Yes, the state of Missouri will allow a sole-proprietor, LLC member, and owners of a corporation (if there are less than two owners and they are the only employees) to exclude themself from a worker’s compensation policy.
However, the better question to ask is “Should an owner exclude themself from a worker’s compensation policy?”
Once an owner chooses to exclude themself, there is absolutely no coverage provided for a workplace injury under the workers compensation policy.
The two most common reasons owners will exclude themselves from workers compensation are:
- Save money on their annual work comp premium
- Rely on a health insurance policy to cover any injuries
These reasons seem logical at a 10,000-foot view, but upon closer inspection, they could end up costing the owner more after a serious injury on the job.
Breaking down reason #1 – Save money on the annual premium
- The state of Missouri, as of 2020, caps an owner’s salary on workers compensation at $43,800 (regardless if they pay themself $1 or $100,000 a year.) Depending on the industry and if the owner works regularly in a higher rated class code, they can be classified as “clerical.” This means they would save approximately $110 a year on their work comp premium.
- The most common type of industries where owners exclude themselves are in the construction/trade industries. If an owner is regularly working on a jobsite installing, demolishing, or erecting but decides to exclude themself, the annual premium savings will be more than the “clerical” premium. However, the likelihood of a more severe injury is also higher. One incident on a job site or a vehicle accident that results in a broken leg, back, amputation, burn, etc. would result in out of pocket expenses for medical bills costing more than the annual premium for an owner.
Breaking down reason #2 – Rely on a health insurance policy to cover any injuries
- A health insurance policy is designed to provide coverage for non-work-related injuries. All insurance policies have exclusions that limit coverage, and a health insurance policy is no exception. Business owners may find many policies will deny coverage for work-related injuries even if the owner was “eligible” for workers compensation coverage. Before opting out of coverage, an owner at the very least should have a conversation with their health insurance agent reviewing the policy to assure there are no exclusions for a work-related injury.
- Even if a health insurance policy will cover a work-related injury, the policy typically pays 80% of the medical expenses and is still subject to a deductible. A workers compensation policy will pay 100% of medical expenses, provide lifetime benefits, retraining and rehabilitation coverage, and worst case scenario a death benefit as well.
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