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Your Business Needs Workers Compensation Insurance

Did you know the effects of Obama’s Affordable Care Act on it?


In 2010, President Obama enacted the Patient Protection and Affordable Care Act (ACA), also known as “ObamaCare”. U.S. healthcare costs associated with workers’ compensation coverage make up only about 2.5% of aggregate medical expenditure in the United States and worker’ compensation was largely ignored when the ACA was written. Additionally, there were no significant elements of the ACA directed specifically at workers’ compensation laws.

It will take some time to determine how the ACA impacts workers’ compensation. In the meantime, here are some interactions to keep an eye on:

  1. Individual Substitution Effect. This occurs when an individual with a pre-existing injury has a real workplace accident and then receives treatment and care for the symptoms unrelated to the workplace accident. If more workers are insured for health coverage, we could see instances of individual substitution decline.
  2. Remote Injury. This occurs when a worker without health coverage is injured away from work, but then claims to have been hurt on the job so workers’ compensation will cover their bills. Again, if more workers are insured for health coverage, we could see instances of remote injury decline.
  3. Direct Fee Effect. Workers’ compensation fee schedules are mostly set by individual states, and in most cases Medicare fee schedules are used as the basis for workers’ compensation fee schedules. If Medicare rates are reduced by the ACA and workers’ compensation fee schedules accept these reductions, then workers’ compensation medical expenses may also fall.
  4. Fee Schedules. Basing workers’ compensation fee schedules on Medicare has always been problematic. This is because Medicare is focused on older patients and chronic ailments, whereas workers’ compensation is centered on injuries involving younger and generally healthier patients. If new and adapted schedules develop around mandated insurance under the ACA, then we may see reductions in costs through more specifically developed workers’ compensation fee schedules.

As a business owner, it’s crucial that you have an understanding of insurance and worker or unemployment compensation coverage. Consult with a reputable independent insurance agency for State of New Jersey Department of Labor updates in regard to your protection needs.



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