Federal Law Workers' compensation programs for employees working in the private sector are designed and administered by the states. The programs vary across states in terms of who is allowed to provide insurance, which injuries or illnesses are compensable, and the level of benefits. Benefits Provided Workers' compensation insurance provides employee benefits such as wage replacement, medical treatment, and vocational rehabilitation for employees (and their dependents) who are injured at work or acquire an occupational disease. It may also cover employer liability in the case of a lawsuit and pay benefits to the eligible family members of an employee killed on the job. Coverage Requirements and Premium Rates Businesses with employees are generally required to carry workers' compensation insurance coverage through a commercial carrier, on a self-insured basis, or through a state workers' compensation insurance program. State laws set the minimum amount of coverage required for each type of business. Workers' compensation is financed almost exclusively by employers. Insurance rates are determined by state law and vary by state. The premiums paid by employers are based in part on the industry classifications of the employers and the occupational classifications of their workers. Many employers are also experience rated, which results in higher (or lower) premiums for employers whose past experience demonstrates that their workers are paid more (or fewer) benefits than workers for similar employers in the same insurance classification.