In traditional workers' compensation plans, who typically handles the payment of benefits?

In traditional workers' compensation plans, an insurance company typically handles the payment of benefits. These companies provide coverage to employers, allowing them to transfer the financial risk associated with workplace injuries and illnesses. When an employee files a claim due to a work-related injury, the insurance company steps in to assess the claim and manage the benefit payments.

This system helps streamline the process for both employers and employees. Employers pay premiums to the insurance company, which in return is obligated to investigate claims, determine compensability, and disburse appropriate benefits based on the policy's terms. This arrangement not only mitigates the financial burden on employers but also ensures that injured workers receive timely benefits as stipulated under the workers' compensation laws.

While there are instances where employers may handle claims directly, especially in self-insured scenarios, the traditional model predominantly relies on insurance companies because they offer a level of expertise and risk management that individual employers may not possess.