Difficulty: Medium

Average Score: 50%

An employer who wishes to be self-insured for workers' compensation liability will have to

Rationale

Post a surety bond to guarantee the employer’s financial ability to pay workers’ claims.

To be self-insured for workers' compensation liability, an employer must demonstrate financial capability to cover potential claims, which is typically done by posting a surety bond. This bond acts as a form of security to ensure that funds are available for employee claims, providing assurance to the state and employees.

A (obtain the agreement of all employees to such a plan) YOUR ANSWER

While employee agreement can be beneficial for communication and transparency, it is not a legal requirement for an employer to become self-insured. Self-insurance primarily involves financial assurance mechanisms rather than employee consent.

B (participate in the state's second injury fund) YOUR ANSWER

Participation in the state’s second injury fund is usually a separate matter designed to provide benefits for employees who sustain a second injury. It does not relate directly to the requirements for being self-insured, which focuses on the employer’s ability to handle their own claims.

C (post a surety bond to guarantee the employer's financial ability to pay workers' claims) CORRECT

This option accurately describes a critical requirement for self-insured employers. The surety bond ensures that there are funds available to cover workers’ compensation claims, thus providing financial protection for employees and compliance with state regulations.

D (join with other self-insurers to create a large funding pool for the settlement of claims) YOUR ANSWER

While pooling resources with other self-insurers can be a strategy to manage risks, it is not a requirement for an employer to become self-insured. Self-insurance can be conducted independently without joining a collective funding pool, as long as the employer meets the necessary financial obligations.

Conclusion

To self-insure for workers’ compensation, an employer must post a surety bond that demonstrates their financial capability to cover claims. This bond serves as a guarantee to both employees and regulatory bodies. Other options, such as employee consent or joining funding pools, do not fulfill the fundamental requirement of ensuring that adequate funds are available for potential liabilities.

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