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How To Reduce Your Workers Comp Costs

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How To Reduce Your Workers Comp Costs

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How To Reduce Your Workers Comp Costs

  1. 1. How To Reduce Your Workers Comp Costs Kathryn Carlson Peter Zaidel
  2. 2. Moderator Becky Ross Marketing Manager Office: (303) 228-8753 bross@kpaonline.com
  3. 3. PRESENTED BY Peter Zaidel KPA Product Manager Office: (303) 228-2397 pzaidel@kpaonline.com
  4. 4. Presenter Kathryn Carlson, SPHR Director HR Management Products 303.228.8765 kcarlson@kpaonline.com
  5. 5. If you have questions during the presentation, please submit them using the “Questions” feature QUESTIONSQuestions
  6. 6. 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
  7. 7. 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
  8. 8. Premium Calculation Premium Factors • Payroll • Employee Class Codes • Loss Experience – Scheduled Ratings – Discounts } Manual Premium
  9. 9. • Rates are pre-determined • Common set of class codes • Ensure accuracy with job descriptions 8380 8748 8810 9410 7380 Manual Premium
  10. 10. 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
  11. 11. Class code 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
  12. 12. • 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
  13. 13. Experience Modification “E-mod” “X-mod” “Mod Factor” “Experience Rating” “Merit Rating”
  14. 14. 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
  15. 15. 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!
  16. 16. 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
  17. 17. – KPA CONFIDENTIAL – Aacme Motors ABC Motors Tier 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
  18. 18. 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
  19. 19. 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 –
  20. 20. 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 –
  21. 21. 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 –
  22. 22. 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 –
  23. 23. 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 –
  24. 24. 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

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