If you run an assisted living facility or senior care business, workers' compensation insurance isn't just a legal requirement—it's your financial safety net against an industry reality. Senior care workers get injured at a rate more than four times higher than the average private sector employee. Back strains from lifting residents, slip-and-fall accidents in hallways, and even workplace violence incidents happen more often than most facility owners realize. Without proper coverage, a single serious injury could cost you tens of thousands of dollars and potentially your business.
Here's what makes workers' comp particularly tricky for senior care facilities: your premiums aren't just based on the number of employees you have. They're calculated using class codes that categorize your staff by risk level, then adjusted by your facility's actual claims history. Understanding how this system works can save you thousands of dollars every year.
Do You Legally Need Workers' Comp for Your Senior Care Facility?
In almost every state, if you have employees, you need workers' compensation insurance. The specific threshold varies—some states require it with your first employee, others kick in at three or five employees—but senior care facilities rarely get exemptions. Even if you only employ part-time caregivers, you're likely required to carry coverage.
The penalties for not having coverage when you should are severe. You could face fines of thousands of dollars per day, criminal charges in some states, and personal liability for any workplace injuries. If an employee gets hurt and you don't have insurance, you're paying their medical bills, lost wages, and potentially legal fees out of pocket. For a serious injury like a herniated disc from lifting a patient, that could easily exceed $100,000.
Understanding Class Codes and How They Affect Your Rates
Workers' comp premiums for senior care facilities are calculated differently depending on what your employees actually do. Insurance carriers use classification codes—essentially job categories that predict injury risk. The two most important codes for assisted living facilities are:
Class Code 8824 covers healthcare employees who provide direct personal care to residents—your nurses, CNAs, caregivers, and aides. These workers have higher injury rates because they're lifting patients, assisting with mobility, and exposed to physical strain all day. The average rate is around $1.90 per $100 of payroll.
Class Code 8826 applies to all other employees—administrators, schedulers, sales staff, and drivers. These positions are considered lower risk, with rates averaging around $1.88 per $100 of payroll. Your maintenance staff and janitors typically fall under a separate code (7380) with different rates.
Here's why this matters: if you have 10 caregivers earning a combined $400,000 annually and three office staff earning $150,000, your base premium calculation would be roughly ($400,000 × $1.90/100) + ($150,000 × $1.88/100) = $7,600 + $2,820 = $10,420. But that's just the starting point. Your actual premium depends heavily on your experience modification rate.
Experience Mod: Why Your Claims History Determines Your Cost
Your experience modification rate (e-mod or x-mod) is a multiplier applied to your base premium. It's calculated by comparing your facility's actual workers' comp claims to what would be expected for a facility your size in your industry. An e-mod of 1.0 means you're exactly average. Below 1.0 means fewer claims than expected; above 1.0 means more claims.
The impact is dramatic. Let's say your base premium is $10,000. If your e-mod is 0.75 because you've had few claims, you'd pay $7,500. If your e-mod is 1.25 because you've had several injuries, you'd pay $12,500. That's a $5,000 difference for the exact same coverage. And your e-mod sticks with you for three years based on your rolling claims history, so one bad year affects your premiums for a long time.
What many facility owners don't realize is that even small claims impact your e-mod. A $5,000 medical-only claim for a strained back still goes into the calculation. This is why claims management matters so much—returning injured workers to light duty quickly and implementing safety programs to prevent injuries in the first place directly reduces your insurance costs year after year.
What's Driving Up Workers' Comp Costs in Senior Care
Workers' compensation costs in the senior care industry are rising faster than in many other sectors, and there are several reasons why. First, medical costs are climbing 6-8% year-over-year, which directly increases what insurers pay out for injuries. When your CNA needs physical therapy for a back injury, those sessions cost more every year.
Second, the workforce itself is aging. Workers aged 60 and older now represent the fastest-growing segment of workers' comp claims, with a 2.8% increase in 2024. These older workers have 35% higher medical costs and take nine more disability days on average than younger employees. Since senior care facilities often employ older workers who understand the needs of elderly residents, this demographic trend hits the industry particularly hard.
Mental health claims, while still only 2% of total claims, cost 3.5 times more and last 3.6 times longer than physical injury claims. In an industry dealing with patient deaths, emotionally demanding care situations, and high stress levels, these claims are becoming more common. The good news is that most of these cost drivers are manageable through better safety programs and workplace practices.
How to Lower Your Premiums Through Claims Prevention
The most common injuries in assisted living facilities are musculoskeletal disorders from patient handling, slip-and-fall accidents, and workplace violence incidents. All three are largely preventable. Implementing proper lifting equipment and training your staff on safe patient transfer techniques dramatically reduces back injuries. Installing non-slip flooring, maintaining clear hallways, and addressing spills immediately cuts down on falls.
Return-to-work programs are another powerful tool for controlling costs. When an employee gets injured, getting them back to light duty as soon as medically possible—even if it's just answering phones while they recover from a sprained ankle—reduces the length of lost-time claims. Shorter claims mean lower payouts and a better e-mod down the road.
Safety committees, regular training sessions, and documented safety protocols all help reduce your injury frequency. But here's what really matters: consistency. A safety program that exists on paper but isn't actually followed won't lower your e-mod. Your insurance carrier may even offer premium discounts or credits for documented safety programs, so ask about available incentives.
Special Considerations When Buying or Starting a Facility
If you're purchasing an existing assisted living facility, pay close attention to its workers' comp history. You inherit the facility's loss history and its e-mod rating, even if the previous owner had terrible safety practices and you plan to do everything differently. That elevated e-mod will follow you for at least three years, significantly increasing your premiums during that period. This is a real cost that should factor into your purchase price negotiations.
For new facilities, you'll start with a standard 1.0 e-mod, but your early claims will have an outsized impact on your rating once you've been operating for a few years. This makes it critical to prioritize safety from day one, not after you've already had several injuries.
Getting the Right Coverage at the Best Rate
Shopping for workers' compensation insurance isn't like buying car insurance—you can't just plug in your information and get instant quotes online. Rates vary significantly by state, carrier appetite for senior care facilities changes regularly, and your specific risk profile matters enormously. Working with an insurance broker who specializes in senior care or healthcare facilities gives you access to carriers you won't find on your own and someone who understands how to properly classify your employees to avoid overpaying.
When getting quotes, make sure you provide accurate payroll projections broken down by job classification. Underestimating payroll means you'll owe additional premium at audit time. Overestimating means you're tying up cash unnecessarily. Review your policy annually—if you've reduced claims, improved safety, or changed your staffing mix, you might qualify for better rates. Your workers' comp premium should decrease over time as you build a strong safety record, not stay static or increase.
