Here's something most optometry practice owners don't realize until it's almost too late: the day you hire your first employee, your insurance needs completely change. You're no longer just protecting yourself from malpractice claims—you're now responsible for someone else's livelihood, their safety, and the legal complexities that come with being an employer. That first hire is exciting, but it also triggers a whole new set of insurance requirements that most solo practitioners haven't thought about.
The good news? Once you understand what's required, getting the right coverage isn't complicated. Let's walk through exactly what insurance you need when you bring that first receptionist, optician, or associate doctor onto your team.
Workers' Compensation: The Non-Negotiable Requirement
In most states, workers' compensation insurance isn't optional—it's the law. The moment you hire your first employee, you're legally required to carry this coverage. States like California, Pennsylvania, and New York mandate workers' comp if you have even one employee. Florida requires it at four employees, and Texas is one of the few states where it's technically optional (though still highly recommended).
Workers' comp protects your employee if they get hurt on the job. Think about your practice: your staff is constantly on their feet, moving equipment, adjusting chairs, working with diagnostic machinery. If your optician strains their back lifting boxes of frames, or your receptionist trips over a cord and breaks their wrist, workers' comp covers their medical bills and a portion of their lost wages while they recover. Without it, you could be personally liable for those costs—and they can add up fast.
For optometry practices, the average cost runs about $53 per month, or $638 annually. That's relatively affordable compared to the financial disaster of an uncovered workplace injury. The key to keeping costs down is accurate employee classification. A front desk receptionist and a licensed optician have different risk profiles, and your insurer needs to know exactly what each employee does to calculate fair premiums.
Employment Practices Liability: Protecting Against the Unexpected
Your professional liability insurance protects you from patient claims about your clinical work. But what happens if an employee claims you discriminated against them during hiring? Or alleges sexual harassment? Or says you wrongfully terminated them? That's where Employment Practices Liability Insurance (EPLI) comes in, and it's coverage most small optometry practices overlook.
While EPLI isn't legally required, it's increasingly essential. According to the Equal Employment Opportunity Commission's 2024 data, retaliation claims account for nearly 48% of all employment charges filed, followed by disability, race, and sex discrimination claims. Small practices are particularly vulnerable because legal defense costs alone can be devastating, even if you ultimately win the case. A standard $1 million EPLI policy costs between $1,500 and $2,500 annually for practices with five to twenty employees. Some insurers offer add-on EPLI coverage starting at just $18 per employee per year.
Think of EPLI as insurance against misunderstandings that spiral into lawsuits. You might have the best intentions as an employer, but employment law is complex and constantly evolving. This coverage pays for your legal defense, settlements, and judgments related to wrongful termination, discrimination, harassment, invasion of privacy, and other employment-related claims.
Getting Employee Classification Right
Here's where many new employers stumble: properly classifying workers. The distinction between employee and independent contractor matters enormously for insurance and tax purposes. If you hire someone to work set hours at your practice, using your equipment and following your processes, they're almost certainly an employee—not a contractor. The Department of Labor has tightened classification rules in recent years, and misclassifying workers can lead to penalties, back taxes, and insurance headaches.
For workers' compensation purposes, you also need to classify employees by job function. Your insurance company uses these classifications to assess risk and calculate premiums. An optician who works with tools and equipment carries different risk than a receptionist doing administrative work. Accurate classification ensures you're paying the right amount—not overpaying for coverage you don't need, and not underinsured for the actual risks in your practice.
Don't forget about payroll tax obligations either. If you're structured as an S-corporation, you'll split Social Security and Medicare taxes with your employee. As the employer, you're responsible for 6.2% for Social Security (on wages up to $160,200 in 2025) and 1.45% for Medicare. These aren't insurance premiums, but they're part of the total cost of having employees.
Timing Matters: When to Get Coverage
You need workers' compensation insurance in place before your first employee starts work. Not on their first day—before it. Most states impose penalties for even short gaps in coverage, and if your employee gets hurt on day one without active coverage, you could face serious legal and financial consequences.
The smart move is to start shopping for insurance as soon as you decide to hire. Give yourself at least two to three weeks to compare quotes, understand your options, and get policies bound. This also gives you time to implement basic safety protocols and risk management practices that can lower your premiums. Simple things like keeping walkways clear, properly storing equipment, and maintaining your facility can demonstrate to insurers that you're a low-risk employer.
Building Your Insurance Package
As a new employer, you're looking at a minimum of two policies: your existing professional liability coverage plus workers' compensation. Smart optometry practice owners add EPLI at the same time. Many insurers offer package deals that bundle these coverages, often at a discount compared to buying separate policies.
Work with an insurance agent who understands healthcare practices, ideally one who specializes in optometry. Organizations like the AOA Insurance Alliance and specialty providers like AmTrust Financial and Insureon focus specifically on optometry practices and understand the unique risks you face. They can help you balance adequate protection with reasonable costs.
Review your coverage annually as your practice grows. Your insurance needs with one employee are different from your needs with five or ten. As you add staff, your premiums will increase, but you may also qualify for better rates or expanded coverage options. Keep your insurer informed about changes in your practice—new services, additional locations, or changes in staff responsibilities—so your coverage stays aligned with your actual risks.
Hiring your first employee is a milestone that transforms your practice from a solo operation into a real business. The insurance requirements might seem like just another administrative burden, but they're really about protecting everything you've built. Get the right coverage in place before that first employee walks through your door, and you'll have peace of mind knowing both your practice and your team are protected.
