What can happen if household employers overlook workers compensation
A case study highlighting the importance of protecting yourself if your caregiver is hurt on the job
Workers' compensation insurance is an important part of the household employment hiring checklist. It's unique in that it’s not tied to the payroll and tax process, but can have a dramatic impact on a family's finances. Not all states require families to have a workers’ compensation insurance policy, but not having coverage can put you at risk if your nanny or senior caregiver is hurt while working for you. The following incident highlights why it’s better to err on the side of caution than to assume nothing will happen to your caregiver on the job.
How the family’s nanny was injured while taking care of their kids
A family in Tennessee hired a nanny to take care of their two kids. The family lived near the park in their neighborhood, so it was part of the nanny's daily routine to take the kids there and let them have some play time outdoors. Unfortunately, only 3 weeks into the job, the nanny hurt herself while playing with one of the kids and was unable to walk back to the family's home. She was able to call the mother who quickly drove to the park, picked up the nanny and the kids and took the nanny to the emergency room.
The nanny's doctor informed her that it would be unsafe for her to care for the family's children for 3 weeks while she recovered. Between the emergency room visit, x-ray, MRI, arthroscopic surgery and 12 recommended rehabilitation sessions, the total cost of her care came to approximately $8,800. To make matters worse, the hospital informed the nanny that her health insurance company refused to pay for her treatment because it was a work-related injury. The nanny and the family were both confused about what to do.
What the law says about workplace injuries and workers’ compensation insurance
The majority of states require household employers to purchase a workers' compensation policy to assist their employee with medical bills and lost wages if they are sick or injured on the job. Even if workers' compensation isn't required in a family's state, they can still be held liable for the value of their employee's lost wages and medical bills in a work-related incident.
See the workers’ compensation requirements in your state.
Many families mistakenly believe their homeowner's insurance umbrella policy is sufficient for coverage. However, these policies are written for "guest workers" (i.e. a painter or plumber doing a short-term project) and do not cover an in-home employee.
Note: In California, a homeowner's insurance policy does provide a certain level of coverage depending on how much the employee works. When you hire a household employee, you should call your insurance provider to see if a rider needs to be purchased to provide additional coverage.
How the family and their nanny resolved her medical expenses
Since Tennessee is not a state that requires household employers to have workers' compensation for a nanny, the family didn't break any employment laws. However, since the nanny's health insurance company refused to pay for her medical bills, the family was stuck with the $8,800 bill - plus another $2,100 to pay their nanny for the 3 weeks of work she had to miss.
In order to save a little money when their nanny was recovering, both parents used vacation time from their own job to watch their kids until their nanny returned to work. The family now has a workers' compensation policy - which costs them approximately $500 a year - to protect them in case another accident occurs.
This case illustrates why it's a good idea for families to purchase workers' compensation, even if it's not required by their state. This family unfortunately made an $11,000 mistake - largely because they weren't informed about workers' compensation during the hiring process. Had they received a thorough consultation from an expert like HomePay, they could have avoided the situation entirely. You can easily imagine a scenario where a household employee is injured on the job worse than this family's nanny. The resulting medical bills could be 2 or 3 times more expensive, which could cripple a family's finances.
To make things as easy as possible for your family to obtain coverage, HomePay has a workers’ compensation program called HomeStaff Protect where our partner can provide free quotes and issue a policy in nearly every state. You hope you never need to make an insurance claim, but you’ll be happy you have a policy if an unfortunate incident occurs.
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