Workmen Compensation

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Employees’ well-being is extremely important for the growth of any business. Ensuring the well-being of employees and protecting them is a great productivity booster and talent retention technique for businesses. Group health insurance, group term insurance, etc. are part of this employee retention program. Availing of the right employee compensation insurance policy also helps in retaining talent at the workplace. 

Employees health insurance is not a mandatory requirement for employees to opt for. Employees can opt out of the group health insurance coverage offered by their employer. However, an employees’ compensation insurance policy is mandatory by law for employers to cover all their full-time employees. Let us understand what is covered in employee compensation insurance and how it can compensate employees who opt out of health insurance.

Employees Compensation Insurance Policy

Employees compensation insurance coverage is also referred to as workmen’s compensation insurance. This policy gives financial protection to the employer against the statutory liabilities arising from the workmen’s compensation claims. That means, the compensation is paid to the workers who suffer bodily injury, death, occupational illness, disability, or property damage due to unforeseen workplace accidents. Knowing the features of employees’ compensation can help you understand how it helps in compensating employees who opt out of health insurance.

Features of Employee Compensation Insurance

Employee compensation insurance is a great protection tool for employers and employees during workplace accidents. It is a mandatory legal requirement for employers to have this coverage. Here are some of the important features of employee compensation insurance:

  1. Employees’ compensation insurance policy provides financial support to ill or injured workers in a work-related accident. The coverage includes medical costs for treatment of injury, compensation for dependents of deceased employees, income loss cover, disability benefits, etc. as per the provisions of the Workmen Compensation Act, 1923.
  2. Employee compensation is a no-fault system in which the employee is not required to prove the employer’s fault.  
  3. Employees’ compensation insurance policy promotes safety in the workplace.

Health Insurance Plan Opt-out

The employee is free to opt out of the group health insurance policy offered by the employers in case they have the provision to be covered elsewhere. In case an employee opts out of the health insurance policy, the employer may compensate with cash incentives. 

Generally, group health insurance plans offered by the employer provide comprehensive coverage and financial assistance against medical emergencies. Employers sponsor the following benefits of health insurance plans:

  1. Access to medical care services which includes hospitalization cost, pre- and post-hospitalization cover, preventive care, diagnostic and surgery costs, maternity and childbirth expenses, etc.
  2. Most group health insurance plans offer cashless hospitalization benefits as they settle claims without incurring out-of-pocket costs.
  3. Group health insurance plans are a more cost-efficient option than individual health insurance plans availed by employees as premium costs. This is because of cost-sharing between the employer and employees and the large number of people included in one umbrella.
  4. Employees can also avail coverage for their dependents in group health insurance at a relatively lower premium rate.
  5. Major benefits offered by group health insurance is the coverage of pre-existing illnesses from day one of the policy.

How Does Employee Compensation Insurance Compensate Employees Who Opt Out of Health Insurance?

Employee liability policy online provides medical cost compensation to employees when they suffer occupational illness or injury while performing their job due to work-related accidents. The company pays this compensation to the employees even if they have opted out of health insurance. However, the other benefits offered by the health insurance policies are not covered under the employees’ compensation insurance policy.

For example, if an employee breaks a leg while operating machinery at the workplace. In this case, the employees’ compensation insurance policy provides compensation as per the provisions of the Workmen Compensation Act, of 1923. The company pays this compensation to the employee regardless of their enrollment in group health insurance.


Employees’ compensation insurance policy ensures employer is compliant with the statutory requirements and also ensures the well-being of employees at the workplace. It helps the employer to ensure the injured or ill employee receives the appropriate medical care by offering the needed financial support. Right employee compensation policy is important for the protection of employees and for long-term business growth.

About The Author

Rahul Kumar 

MBA Finance

With a wealth of experience in the insurance industry, Rahul is a seasoned writer specializing in articles related to workmen compensation policies (WC policies) for SecureNow. With 12 years of experience in the field, he has acquired in-depth knowledge and expertise in workmen compensation insurance, understanding its complexities and nuances. Their insightful articles provide valuable insights into the importance of WC policies for businesses and employees alike, offering practical advice and guidance on navigating the intricacies of insurance coverage. Trust him to deliver informative and engaging content, backed by years of experience and a passion for educating readers about insurance-related topics.