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In almost every U.S. state, employers are required to carry workers’ compensation insurance if they have a certain number of employees. If you’re a business owner in Alaska, you’ll need to purchase workers’ comp insurance if you have at least one employee that doesn’t meet the state’s exemptions criteria.
In this article, we’ll go over who you need to cover, who is exempt, and possible penalties for non-compliance.
How does workers’ compensation insurance in Alaska work?
Unlike many other states, Alaska does not have a state fund for workers’ compensation insurance. That means employers who are required to have workers’ comp must purchase coverage on the commercial market.
If you can’t find coverage via a commercial insurance provider, you can get coverage through Alaska’s Assigned Risk pool by contacting the National Council on Compensation Insurance (NCCI).
Certain employers aren’t required to purchase workers’ compensation insurance if they can qualify to become self-insured employers. Self-insured employers must meet all of the following criteria:
- Have been in business in the state of Alaska for at least 5 years
- Have at least 100 employees
- Have a net worth of at least $10 million
- Are able to meet all current and future financial obligations under the Alaska Workers’ Compensation Act
- Have a safety/loss program in effect
- Are able to provide claims services
- Have agreed to post any required security deposits
Who needs workers’ compensation insurance in Alaska?
All employees, including part-time workers, must be covered by your workers’ comp policy in the state of Alaska unless they are on the list of exemptions.
If you’re self-employed, you don’t have to purchase workers’ comp insurance for yourself. However, if you’re doing contract work for another business, that business may have to add you to their workers’ comp policy depending on the nature of your work. Additionally, executive officers and LLC members who have at least 10% ownership in a company aren’t required to be covered under a company’s workers’ comp policy.
As with most states, in Alaska there are certain exemptions to who must be covered by workers’ comp insurance. Those exemptions are:
- Part-time babysitters
- Non-commercial cleaning people (like housekeepers)
- Certain part-time agricultural workers
- Amateur sports officials
- Contract entertainers
- Commercial fishery workers
- Some taxicab drivers
- Individuals performing work mandated by the Alaska temporary assistance program
- Professional hockey players and coaches already covered by a health insurance plan
- Some real estate licensees
- Transportation network company drivers
For more information about Alaska’s workers’ comp exemptions, visit the Department of Labor’s website.
What are the penalties for not having workers’ comp in Alaska?
Failing to provide legally required coverage to your employees can lead to steep penalties. In Alaska, employers can be assessed up to $1000 per day for each uninsured employee. If an employer receives a stop work order for noncompliance, they’ll face a mandatory $1000 fine each day they violate the stop work order. Penalties for noncompliance are handled by the state’s Special Investigations Unit.
What does workers’ comp cover?
If one of your employees is injured or becomes ill on the job, workers’ comp can cover their immediate medical expenses such as ambulance rides, emergency room visits, x-rays, surgery and prescription medications.
For example, if a kitchen employee reaches into a sink and slices their hand on a broken glass, they might require medical attention. Workers’ comp could cover the costs of their emergency room visit, stitches and pain management prescriptions.
Many work-related incidents can leave employees unable to work for several weeks or months. Workers’ comp can provide some relief for employees in the form of partial wage replacement.
If an employee breaks their foot in a work-related accident, they could end up stuck at home for multiple months. While they’re out of work, workers’ comp would cover some of their lost wages.
Some work-related injuries require long-term care such as physical therapy or pain management. Often, these injuries are more the result of repetitive workplace stress rather than a single traumatic incident. Chronic back issues for construction workers and carpal tunnel syndrome for office employees are two common examples of the types of workers who must receive ongoing care due to repetitive stress. If their claim is approved, workers’ comp can cover the costs associated with their ongoing care.
If the unthinkable happens and an employee passes away because of a workplace incident, workers’ comp can cover funeral costs and other death benefits for the deceased worker’s family or beneficiaries.