With so many different types of businesses in the world, it may not
always be easy pinpointing what type of coverage you will need. This is
especially true when it comes to a Massachusetts workers compensation
policy. There are different rules in place for different types of
businesses.

Here is an example of three different business entities and how they may be treated for workers compensation in MA:

Sole Proprietor: Sole proprietors of an unincorporated business are not required to carry workers compensation insurance for themselves. However, the laws changed in 2002, allowing sole proprietors to choose whether or not to include themselves for workers compensation. They must still buy workers compensation insurance if they have any employees. Should they choose to be included, they will be charged premium on a payroll amount set by the state of MA each October 1st. This set amount is equal to 70% of the average weekly wage. In 2011, the annual set payroll amount is $41,300.

Corporate Officers: Corporate officers who own at least 25% interest in the corporation may be able to exempt themselves from the provisions of the Workers Compensation Act. These business owners are typically included in coverage but may elect to be exempt. In order to do so, ALL eligible corporate officers must sign the Affidavit of Exemption for Certain Corporate Officers or Directors – Form 153, stating whether or not they wish to exempt themselves. This exemption must be filed with the DIA’s Office of Investigations in Boston for an approval. If there is any change in the Corporate Officers, this form must be refiled accordingly. It is recommended that this form be supplied each year to your workers compensation carrier.

LLC Members: If you are a member of a Limited Liability Company (LLC) or a partner of a Limited Liability Partnerships (LLP), you are not required to carry workers compensation insurance for yourself. Again, a change of law made in 2002 states that members may now choose to purchase workers compensation coverage for themselves. Should you choose to be covered, your annual payroll amount will be set by the state of MA each October 1st. This set amount is equal to 70% of the average weekly wage. In 2011, the annual set payroll amount is $41,300.

A Word of Caution: Should you choose to exempt yourself, you may want to check with your health insurance carrier to determine if they will pay medical bills associated with an on the job accident. Most health carriers exclude coverage related to occupation injuries even if you do not have workers compensation insurance. Finally, because workers compensation has a disability aspect to the coverage, you should investigate whether you should purchase a personal disability policy so that a portion of your income stream can continue should you suffer an injury that puts you out of work.

For more information on Massachusetts workers compensation and other insurance-related questions you may have, check out our Wolpert Insurance Youtube Channel for a few helpful video blogs!