In almost every U.S. state, employers are required by law to carry workers’ compensation insurance if they have a certain number of employees. If you’re a business owner in Iowa, you must carry workers’ comp insurance if you have at least one employee. Like most states, there are a few employee types that are exempt from compulsory coverage in the state of Iowa.

Workers’ compensation is one of many small business insurance types all Iowa entrepreneurs should consider.

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 Iowa work?


The state of Iowa requires you to carry workers’ compensation insurance as soon as you have one employee. Workers’ compensation coverage can be purchased via the private insurance market. If you can’t find suitable coverage on the private market, you can buy it from the Iowa Assigned Risk Pool. To do so, visit the National Council on Compensation Insurance.

Some larger employers can also qualify to become self-insurers. To become a self-insurer, a company must periodically submit proof that it has the financial capability to handle injury claims from any and all of its employees.


Who needs workers’ compensation insurance in Iowa?


Nearly every employee in Iowa must be covered by workers’ compensation insurance, with some exceptions. Employees who are exempt from mandatory coverage include:

  • Domestic workers and casual employees who make less than $1,500 over any 12-month period
  • Agricultural workers employed by a company with less than $2,500 in total payroll
  • Employed family members
  • Agricultural exchange laborers
  • Family farm corporation executives and their immediate family
  • Employees covered under federal compensation programs

As a business owner or sole proprietor, you don’t have to purchase workers’ compensation insurance for yourself. That doesn’t mean you shouldn’t get coverage. Sustaining an injury or illness while performing your work can lead to sizable hospital bills, medical costs and a lengthy recovery period. Investing in workers’ comp for yourself could save you from a brutal financial setback.


What are the penalties for not having workers’ comp in Iowa?


If an Iowa business fails to properly provide workers’ compensation coverage, it could face both civil and criminal penalties. Willfully failing to provide coverage carries the steepest penalties including a potential felony conviction punishable by up to 5 years imprisonment and up to $7,500 in fines. Businesses that fail to provide the required coverage to their employees are also liable for full damages if an injured employee sues them.


What does workers’ comp cover?

Medical costs

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.

Lost Wages

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.

Ongoing Care

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 might receive ongoing care due to repetitive stress. If their claim is approved, workers’ comp can cover the costs associated with their ongoing care.

Death Benefits

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.