Certain types of workers and jobs are not covered by workers compensation. The main categories of workers that are not covered by traditional workers compensation are business owners, volunteers, independent contractors, federal employees, railroad employees, and longshoremen.
The cost of a workers’ compensation policy depends on the coverage and a number of other factors like state regulations and industry. An ergonomically-conscious accounting firm might only pay $1,000 a year, whereas a traveling circus could pay up to $88,000 a year. Basically, the safer and smaller the company, the cheaper it is.
Workers compensation insurance premiums are calculated according to how employees are classified (with regards to the specific type of work they perform) and the rate assigned to each employee classification. The premium rate itself is expressed as dollars and cents per $100 dollars of payroll for each class code.
Business owners can deduct the costs of required insurance payments if they are necessary for their business operations. The IRS allows business owners to deduct the cost of workers compensation insurance premiums that are required by state law and provide benefits to injured employees without regard to fault.
