The Alarming Consequences of Not Having Workers Comp Insurance in Assisted Living
Sep 17, 2025
Starting an assisted living business is exciting—but skipping over important details like workers comp insurance can put everything at risk.
This guide breaks down exactly why having workers compensation is not optional and what can happen if you don’t have it in place. We'll show you how to protect your caregivers, your facility, and your future.
Let’s dive in! π‘οΈ
Check out this video, too:
Why Workers Comp Insurance Matters
Most assisted living facilities have caregivers doing physical work—transferring residents, cooking, cleaning, and handling medications. That means injuries can and do happen.
If you don’t have insurance when something goes wrong, it could be the end of your business.
Ask yourself:
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Do I want to protect my team if they get hurt on the job?
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Am I willing to risk fines, lawsuits, or even losing my facility?
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What would happen if an employee were injured tomorrow?
Having a solid insurance plan in place is part of building a smart, secure business foundation.
What Does Workers Comp Actually Cover?
With the right policy in place, here’s what workers comp can help cover:
π©Ή Medical care for injured employees
πΈ Lost wages if they can’t work
βοΈ Legal costs if they sue
π Settlements or court judgments
This is about creating a safety net that protects both you and the people who make your business run every day.
Most states legally require workers comp as soon as you hire one employee—even if they’re part-time.
How to Get Covered the Right Way
Getting workers comp doesn’t have to be complicated or expensive. Here’s a simple step-by-step:
π Step 1: Set up your business as an LLC or Corporation
π Step 2: Register with your state’s workers comp board
π Step 3: Call an insurance broker who understands residential assisted living
π Step 4: Ask for “pay-as-you-go” payment options to manage cash flow
π Step 5: Get covered before your first employee starts work
π‘ Many brokers can get your policy up and running in just a few days.
Pro Tip: Keep Payroll Accurate
Your insurance cost depends on payroll numbers. If you estimate wrong, you’ll either:
π« Overpay and waste money
β οΈ Underpay and owe a big bill during your audit
Use a payroll service that works directly with your workers comp provider. Many of them offer automatic syncing and “pay-as-you-go” so your payments stay accurate.
Protect Your Business Before It’s Too Late
You’ve worked hard to get your business off the ground. One accident without coverage can undo it all.
Workers comp insurance is your facility’s seatbelt—you might never need it, but when you do, it can save everything.
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Protect your caregivers
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Protect your finances
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Protect your dream
Don’t take chances. Take action now.
Free Resource to Help You Build a Strong Foundation
Want to avoid costly mistakes as you grow your assisted living business?
π Download our Business Plan Checklist – It walks you through everything you need to create a solid business plan to get you started.
Join the Challenge for Personalized Support
Launching your assisted living business is easier when you’re not doing it alone.
Need help figuring out where to start? Join the next Roadmap Challenge and build your launch plan with me.
It’s the fastest way to go from idea to income.
Show full transcript π
Transcript
00:00:10
Hey friend, it's Brandon Gustafson with Assisted Living Investing. Excited to have you here with me. I help beginners like you launch their assisted living business in the next 12 months. Excited to be chatting with you today. Our topic is the alarming consequences of not having workers comp insurance. This actually came from somebody in uh a comment on on YouTube uh who is wondering about workers comp. Do you need it? Uh is it required? And so I really wanted to dive into that for you today so you understand what workers
00:00:40
comp is uh how it works and uh you know if you need it or not uh for for you to be uh successful as you're as you're trying to launch your assisted living business. It can be really confusing. Insurance is is hard. It's confusing. It's expensive. It's it's one of the five main expenses that I see uh or from my experience. Um and in owning an assisted living business, uh it's one of the the big ones that that you need to be aware of and and so that's that's something that I wanted to really dive
00:01:08
in with you on this so you understand exactly what what you're getting into. Okay. So, with that, I think I've got everything posted on the other stuff. I think I figured out Facebook's new uh little way of sharing things. So fingers crossed that that it worked. Uh but with that, I want to remind you to go and grab your free business plan checklist. It will be over here just kind of over on the side uh for you to go grab that. Assisted living investing.net/bp checklist. Go make sure you grab that
00:01:35
free uh business plan checklist to help you out as you are trying to build your foundation to get started. Is the most important thing you can do as you're trying to start your assisted living business is build a foundation. And a key component, one of the most important things you can do there is building a solid business plan. So, make sure you go and grab that checklist to help you out along your way. Now, let's get into this, the the alarming consequences of no workers comp insurance and what
00:01:58
that's going to look like. For those of you who are new here, let me introduce myself. My name is Brandon Gustafson. I have owned and operated assisted living facilities since 2020. I've done that remote. I live in Utah. I've owned facilities in Colorado and in Utah or Colorado and in Idaho. Um, I also have a masters in healthcare administration. I've worked in the healthcare industry since 2011. I I I know what I'm doing. I've also um started these buying new facilities uh from from the ground up,
00:02:26
you know, from the beginning. Uh and have secured $1.5 million in SBA funding. Um I've also had a few issues with workers comp. So, I'm going to get into that at the end of the video today. So, if you're interested in hearing about uh some of the my experiences with workers comp, um make sure you stick around until the end of the video because I I've got some fun stuff for you uh to help you out as you're as you're trying to figure out, you know, do you need this or not? So, let's start
00:02:50
off with some of the basics. What is workers comp insurance? So, I'm I'm going to say workers comp because I'm just used to it. Workers comp means workers compensation fund insurance. is is basically um there to help cover workplace incidents. So something happens uh somebody cuts their finger um while they're on the job, uh somebody breaks a leg, you know, something like that, something that you hope does not happen. Workers comp insurance is there to cover that. Uh it's there to to to
00:03:24
help you as a as a as a business owner not have to pay for all of those things out of pocket. helps reduce some of those medical um burdens, medical costs that could happen to your employee, uh reduces those as well. So, it's a really good benefit for you to have um for for your employees uh for for you to have this in place so that they don't get stuck with a huge medical bill. Takes out some of the liability um in the event that uh something like this does happen to you, which you want to avoid.
00:03:54
Um and and gives you some extra protection there. Um, it provides medical coverage. Uh, so somebody cuts their finger, they have to go to the hospital. Let's say it's a a bad cut and they need to get stitches. Stitches. Not sure what word I was trying to say there. Uh, you have to get stitches. Um, workers comp is going to help cover that. Um, the the stitches help cover any, you know, followup. You know, maybe it's got infected, they're going to have to look at it, you know, medicine,
00:04:20
whatever. Um, it's going to help cover that. It can also help cover lost wages um in in certain circumstances. So, if a person were to break their ankle and they had a job where they had to be up, like in assisted living as a caregiver, you've kind of got to be up and be able to walk around and and work. If they were to break their ankle on the job, has to be on the job, but if they broke their ankle on the job doing an approved work activity, then um there could be some wage replacement for them through
00:04:49
workers comp insurance. So that that's that's the benefits of of it. That's kind of what it is and and how it functions. So do you need workers comp insurance? It is actually a legal requirement in every single state except for Texas because Texas does things on their own. Um so that's something you want to to be aware of. But even in Texas, if you are working on a government contract, which could potentially be Medicaid, um then you will likely need to to have workers comp. Okay. So, it it is going to be as
00:05:25
unless you're in Texas, it is 100% required. Um for for every other state, uh it's a legal requirement. Um and even in Texas, there may be stipulations where you want to do it. Um, even if it's not required, you're in Texas and and it's not required for you, I still would highly recommend that you get workers comp, uh, the the amount of money that you pay into it. I'm going to talk about this here at the end of the video. Uh, but it is it's it's worth it. Um there there's been experiences that
00:05:51
I've had that um I'm I'm grateful that we had workers comp and that we were able to to have that in there because it saved us uh a lot of money um and protected us from from liability um from from circum certain from certain circumstances. Uh so it's it's something that even if it's not required I would suggest that the person who asked this question on YouTube was wondering if it was required in California. The answer is yes. It is going to be required in California. You have employees. You are
00:06:20
required to have workers comp insurance. So, you need to to make sure you get that. Now, let's talk about a little bit of what it costs to to get this. So, I'll I'll also let me really quick. I want to see Okay. Yeah. So, I'm going to talk a little bit about this. Where to find workers comp um before I get into how much it costs. So when you are looking for workers compensation uh insurance when when you want to find that um especially as a small residential facility it can be hard to find it. So if you start looking
00:06:52
for workers comp online you you start uh looking you you put that search term into your YouTube algorithm you are going to be inundated with all kinds of of ads. Uh they will they will come out of just out of nowhere. There's so many of them. Um, and you're going to get, you know, here's here's this one. It's nationwide. Here's here's that one. You can do this. Um, here's this one for this state. You know, you're going to get a ton of different workers comp um,
00:07:17
options that are coming to you. And you might think, "Oh, cool. I've got all these options." And sorry if you can hear the screaming up there. My daughters are playing apparently screaming. I don't know if you can hear it, but I can. Uh, anyways, uh, let's see. Uh, you're you're going to get those. But what you're going to find is that not uh not all of those are going to be able to provide you with the workers comp insurance that you need. Ultimately, what comes down what it
00:07:43
comes down to is if you are a brand new business and you're kind of in this kind of weird world of you you do provide care, but you're not providing the same amount of care as as a nursing home. Uh and you're just kind of in this this weird kind of gobetween. I have found that workers comp is actually hard to get unless you go to a state-based um workers comp insurance fund. So, uh there each state is going to have their own uh their own version of this that they that they run. In Idaho, we it's
00:08:12
called the state insurance fund, SIF. In Utah, it's workers compensation fund, WCF. In Colorado, it's through Pinnacle. Um, so each each of those states they have it's it's kind of run not run by the state but it's a state approved one and and it's done uh I'm not sure exactly how they how they build that out but it it's a state approved one and they will cover you and you might find that they are the only ones that can or will cover you. Uh so that that's something you want to get into and when
00:08:43
you're first getting started your rates are probably going to be a little bit higher. Now, once you get in and you start doing this and and you show that you're good, you might be able to go and apply for workers comp somewhere else, um you might be able to start getting some better rates. So, you have to decide if you want to do that or not. Um but you you could potentially do it. So, that's how how you're going to go find it where you're going to find uh this and and you're probably going to
00:09:06
especially in the beginning need to do something that's a little more state based. Okay. Now, let's talk about how much it costs. So, based on the volume of historical payroll, um, that's what it's going to be based off of. You're going to do a quarterly reporting, you're going to your your payroll vendor. I I suggest you use Gusto. Um, we're going to have a link down below. You can go use Gusto. I I've been using it since 2020. I love it. Um, the first time you run your payroll,
00:09:32
you'll get a $100 Visa gift card from Gusto if you use my link. So, make sure you go do it. I get I think the same thing. So, um, yeah, helps both of us out. Anyways, um you're going to have to do quarterly reporting. So, you're going to use your payroll vendor. Uh you're going to create a report. They might have one already created. You might have to create one yourself. It's super easy to do inside of Gusto to create a custom report. Uh but basically, you just need to take how many wages um you you paid
00:09:59
out, the gross pay that you paid out um in in wages. So, you're taking you're not subtracting anything for taxes or anything like that. You're just saying my people worked enough that they earned a million dollars this quarter. That's what it was. So, you just you put that number in there and then there are calculations that they do on their side that I'm not like super privy to. I don't understand exactly how they work, but you submit your number, they come back and they say, "Okay, here's the
00:10:25
percentage." And then um that's what you have to pay as a premium um for that. So, that's kind of how how it works. Um there there's probably videos out there you could watch. I'm not going to go through the math of it, uh, or the specifics, and also it's probably going to be based off of each state, your experience as a business owner, um, your longevity. There's going to be a lot of stuff that goes into that. Really, it is determined by the type of work as well that is, uh, performed by your
00:10:51
employees, so caregivers. This type of work is going to be assigned by the National Council on Compensation Insurance, the NCCI. So, that's that's a big component of it. There's the the percentage of of the payroll. Uh there's like going to be how many employees you do have, longevity in business. There's a lot that goes into it. Um but it all will come back down to a base of the work performed by your employees. Okay, that I'm getting like super technical in the weeds here. That's just kind of how
00:11:20
it works uh when it comes to insurance. There's an insurance person watching this, please comment down below. I'd love to hear from you on on how that works. Um and reach out. we might be able to do some connecting on that um and and helping people in in my programs uh you know like the mastermind program uh help them get the insurance that they need. So reach out to me um go to assisted livinginvesting.net/c contact. Okay. Uh anyways um you can find calculators online for this to give you
00:11:47
an idea of what this would look like. You would just plug in your quarterly reporting um and your state, the type of work that you do, and it will spit out a number for you that's going to give you a pretty good ballpark. Typically, in my experience, we pay between about 1,500 and probably $2,300 per quarter. Um, that that's how we pay premiums for workers comp. So, if you were to break that down on a monthly basis, we're between like $500 and $800 a month um is what we pay for workers comp insurance.
00:12:17
So, that kind of gives you an idea of the ballpark. I do this my mine are my my facilities are 16 bed facilities. I have between 10 and 12 employees um total um that that work and and and cover shifts for us. So it kind of gives you an idea of what that would work look like. Um and I would say that those numbers are pretty consistent between both Colorado and Idaho. Now this is the western United States. You might see something if you're in California is different like on the coast or if you're
00:12:44
over on the east coast or the northeast probably more expensive than it would be like in the southeast or just in the south. uh just kind of is going to depend but gives you an idea in ballpark what you could be expecting there. I would I would anticipate that it's that's going to be pretty common um for for what you're trying to get. Okay. Now, let's talk about what workers comp actually covers for uh for your employees. It's going to do employee protection. Instance, you know, you have
00:13:11
an employee, they cut their finger, they've got to go to the hospital, they got to get stitches. It's going to protect them. uh it's an added layer if you were to offer health insurance uh to your employees. Your workers comp will come in as a secondary um a secondary benefit usually on that. So their their primary health insurance would process the claims. Anything that's outstanding um after that initial primary insurance processes, workers comp is going to to provide um reimbursement for that. If
00:13:42
there is no primary insurance, then the workers comp becomes the primary insurance and processes the claim that way. So, I could get into insurance processing claims and stuff like that all day long. I'm going to try to keep it simple. Um, it will give you legal protection. Your employee is there. They they fall, they they break their ankle. you have your liability insurance in place to help protect you. But workers comp is also going to show um your your liability insurance show anything where
00:14:11
if if you live in a religious society, um if you get to that point where somebody is taking you to court, you have done the things that you were supposed to do. Um, and uh, you know, you've provided adequate coverage and your liability and workers comp insurance should provide you as a as a business owner with attorneys to help com combat um, those types of instances where somebody's coming after you to sue you. Okay. Um, risk mitigation. Um, somebody falls and breaks an ankle, you have a thing in place where that
00:14:44
insurance is going to pay the hospital bills for it. It's not going to come out of your pocket. helps reduce the the risk there. Um it makes you can reduce rates with with um your liability insurance and things like your property insurance. If you have that in place, it can can benefit those rates as well. Uh because it's it's reducing the risk that they're assuming. So having all of these insuranceances in places in place is going to help you out um quite a bit and and reducing costs um as a whole for for
00:15:13
all the insurance that you need. So that's a good one to have. It also can avoid lawsuits because you you're providing that coverage to somebody, they break their ankle, you say, "Go to the hospital, go get it taken care of. Here's workers comp information. Just hand that over to them or call them, figure it out, and then you can avoid those lawsuits." So you it it's this is why I tell you even if it's not required for you. So if you're in Texas and it's not required for you, um I still highly
00:15:41
suggest that you get it uh get this coverage because it the benefits there are are big. Yes, it costs money upfront. I mean that's how how this works, right? That's how insurance works. You pay premiums into it. You hope you don't have to use it, but when you do have to use it, you're so grateful that you have it in place. Um, so that that's why you want to do it. So, let me talk to you a little bit here about my experience with workers comp. And as I do this, um, if there's those
00:16:07
of you that are live, go ahead and start typing in your questions now, uh, because we'll get to our Q&A here, uh, in a little bit. And for those of you that are new, type in newbie. I love seeing the the new people that that hop in on on these, uh, videos and and are trying to learn as they're they're moving things things along. So, let's talk about my experience with workers comp. Um, early on in our process, we uh this was in Idaho. Uh, I I didn't realize that there were quarterly reports that I had
00:16:36
to do. So, we got the insurance in place. Uh, this was very early on in in our process. We got the insurance in place. I gave it to them and, you know, everything was good. And I got an email and it was a quarterly report, so we did it. But then I I I don't know what happened. I I don't know if we if they lost my email. I don't know if I didn't get it. I don't know if I didn't see it. I don't know what happened. If we had changed our our rep there with the insurance company, something happened
00:17:02
and we did not pay our next premium. And all of a sudden, I'm getting angry emails from the state insurance fund about our our workers comp and hey, it's going to uh you missed a deadline. You haven't paid it. We've sent you notices. And I'm like looking around. I I haven't missed any notices, but ultimately we did. uh like I couldn't prove that I had had not received the stuff that they didn't send it to me or whatever and we had our insurance go away and so I had
00:17:30
to scramble and reapply and I'm pretty sure we got higher rates because of that because we let it lapse and we had to do it again. So you want to make sure that you stay on top of it. They will send you emails. Make sure you set that up in a way that you are going to receive their notices and then make sure that you are you're you're staying on top of it. Anytime I get a notice now I am staying on top of it. I'm getting it done within days. I have 30 days to do it. I'm trying to do it in like day two
00:17:55
or three because I don't want to run into an issue where I lose my insurance. And the reason for that is we've had two instances in our facility where we've had to use our workers comp. We had bed bugs at one of our facilities at one point. Um, and if you've ever had bed bugs, it's horrible. Like they're they get everywhere. They're hard to get rid of. Um, we've been able to get rid of it. We've been bed bug free for years now. Um, but we had them. We had we had
00:18:20
a resident that was in another facility and they brought them with them and then they just kind of expanded from there. And in providing that care, one of our caregivers um got some probably on her clothes and took them home and she ended up having bed bug bites all over her leg. And so she had to go to the hospital and get those treated and and make sure everything was good in her home. Um, and having workers comp allowed us to cover those things. We worked with her. We worked with the the insurance company and we helped make
00:18:54
sure everything was good and she was fine and everything worked out. Another instance happened probably about a year year and a half ago. We had our our one of our cleaning staff um they were cleaning and um they reached into we had this little cart thing. They reached into it and and something happened. I don't know, some bottle of something fell or or whatever. something happened and like clamped her hand and like sprained a hand or broke a bone or something like that. Something weird um kind of happened and we had workers comp
00:19:24
and so we were able to tell her go uh you know go off to to the hospital, go get that taken care of. Let's get you uh let's get you um what you need. Um she had to be off work for about two weeks and so workers comp comp helped um to uh kind of what's the word I'm looking for? supplement her wages and uh help out uh with that and all of those things without workers comp. We would have been I don't know where we would have been. We would have been paying hospital bills. We would have been in these weird
00:19:54
situations potentially opening opening ourselves up to liability um issues. And that's something that you just want to avoid. So I've I've had that experience um while while doing this as owning my businesses for since 2020. Like I've I've had the experience there. Uh, I am so glad that that I had it. Um, that we were able to work through the issues that we had where we we had this gap in coverage of about 15 days, which is actually about the time that that bed bug incident happened. Luckily, the
00:20:24
incident happened before the workers comp got shut off and we were able to to get it taken care of. But had we waited or had it had things just not lined up correctly, we would have been in a really bad situation. So, you have to make sure you have it in place that you want to make sure that you are staying up to date on your quarterly payments and quarterly reporting and that you keep it active um during renewals and and that you look at it. It's okay if you want to shop around and and look for
00:20:48
other insurance and and things like that and see if you can get better rates. It's totally fine. You just want to make sure that there is no gap in coverage because you never know what's going to happen. You don't need it until you do and then you are so glad you have it. And I'm speaking from experience on this. you want to make sure that you have that workers comp insurance in place. I promise you it is. It's worth the money um to to not have to deal with the headaches that that could come um if
00:21:11
you didn't have it in place. So, doesn't happen often. Like, I've owned these since 2020. It's been over, you know, really close to 5 years now. I've had two instances in 5 years. Doesn't happen very often, but man, it's it's so important for you to have that uh when you do uh when you need it. Um, the next thing I want to tell, you know, invite you is into the ALI basics community. This is a community. It's the the easiest way for you to work directly with me. We have monthly member onlyly
00:21:37
calls. We actually do one of those um this week. So, if you get in today or tomorrow, you can hop into that that monthly Q&A call. Ask me whatever questions you have. Those are recorded uh for the members inside of that community and help you along your path to to launching your assisted living business. I love helping people and coaching people. I'd love to do that. So, go check out ALI basics at assistedlivinginvesting.net/basics. Uh, and I'd love to help you uh get through that. So, with that, I want to
00:22:04
remind you to like the video, subscribe, and ring the bell as well so you get notified every time we put out content like this. Uh, we go live on th or we go live on Tuesdays today. Um, and we put out content on Thursdays as well uh to make sure that you're getting the help that you need to help you launch your assisted living business. Uh, I am actually not seeing any Q&A, which is totally fine with me because I have to um leave um and and take my my girls off uh to something tonight. Um so, uh with
00:22:31
that, I'm going to thank you for watching. I really appreciate uh for those of you that are live uh being here. I I I really enjoy chatting with you and helping you along your path to launching your assisted living business. Make sure you go get your free business plan checklist at assistedlivinginvesting.net/vp checkcklist. Um, and I I'd love to help you make continual progress on on your path. Does residential assisted living sound interesting to you, but you don't know how to get started? At Assisted
00:22:57
Living Investing, I'm here to help beginners like you launch their assisted living business in the next 12 months. I love helping and coaching people. It is one of my favorite things to do. I I I just I I love it. Um, and I'm so excited to help you along your path. And remember, it doesn't take a lot, just a little bit. Just keep going step by step by step. And I promise you if you do and you are consistent and persistent, you are going to be successful. Thanks for watching and have a great day.
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