It is unknown by many that some private employers have to buy federal workers' compensation insurance coverage for their employees. Approximately 500,000 employees in the United States are excluded from coverage under state statutes as these employees are covered under a federal statute, the Longshore and Harbor Workers' Compensation Act (LHWCA).
However, workers' compensation insurance carriers are very aware of this market and some 400 plus work comp insurers offer coverage. In addition to these 400+/- insurance carriers, there are approximately 200 large companies self-insuring for coverage required by the LHWCA.
LHWCA coverage requirements are very broad and do not only apply to the stevedores loading/unloading ships. Coverage is required of employers emploing workers for maritime work or in a maritime profession on the navigable waters of the United States and in adjoining waterfront areas. These employers could include:
1. commercial ports
2. ship builders
3. barge builders
4. ship repairers
5. ship breakers
6. dock workers other than stevedores
7. barge loading facilities of products such as coal, grain, gravel, sand
An oddity of the LHWCA is employers also must buy a second state workers' compensation insurance policy to cover workers excluded from coverage under the LHWCA. The excluded workers would include:
1. workers who build, repair or dismantle recreational vessels under 65' in length
2. the master or member of any vessel crew
3. workers who load or unload or repair any vessel under 18 tons
4. office clerical or secretarial
5. security guards
6. data processors
7. club, camp or recreational workers on a navigable water way
8. restaurant workers
9. retail outlet employees
10. museum workers
11. marina workers who are not engaged in construction, replacement or expansion
12. workers who are temporarily doing business on the premise of a maritime employer
13. aquaculture workers
When an employee is injured while working for an employer covered under the LHWCA all medical cost are paid by the LHWCA insurer. The employee can select any physician to treat the injury, as long as the physician is pre-approved by the office of the Secretary of the U.S. Department of Labor.
The weekly benefit for temporary total disability and permanent total disability is two-thirds of the employee's average weekly wage. The indemnity benefits under the LHWCA have a very high maximum weekly amount of $1,224.66. The employee has to be making in excess of $95,000 per year to max out on the weekly benefit. The weekly benefit is adjusted each fiscal year by the Department of Labor.
An ESSENTIAL RTW Program
An odd thing occurs when the weekly indemnity benefit is $1,200+ a week. The work comp indemnity benefit is often higher than the net pay the employee took home including all the deductions from the paycheck for federal income tax, state and local income tax, social security tax, Medicare tax, medical benefits, 401k contributions and union dues (most stevedores are union members).
When the employee's work comp check is bigger than the paycheck, it is often difficult to get the employee back to work. No surprise there! It is essential for the employer to have a light duty return-to-work program, with the adjuster and the employer working with the treating physician to get the employee back to work.
The LHWCA requires a 3 day waiting period before indemnity benefits start. If the employee is off work more than 14 days, the initial 3 day waiting period for benefits is paid retroactively.
The LHWCA has a permanent partial disability schedule for loss of body parts—finger, hand, arm, toe, foot, leg, sight and hearing. Permanent partial disability for non-scheduled body parts is based on two-thirds of the average weekly wage or the loss of wage earning capacity.
Death benefits are also provided under the LHWCA including reasonable funeral expenses up to a maximum of $3,000. The death benefit is paid to the spouse or other eligible survivors. The spouse receives 50% of the average weekly wage for life or until remarriage occurs If there are dependent children, they share 16.66% of the average weekly wage, until they are 18 years old or 23 years old if enrolled in higher education.
Vocational rehabilitation is also provided under the LHWCA. If an employee is unable to return to prior employment, the worker may be eligible for retraining and job placement. The vocational rehabilitation expense is paid for by the U.S. Department of Labor, not by the work comp insurer. (workersxzcompxzkit)
If an employer has anything to do with maritime work or has facilities on or adjacent to navigable water, consult with your insurance broker to see if you need to have the federal workers’ compensation coverage required by the LHWCA.
Author Rebecca Shafer, Risk Consultant / Attorney, President, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers’ Compensation costs, including airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. She serves on the Executive Committee of Lexis Nexis Workers' Compensation Law Center. Contact: RShafer@ReduceYourWorkersComp.com or 860-553-6604.
FREE WC IQ Test: http://www.workerscompkit.com/intro/
WC Books: http://www.reduceyourworkerscomp.com/workers-comp-books-manuals.php
WC Calculator: http://www.reduceyourworkerscomp.com/calculator.php
TD Calculator: http://www.reduceyourworkerscomp.com/transitional-duty-cost-calculator.php
Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers' comp issues.
FREE WC IQ Test: http://www.workerscompkit.com/intro/
WC Books: http://www.reduceyourworkerscomp.com/workers-comp-books-manuals.php
WC Calculator: http://www.reduceyourworkerscomp.com/calculator.php
TD Calculator: http://www.reduceyourworkerscomp.com/transitional-duty-cost-calculator.php
Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers' comp issues.
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