How To Reduce Your Workers Comp Costs

How To Reduce Your Workers Comp Costs

Kathryn

Carlson

Peter

Zaidel

Moderator

Becky RossMarketing Manager

Office:  (303) 228-8753

bross@kpaonline.com

PRESENTED BY

Peter ZaidelKPA Product Manager

Office:  (303) 228-2397

pzaidel@kpaonline.com

Presenter

Kathryn Carlson, SPHR

Director HR Management Products

303.228.8765

kcarlson@kpaonline.com

If you have questions during the presentation, please submit them using the “Questions” feature

QUESTIONSQuestions

History

Employee must prove:• The employer was negligent• The employee was not negligent• The employer’s negligence was the cause of the employee’s

damages

Employer defenses:• Contributory negligence• Assumption of risk• Fellow servant rule

Current Structure

The Great Trade Off

No Fault System

In the course of employment

Scheduled Benefits

Exclusive Remedy Sources• Monopolistic

• NV, ND, OH, WA, WV, WY• Competitive State Fund• Private Insurance• Self Insurance

Premium Calculation

Premium FactorsPayroll

Employee Class Codes

Loss Experience– Scheduled Ratings– Discounts

} Manual Premium

• Rates are pre-determined

• Common set of class codes

• Ensure accuracy with job descriptions

83808748

8810 94107380

Manual Premium

Manual Premium Example

• 6 Point Dealer Group

• 100 Employees at each location

• Annual Payroll of $5 million per dealership

600 Total Employees with $30 million in payroll

Payroll For Aacme Motors

Classcode Employee Type % of

Payroll $ Payroll Premium$100 payroll

8380 Technicians/ Detailers/ Drivers 30% $9 mil $5

8748 Sales 30% $9 mil $2

8810 Administrative 40% $12 mil $1

Payroll For Aacme Motors

Manual Premium Example

• 8330 (Tech) $9,000,000 = $90,000 x $5.00 = $450,000 $100

• 8748 (Sales) $9,000,000 = $90,000 x $2.00 = $180,000 $100

• 8810 (Admin) $12,000,000 = $120,000 x $1.00 = $120,000 $100

Total manual premium: $750,000

Payroll For Aacme Motors

Manual Premium Calculation

Experience Modification

“E-mod”

“X-mod”

“Mod Factor”

“Experience Rating”

“Merit Rating”

Experience Modification

• Calculated by the National Council on Compensation Insurance (NCCI) or a state agency

• 3 consecutive years are used to calculate a rating• Excludes current and prior year

2004 2005 2006 2008

2005 2006 2007 2009

2006 2007 2008 2010

2007 2008 2009 2011

2008 2009 2010 2012

Experience Modification

• Calculated by the National Council on Compensation Insurance (NCCI) or a state agency

• 3 consecutive years are used to calculate a rating• Excludes current and prior year

• Frequency of claims is weighted higher than severity• Used to compare businesses in the same industry

• Industry Average is set to “1”

$750,000 Manual Premium

Aacme Motors ABC Motors

Experience Mod .80 (-20%) 1.2 (+20%)

$600,0000 $900,000

A difference of $300,000!

Ratings are based on business characteristics the insurance company thinks can make a difference in reducing future losses.

• Regular safety committee meetings

• Positive incentive programs

• Written safety programs

• Hazard inspections

• Ongoing safety training

• Timely reporting

• Claims Management

Scheduled Ratings, Credits and Discounts

– KPA CONFIDENTIAL –

Aacme Motors ABC MotorsTier Rating 1.17 (preferred plus) 1.67 (residual)Experience Mod -20% (.80 mod) +20% (1.2 mod)Deductible -3.9% ($500 ded.) 0%Provider Discount -2.5% 0%Association Disc. -4% 0% Cost Containment Cert. -5% 0%Schedule Rating -10% +10%Premium Disc. -8.6% -8.6%

$390,795 $1,189,804

A Difference of: $799,008!!!

$750,000 Manual Premium

Scheduled Ratings, Credits and Discounts

Reducing Your WC Premium

Eliminating sources of past losses

Insurer’s understanding of the business

Longevity with the insurer

Competition

Deductibles

Loss Control Inspections

Safety Program

Return to Work Program

From the Employee’s Perspective

Medical care: Paid for by the employer to help employees recover from an injury or illness caused by work

Temporary disability benefits: Payments to the employee if there are lost wages because the injury prevents you from doing the usual job while recovering

Permanent disability benefits: Payments if the employee doesn't recover completely

Supplemental job displacement benefits (if your date of injury is in 2004 or later in many states including CA): Vouchers to help pay for retraining or skill enhancement if the employee does not recover completely and don't return to work for your employer

Vocational rehabilitation (in some states in including CA): Job placement counseling and possibly retraining for the employee if they are unable to return the old job and the employer doesn't offer other work

Death benefits: Payments to the family if the employee dies from a job injury or illness.

– KPA CONFIDENTIAL –

Checklist for Reporting a Claim

Post “How to Report a Claim” poster in the workplace

Provide instructions and claim forms to employees during orientation

Complete the “First Report of Injury” form and send to Carrier/TPA without delay

Follow up with your carrier/TPA-be proactive!

– KPA CONFIDENTIAL –

Claim Suppression

Never say to your employee who has reported an injury or illness

You didn’t really hurt yourself on the job.

If we keep our work place accidents down, employees will receive an incentive bonus. If you file a claim you will cause all your co-workers to lose their bonus.

If you hurt yourself at work, you won’t be called out for another job with this company.

You’ll be fired if you file a claim.

You don’t need to file a claim. We’ll take care of it…

Why don’t you put this on your health insurance?

– KPA CONFIDENTIAL –

Restricted Duty (Light Duty)

Follow the doctor’s orders

Employers do not have “create work” to fulfill restricted duty requests

Employees may not refuse restricted duty if restricted duty is reasonable (don’t make it punitive)

Studies show that employees offered light duty return to work faster than employee who are not offered light duty

– KPA CONFIDENTIAL –

HIPAA and Workers’ Comp

Always keep employee medical records separate from other personnel files

Do no share any information that is not directly related to the claim without the employees written permission

Employees may not restrict protected health information in regards to a workers’ comp claim

Employees are entitled to copies of their file

23– KPA CONFIDENTIAL –

Ask.

Contact Information

25– KPA CONFIDENTIAL –

The recorded webinar and presentation slides will be emailed to you today including your local representative’s contact information.

www.kpaonline.com

bross@kpaonline.com

866-356-1735