Monopolistic workers comp states: ND, OH, WA, and WY

What a monopolistic state is

In most states, you buy workers' comp from a private insurance company, and you can shop around. A monopolistic state works differently. The state runs its own workers' comp fund, and that fund is the only place you can buy required coverage. Private insurers are not allowed to sell it.

Four states work this way: North Dakota, Ohio, Washington, and Wyoming. Two U.S. territories, Puerto Rico and the U.S. Virgin Islands, also use a government fund. The word "monopolistic" only describes who sells the insurance. The basic deal is the same as everywhere else: injured workers get medical care and wage benefits, and in return they generally cannot sue a covered employer.

The four monopolistic states

Each state has its own agency, its own rules for who must be covered, and its own rates:

• North Dakota: Workforce Safety & Insurance (WSI) is the only provider. State law does not let private insurers write workers' comp in North Dakota. Coverage is required for full-time, part-time, seasonal, and occasional workers before they start work.
• Ohio: The Bureau of Workers' Compensation (BWC) covers most employers from the first employee. Large employers can apply to self-insure instead.
• Washington: The Department of Labor & Industries (L&I) runs the State Fund. Workers must be covered through the State Fund or by a certified self-insured employer.
• Wyoming: The Department of Workforce Services (DWS) covers businesses in industries the law lists as extra-hazardous, and that coverage is required before work begins. A business outside those industries can choose state coverage, or buy a policy from a private insurer.

Puerto Rico and the U.S. Virgin Islands

Puerto Rico's State Insurance Fund Corporation (CFSE, also called SIFC) says every employer must keep an active policy with the fund. The cost is based on the payroll you report, so report it accurately and pay by the deadline.

In the U.S. Virgin Islands, the Department of Labor says all employers must buy a policy through the Government Insurance Fund. The fund moved to the Department of Labor in 2024, so use the Department's current contacts for new policies and payments.

How buying coverage is different

In a monopolistic state, you apply directly to the state agency. There is no shopping between insurers for the required policy, and the state sets the rates and job classes. Keep these differences in mind:

• Rates and job classes come from the state fund, not from NCCI or a private rating bureau. A quote or class code from another state will not match.
• Washington bases most premiums on hours worked, not payroll. Employers can take part of the premium out of workers' pay, but only up to the amount on the L&I rate notice. Reports and payments are due every quarter.
• Ohio requires a yearly payroll true-up. A coverage lapse is serious, because new coverage starts when BWC gets your payment and does not go back in time.
• Wyoming uses your WYUI employer account for both unemployment insurance and workers' comp wage reports.
• Owners are often left out unless they choose coverage. Check each state's owner rules before you assume you are covered.

Employer's liability and stop gap coverage

A standard private workers' comp policy has two parts. Part One pays the workers' comp benefits. Part Two, employer's liability, pays for your legal defense and damages if someone sues you over a work injury. That can happen when a family member sues, when another company sues you after its own worker is hurt, or when a lawsuit claims you caused the injury on purpose or through a dangerous condition.

Monopolistic state funds pay the benefits, but they generally do not include employer's liability coverage. North Dakota WSI says its All States Coverage does not provide employer liability coverage, for example. To fill the gap, many employers buy "stop gap" coverage from a private insurer. It is often added to a general liability policy or to a workers' comp policy that covers your other states. Ask a licensed agent to confirm the limits, which are commonly $1 million.

Self-insurance

Ohio and Washington let some large employers pay their own claims instead of buying from the state fund. The bar is high:

• Ohio: at least 500 employees in Ohio, two years with the Ohio State Insurance Fund, and five years of certified financial statements. Apply at least 90 days before the date you want to start.
• Washington: L&I must certify the employer. L&I says companies with at least $25 million in assets, and some government bodies, may qualify. You also need an effective accident prevention program.
• North Dakota and Wyoming: private employers get required coverage through WSI or DWS.

Workers who cross state lines

This is where most mistakes happen. A private policy from your home state usually cannot cover work in a monopolistic state, and a monopolistic state policy may not cover work in other states.

• Sending workers into a monopolistic state: you may need an account with that state's fund. North Dakota requires WSI coverage when a worker is hired in the state, or when 25% or more of a worker's wages or your payroll comes from North Dakota work.
• Washington has reciprocal agreements with Idaho, Montana, Nevada, North Dakota, Oregon, South Dakota, Utah, and Wyoming for temporary work. The Montana and Nevada agreements do not include construction. For other states, your insurer must agree to cover the Washington work, or you need an L&I account.
• Leaving a monopolistic state: North Dakota WSI includes All States Coverage for temporary work of 30 days or less in other states, but not in Ohio, Washington, or Wyoming. Ohio BWC offers an optional Other States Coverage program through a private partner for Ohio employers with workers outside Ohio.
• If you have workers in several states, ask your agent for a private policy that lists your other states and adds stop gap coverage for the monopolistic ones.

If you skip coverage

Each state can make you pay back premium, penalties, and claim costs. North Dakota can order you to stop operating, with a $10,000 penalty plus $100 a day for ignoring that order. In Ohio, you must pay back BWC for any claim it approves while you were not covered. Washington adds penalties of 5% to 20% of the unpaid premium, plus interest. In Wyoming, a business in a required industry still owes what it should have paid. Each state guide below has the details.

Checklist for employers

Before you hire or start a job in a monopolistic state:

• Confirm whether your business, or each worker, must be covered by that state's fund.
• Open the account and get proof of coverage before work starts.
• Use the state's own job classes, rates, and reporting schedule to budget.
• Decide whether owners and officers should elect coverage.
• Buy stop gap employer's liability coverage from a private insurer.
• Check coverage for every other state where your people work.