Who pays workers' compensation benefits?

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In most states, employers are required to purchase insurance for their employees from a workers' compensation insurance company (also called an insurance carrier). In some states, however, very small companies (with fewer than three or four employees) are not required to carry workers' ompensation insurance. In some states, larger companies that are clearly financially stable are allowed to act as their own workers' compensation insurance companies (also called self-insuring).

When a worker is injured, his or her claim is filed with the insurance company or self-insuring employer, which pays medical and disability benefits according to a state-approved formula.

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