how to reduce your workers comp costs
DESCRIPTION
How To Reduce Your Workers Comp CostsTRANSCRIPT
– KPA CONFIDENTIAL –
How To Reduce Your Workers Comp Costs
March 17, 2010
QuestionsQuestions
• If you have questions during the presentation, please submit them using the “Questions” feature
• Questions will be answered at the end of the webinar
HistoryHistory
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 StructureCurrent 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 CalculationPremium Calculation
Premium Factors• Payroll • 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 PremiumManual Premium
Manual Premium ExampleManual 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 ExampleManual 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 CalculationManual Premium Calculation
Experience ModificationExperience Modification
“E-mod”
“X-mod”
“Mod Factor”
“Experience Rating”
“Merit Rating”
Experience ModificationExperience 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 ModificationExperience 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 DiscountsScheduled Ratings, Credits and Discounts
14– 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 DiscountsScheduled Ratings, Credits and Discounts
Reducing Your WC PremiumReducing 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
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From the Employee’s Perspective 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 –
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Checklist for Reporting a Claim 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 –
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Claim SuppressionClaim 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 –
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Restricted Duty (Light Duty)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 –
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HIPAA and Workers’ CompHIPAA 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
– KPA CONFIDENTIAL –
QuestionsQuestions
• If you have questions during the presentation, please submit them using the “Questions” feature
• Questions will be answered at the end of the webinar
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Questions and AnswersQuestions and Answers
– KPA CONFIDENTIAL –
QUESTIONS?
Contact InformationContact Information
23– 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