What does the term "elective states" mean in the context of workers compensation?

In the context of workers' compensation, "elective states" refers to those states that allow employers the option to choose whether to provide workers' compensation insurance or not. This means that employers can decide to participate in the state’s workers’ compensation system, or they can opt out and choose an alternative form of insurance, such as a self-insured program.

This system is distinct from mandatory states, where employers must provide coverage and are expected to comply with specific requirements set out by state law. Elective states typically encourage a competitive insurance market, allowing businesses flexibility in how they choose to protect their employees while also providing a safety net for workers who incur job-related injuries.

The other definitions, such as full coverage provisions, exemptions for certain workers, or broad inclusivity in coverage, do not accurately describe elective states. Instead, they point to different regulatory frameworks or characteristics associated with other types of workers' compensation systems.