The cost of workers' compensation insurance is significant to employers, especially those who have employees in hazardous job classifications. There are ways to cut the cost of workers' compensation premiums.
Two simple steps to cut premiums are:
- Preventing workplace injuries.
- Managing workplace injuries.
In order to understand how these steps can save you money, it is necessary to understand how injury claims affect your premiums. The National Commission on Compensation Insurance (NCCI) determines classifications and base rates for different types of employment. Your standard premium is based on this rate and your estimated payroll dollars for the year. However, some credits or debits may apply to your premiums based on your company’s injury history and claims costs. These are the experience modification factor and the schedule rating adjustment.
The experience modification factor (emod) is determined by NCCI for employers who pay above a certain threshold in premiums for the two most recent years. NCCI calculates the emod by comparing your workers' compensation losses (costs) and injury history for the past three years to the average expected losses and injury history for your business classification.
For example, your emod for 2019 would be based on 2015, 2016, and 2017 injury history and losses. If your company’s injury history is worse than average for your industry, the emod is greater than 1.00. If your company’s injury history is better than average, the emod is less than 1.00. The standard premium is multiplied directly by the emod. Therefore, if you have a worse than average safety record, you pay more premium. It is important to note that if you have a year in which injuries are higher than usual, it will affect your workers compensation premiums for three years.
The schedule rating adjustment is available to qualified WCF Insurance customers. It may provide a discount or surcharge up to 25% based on your company’s safety programs and risk characteristics. Factors that are considered include the existence of a written company safety program, the potential hazards of your workplace, drug-free workplace management policies and practices, employee safety training, and injury prevention. With the basic idea of how your company’s injury history can affect the cost of your workers' compensation premiums, it is important to utilize simple steps to cut those costs.
Preventing Workplace Injuries
The most effective way to cut costs on workers' compensation premiums is to prevent workplace injuries before they occur. Your company can do this by implementing an effective safety program. Effective is the key. The detailed safety program of a large oil company would not be necessary for a small graphics and copy center.
A safety program does not have to be complicated. Some basic elements of a safety program include:
- Management commitment and supervisor accountability
- Policy statement regarding management’s commitment to workplace safety that specifies responsibilities for safety throughout all levels of the organization
- General rules and regulations of safety which are specific to your business
- A drug-free workplace policy which includes pre-employment, post-accident, random, and for-cause drug testing
- A discipline policy, which applies not only to employment issues, but to workplace safety rule infractions as well
- Initial and ongoing safety training for employees and supervisors at all levels
- Procedure for reporting and investigating workplace injuries and incidents
- A program for conducting workplace safety hazard inspections/audits
- Programs required by regulatory agencies (OSHA, EPA, DOT) for your specific industry. These programs may include hazard communication, forklift operator certification, personal protective equipment, control of hazardous energy (lockout/tagout), machine guarding, transportation safety, etc.
If an injury occurs in spite of an effective safety program, the next efficient way to cut costs is to manage the injury.
To control costs and manage injuries:
- Designate a medical provider and require employees to first seek medical attention with that provider. Where possible, designate a provider from WCF Insurance's preferred provider network. The network adds savings since these providers are contracted with WCF Insurance to provide quality care at the lowest possible prices. Consult WCF Insurance's preferred provider list for the provider nearest to your jobsite. If you do not have a copy, you can print one at wcf.com.
- Implement a procedure for reporting workplace injuries and obtaining medical care through your designated medical provider.
- Document all injuries on an injury report form, and ensure proper record keeping as required by OSHA (ex: OSHA 300 log and Employers First Report of Injury). All compensable injuries should be investigated thoroughly. The more information you can provide regarding an injury, the more likely preventive measures can be taken. Furthermore, the more information provided to your claims adjuster, the more likely a fraudulent claim will be denied or flagged for further investigation by WCF Insurance's Special Investigations Unit.
- Implement a return-to-work policy. Require all employees to provide documentation of doctors’ restrictions. Provide temporary transitional duty to injured employees who are still able to work, but have some restrictions. It improves morale, aids in the healing process, and will get the employee back to work earning a full paycheck more quickly. Furthermore, the quicker the employee returns to work, the lower the costs associated with the claim and the lower the impact on your company’s emod.
- Develop a cooperative relationship with your medical provider. Often physicians will gladly tour your workplace to gain an understanding of what type of work is being done. If a doctor is familiar with your workplace, he/she may be more willing to release employees to work sooner. Additionally, if the physician is aware of your return-to-work policy, he/she will be more likely to specify restrictions so that the employee can be temporarily placed in a task that will ensure a smooth recovery.
- Develop a cooperative relationship with your WCF Insurance claims adjuster. If you have questions or concerns on a particular claim, call your claims adjuster. If you don’t know who your claims adjuster is, call the WCF Insurance Claims department at (385) 351-8010 or (800) 466-2667, ext. 8010. Require a post-accident drug screen of all employees involved in a workplace accident, including those who were not hurt, but played a part in the accident. Most of the providers and occupational health clinics on WCF Insurance's preferred provider network are equipped to collect post-accident drug screens. Call your designated medical provider to get more information on implementing post-accident drug screening. Note that a written policy should be in place regarding drug screening and the consequences of positive results before such screening is done.
- Maintain close contact with the injured employee. Regular calls to check on how the employee is doing are very effective in assuring the employee that they are missed. This will also discourage those who may tend to malinger or extend their time off. Remember, the longer an injured employee is away from work, the less likely they will be to return, and the more the claim will cost.
WCF Insurance Claims Department
(800) 446-2667 ext. 8010
WCF Insurance Safety Department
NOTICE: This guide may make reference to the Occupational Safety and Health Administration (OSHA) regulations; however the guide is not legal advice as to compliance with OSHA or other safety laws, codes, or regulations. Compliance with OSHA and other safety laws codes or regulations, and maintaining a safe work environment for your employees remains your responsibility. WCF Insurance does not undertake to perform the duty of any person to provide for the health or safety of your employees. WCF Insurance does not warrant that your workplace is safe or healthful, or that it complies with any laws, regulations, codes, or standards.