, expect the insurance underwriter to ask if you staff other medical providers, such as dentists. Medical staffing is similar but has apparent differences in coverage requirements compared to nurse staffing. Let your underwriter know if you staff, LPNs, CNAs, RNs, NPs, or other medical providers.
If you hire 1099 employees, you need to provide workers’ comp insurance coverage for them and your W2 employees. 1099 employees are contract employees who you may employ through your staffing agency.
You don’t need to provide workers’ comp coverage to contract employees if they provide a certificate of insurance showing they carry their own workers’ comp insurance. Some contract workers choose to carry their own workers' comp insurance due to the nature of contract employment.
If you don’t include your contract workers in your policy, you will be billed for them at audit. Including all employees when creating your policy is crucial so you don’t end up with a large audit bill.
One of the best ways you can keep your workers' comp insurance premium down is by being deliberate with your hiring process. Specific vetting processes can be done to prevent hiring employees who will likely become liabilities.
Make sure you confirm each candidate’s relevant licenses during the interview process. It’s also a good practice to perform background checks on all applicants to ensure there aren’t any incidents of concern.
If the position requires driving while on the clock, it’s also a good idea to pull the applicant’s motor vehicle record. These should be pulled at the time of hire and annually to ensure you know of any driving incidents. You should have an explicit parameter of what’s acceptable for your driving employees.
A good example of this is making it clear that candidates won’t be eligible for hire if they have two or more moving violations in a particular period.
Finally, consider looking into the potential hire to see if they have a history of a lot of disability or workers’ comp claims in previous positions. Having multiple claims is a red flag for applicants. Multiple claims on your workers' comp policy can cause your premium to go up because it reflects that the risk at your agency is higher than average.
Doing all you can to avoid hiring known liabilities will keep your workers' comp insurance premium as low as possible. This also helps ensure that the services your staffing agency provides are done by well-equipped, safe employees.
Another great way to ensure your premium stays as low as possible for your workers’ comp for staffing agencies is by providing proper training. Ensure that the facilities you send nurses to have adequate training programs for their nurses. Formal training is one of the best ways to prevent workplace injuries and illnesses.
You need to be confident that the onboarding your nurses go through is thorough and complete because it will lower the chances of a workers’ comp claim. Training should be as exhaustive for temp positions as it is for full-time.
On your side of operations, provide your nurses with the proper training and resources so they know what to do in the case of a workplace incident. This will ensure that all concerns get reported as soon as possible, which can help ensure any claims are handled promptly and correctly.
Train your employees on your drug and alcohol policies and any other safety procedures and requirements for your agency.
If you’re handling long-term placements, you don’t need to provide workers’ comp insurance coverage for those employees. This is because long-term placements won’t be on your payroll. Therefore, they aren’t your liability.
The employees on your payroll are the ones you’re required by law to provide workers’ comp insurance for. Long-term placement nurses will receive coverage through their long-term employer or need to provide their own coverage, depending on the rules at their place of work.
When in doubt, ask yourself if you’re paying the nurse in question. If you pay the nurse, you provide their workers' comp insurance. Don't include them in your coverage if you aren’t the company paying them.
Are you looking for workers’ comp insurance for staffing agencies? Kickstand Insurance offers a variety of insurance policies and can work with you to find the one that works for your agency. If you want to have 1099 employees provide their insurance, our team can walk you through the steps of that decision.
If you want to provide coverage for your whole team, including contract employees, our team can help find the right policy that works for everyone. Your underwriter will ask questions to determine the type of nurses you have on payroll, the types of locations they work, and any other special situations. Together, you can find the perfect insurance policy for your agency. Contact us today to get your quote started.
Note: The information provided in this blog is intended for general informational purposes only and is not a substitute for professional legal or insurance advice. Laws and regulations regarding workers' compensation insurance are complex and vary by state and by specific circumstances. Therefore, readers are encouraged to consult with a qualified legal or insurance professional to obtain advice with respect to any particular issue or problem they might have.
Mordechai Kamenetsky, co-founder and lead agent of Kickstand, is recognized as an expert in workers' compensation. He is passionate about helping small businesses manage risks and lower their workers' comp costs. In his articles, he educates readers and clients on the intricacies of workers' comp insurance.