How To Reduce Your Workers Comp Costs Kathry n Carlso n Peter Zaidel
How To Reduce Your Workers Comp Costs
Nov 30, 2014
How To Reduce Your Workers Comp Costs
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How To Reduce Your Workers Comp Costs
Kathryn
Carlson
Peter
Zaidel
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
866-356-1735
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