The United States’ and Canada’s workers’ compensation system have many similarities, but there are several significant differences. Companies operating in both countries, or considering expansion opportunities, should understand these differences to ensure proper coverage within and across borders and help minimize costs.
The systems differ in three main areas:
1. Workers’ Compensation Boards
Like the US, Canadian provinces and territories create and regulate workers’ compensation legislation at a local level for workers’ compensation boards (WCBs). The WCBs, which provide insurance for workplace injuries and illnesses, operate independently and are funded by employers — not the government.
Coverage is generally mandatory, but certain industries are exempt, including dentistry, banking, and insurance. However, unlike in the US, Canadian industries that are required to purchase workers’ compensation insurance can do so only from a WCB.
Most provinces in Canada provide coverage similar to the book premium plus modification factor used by private insurers in most US states. Ontario, the exception, provides coverage using a modified “incurred loss retrospective rating plan,” which charges an annual non-negotiable premium and assigns a rebate based on expected versus actual claim costs.
Additionally, a company that is part of the WCB system cannot be sued by a worker unless gross negligence is first proven and cannot settle on a lump-sum payout.
2. Cost Drivers
Unlike the US, Canada’s loss of earnings and wage-loss benefits, rather than medical benefits, are the primary cost drivers, due to the publicly-funded health care system, which has:
- Fewer administrative costs and fewer health care costs applied to an employer’s experience rating.
- Less overutilization of health care benefits when a workers’ compensation claim occurs, which translates into lower medical costs overall.
3. Return-to-Work Programs
Medical providers have less control over when an employee returns to work in Canada. Doctors complete functional-abilities forms that list the employee’s capabilities, which employers and WCBs then use to assign suitable tasks.
Doctors are generally not consulted on the length of medical leave unless an employee is experiencing high levels of pain or is being treated with narcotics.
Additionally, if an employer concludes that the employee’s recovery is lagging, it can legally request an independent medical examination by a doctor of its choice, or by a WCB’s evaluation center.
While there are many similarities in the two workers’ compensation systems, it is crucial that companies operating across borders understand the differences. Doing so will help ensure the wellbeing of your employees and the financial health of your organization.
