When executives at a major publishing company were pondering their skyrocketing workers' compensation costs last year, they found a convincing explanation. Employees who were receiving workers' compensation were effectively receiving one hundred ten percent of their salaries. That company is not alone.
Consider the following sources of income and why they might be a disincentive to return to work:
Double Dipping. Like many other employers, a national construction company had a group disability insurance policy provided by the company. One employee was receiving workers' compensation following back surgery and, after 26 weeks, began receiving disability payments too. This can happen with personal insurance policies. This double income meant the worker's at-home pay exceeded his at-work pay. When the company offered him a job with lighter duties at his full salary during his recuperation, he turned it down.
Unemployment - In some states, employees on workers' compensation qualify for unemployment benefits under certain circumstances. To prevent this, companies should offer all injured workers transitional jobs they can perform even with their physical restrictions. Under the eligibility rules, workers who refuse such offers will likely not be deemed unemployed.
Lawsuits - While workers' compensation statutes prevent workers injured on the job from suing their employers, they can still sue others. Someone hurt while emptying garbage into a dumpster, for example, can sue the dumpster owner and manufacturer.
If such a worker receives a court award or settlement, he gets paid twice for the same injury. Most states allow insurers or employers to seek reimbursement for sums spent on workers' compensation but I have seen many cases where this is not done. I have also seen many situations where the insurance company waives the company's liens – often without their consent.
Pension Pay - Older workers who receive workers' compensation benefits may retire during their convalescence and can continue to receive workers' compensation benefits. The remedy is to revise pension plans that do not offset workers' compensation by retirement pay.
Grossing Up – Some employers offer "occupational injury supplements," which can raise workers' compensation benefits from two thirds of salary to full salary But, given that workers' compensation is tax fee and employees at home save on commuting and other work-related costs, a full salary is more lucrative for workers on leave than for workers at work. Thus, companies must carefully design any programs for supplemental pay to avoid any disincentives to working.
Motor Vehicle Accidents - In some states, employees who are injured when driving a car on company business may receive both workers' compensation and medical benefits from their no-fault auto insurance policies. To prevent this redundancy, no-fault benefits should be deducted from workers' compensation benefits, where permitted by state law.
Additional Collateral Sources – Employers have many other policies that dampen the enthusiasm of those on workers' compensation to return to work. Open-ended transitional duty jobs and allowing employees on workers' compensation to accrue sick time can deter their desire to return to work.
The Solution - Eliminate double dipping where possible. This requires advance planning so company-paid policies are structured to allow offsets. Have all departments (HR, WC, Labor, Safety) review benefits to make sure these perks and policies do not discourage employees from returning to work as soon as they are able.
Do not use this information without independent verification. All state laws are different. Consult with your corporate legal counsel before implementing any cost containment programs.
©2008 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com
MYTH: The best way to reduce workers' compensation costs is to change insurance companies or TPAs. REALITY: Wrong! The best way to reduce workers compensation costs is to build a better relationship with your current claims administrator. The major cause of discontent between carriers and the insureds is lack of communication which causes a perception that something is being done improperly. For example, in several situations a company believed nurse case management was too expensive; however, upon audit by our medical advisor, the nurse case management service should be used MORE, HOWEVER should be brought in earlier. It wasn't effective when it was used (thus seemed expensive and wasteful) because it was used too late in the process. A couple ideas of HOW to build a better relationship: 1- Start to build a better relationship by becoming more informed about the services your claims administrator offers. Hold a Vendor Day, and invite your TPA in with every one of their services – leave none out. Ask for samples of reports and deliverables so you can understand the product and will know when to request services. Have them bring brochures prior to Vendor Day, and read the brochures so you can ask knowledgeable questions during about the services. 2- Visit one or two claims offices, sit chair-side and observe the process. Learn the categories of desks at your carrier, for example, are there 4 levels of adjusters or 5? Do adjusters have backup and clerical support to get medical files or close files? Sit at the intake desk, then join the lost time and medical adjusters for a few minutes at their desks. Ask to see what happens to medical bills when they enter the system until the time they are paid and filed. This will give you a better understanding of how you can interact more effectively, what information adjusters need from you and what information you can provide about your workplace and employees. 3- Finally, invite your adjusters to visit your workplace, so they know what your company does, the types of jobs and skills required of the employees. They can then visualize exactly how an injury occurred easier than if they'd never been to your work place.They can see the possible transitional duty tasks, and perhaps suggest a few more. They can even have coffee in the lunch room and be introduced to a few employees who come in. Make them feel like part of the team. Try working out the problems before you change insurance companies or claims administrators. For more cost-saving tips go to WC Cost Reduction Tips. Show the REAL cost of workers' comp with the Real Cost Calculator. Workers' Comp Kit® is a web-based online Assessment, Benchmarking and Cost Containment system for employers. It provides all the materials needed to reduce your costs significantly in 85% less time than if you designed a program from scratch. Do not use this information without independent verification. All state laws are different. Consult with your corporate legal counsel before implementing any cost containment programs. ©2008 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com
In an informal online poll, 44 percent of employers and others involved in the claim process think communicating with employees causes them to file a workers’ comp claim if they are predisposed to do so and another 44 percent think communication with employees sometimes results in them filing a claim. This means that many employers are probably not communicating with their employees about workers’ compensation benefits because they think it will result in additional claims. With 20 years of experience, I can verify this is true.
The truth is — SOMEONE will be communicating with your employees about workers’ comp, so let that “someone” be YOU! Plaintiff’s lawyers repeatedly tell employers that the one reason employees seek their assistance is because they cannot get answers from their employers about their benefits.
Having said that, prepare an Employee Brochure. A clear, simple, tri-fold brochure telling employees the following:
1- What type of injuries WC covers
2- The benefits - medical expenses, lost wages, , medication, mileage, scarring, etc.
4- How they will receive benefits
4- Transitional Duty Program is required (if applicable)
5- Fraud Control
6- WHO TO CALL WITH QUESTIONS
In summary, provide information about who, what, when, where, why!
For more cost-saving tips go to WC Cost Reduction Tips.
Show the REAL cost of workers’ comp with the Real Cost Calculator.
Workers’ Comp Kit® is a web-based online Assessment, Benchmarking and Cost Containment system for employers. It provides all the materials needed to reduce your costs significantly in 85% less time than if you designed a program from scratch.
Do not use this information without independent verification. All state laws are different. Consult with your corporate legal counsel before implementing any cost containment programs.
©2008 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com
Open-ended transitional duty policies can be problematic and should have a start point and an end point. For example, transitional duty positions should go no longer than 6 months without a special extension or waiver of the length of the assignment. HR, Legal and Risk Management should work together on the Transitional Duty Policy. Focusing on gradually increasing capacity, at some point the TD job should end. Each company will have a different length depending on circumstances, but 6 months is about average for what most companies have.
Three reasons your TD Policy should have an end-date:
1- The unions may have a problem with transitional duty assignments if they are not temporary because they will argue that you have created a new position which is not allowed by the labor agreement. For example, with a part-time employee whose transitional duty assignment lasts for over a year, it is difficult to argue that that is not “a job” if someone has performed the task for over a year.
2- For ADA purposes, it is difficult to argue the company could not create a new job as an accommodation with those duties if they just let the person work under those conditions for over a year.
3- And, there may be an issue with health insurance being required to be paid during a longer time frame. In some states, an employer is obligated to provide health insurance if a TD job lasts for a long time.
For more cost-saving tips go to WC Cost Reduction Tips.
Show the REAL cost of workers’ comp with the Real Cost Calculator.
Workers’ Comp Kit® is a web-based online Assessment, Benchmarking and Cost Containment system for employers. It provides all the materials needed to reduce your costs significantly in 85% less time than if you designed a program from scratch.
Do not use this information without independent verification. All state laws are different. Consult with your corporate legal counsel before implementing any cost containment programs.
©2008 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com
Every person on transitional duty should meet WEEKLY with the transitional duty (TD) Coordinator to determine if increasing strength or capability is possible to allow additional job tasks. There should be a gradually increasing capacity. Make sure to send a letter (first class) to employee’s address advising of time and date of meeting. Good to vary time of meeting each week. For employee’s who cannot attend on site meetings, you might discuss with options for field-based nurse case manager to visit the employees.
1- It keeps employees in the “loop” at the workplace. This keeps them mentally engaged in your workplace, and thus more likely to fully recover and return to work.
2- It gives employers the opportunity to determine increased capacity for transitional duty assignments.
3- It allows employees to bring up any obstacles to return to work or medical care they are experiencing.
4- It allows employer and employee to coordinate new TD capacity, look at new positions, and discuss transitional duty options
For more cost-saving tips go to WC Cost Reduction Tips.
Show the REAL cost of workers’ comp with the Real Cost Calculator.
Workers’ Comp Kit® is a web-based online Assessment, Benchmarking and Cost Containment system for employers. It provides all the materials needed to reduce your costs significantly in 85% less time than if you designed a program from scratch.
Do not use this information without independent verification. All state laws are different. Consult with your corporate legal counsel before implementing any cost containment programs.
©2008 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com
I read with interest, Paul Winston’s “Commentary” in Business Insurance, Dec 8. Mr. Winston was discussing how the property/casualty market is tightening. He states, “After a few years of soft market conditions, this year has seen an increase in catastrophe losses, a collapse of liquidity and the disappearance of excess capital. In addition, with giants like AIG in trouble, and many other insurers in a weakened position due to catastrophic investment losses, the demand for highly rated, secure insurers outstrips supply.” He makes the point that if the economy were better, companies might be better able to invest in creation of alternative market facilities; however, that’s not the case.
What does this mean for you? WC premiums are going up. I can see it in my consulting practice already. Companies are looking for solutions. It’s time for companies to pay attention to what they “CAN DO” to reduce the costs within their deductible levels. That means, employers need to TAKE CHARGE, make sure their safety and loss control programs are top-notch and they have post injury processes in place.
Over the past 4 years, companies tended not to pay as much attention as necessary to their internal workers’ compensation cost control programs, and as a result costs have risen for many. Now is the time to take action by implementing a program quickly to show underwriters and brokers the operational steps you have taken to maintain control over workers’ comp processes. Our website is devoted to helping employers reduce their workers’ comp costs. We use a “best practice” approach.
For more cost-saving tips go to WC Cost Reduction Tips.
Show the REAL cost of workers’ comp with the Real Cost Calculator.
Workers’ Comp Kit® is a web-based online Assessment, Benchmarking and Cost Containment system for employers. It provides all the materials needed to reduce your costs significantly in 85% less time than if you designed a program from scratch.
Do not use this information without independent verification. All state laws are different. Consult with your corporate legal counsel before implementing any cost containment programs.
©2008 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com
Workers’ Comp Premiums are going up in 2009 primarily due to the economy. To keep lower premiums, some companies will choose higher deductible levels, just like many individuals have done with their health care coverage premiums. All losses within retained levels will directly impact your company’s bottom line. Here are 3 things a company can do NOW to reduce their workers’ comp costs in 2009.
1- Get your National Workers’ Comp Score TM (NWCS). This identifies the gaps within your companies operations and procedures. Just knowing your benchmarks are high, does not diagnose your problems. The NWCS identifies your problems.
2- Review the Recommendations for Improvement generated when you get your NWCS TM. After you get your NWCS, you will get a list of recommendations. Some are things you can do right away with no financial outlay. So, no excuse NOT to do them! I’ve heard all the “reasons” you “can’t do” many things: you are unionized, decentralized, have high fraud rate, etc. But there ARE many things you can do if you take a “CAN DO” approach. The Recommendations for Improvement will tell you many things you can do now.
3- Implement a post-loss workers’ compensation cost control program. Do this one step at a time, by prioritizing the Recommendations for Improvement you get with your NWCS, and begin implementing those recommendations. Do it now, there’s no need to wait. Fill in the Implementation Timetable with 3-4 items from the Recommendations, assign a person to carry out each task, and mark a date for implementation. Don’t look now, but you’ve begun!
You do not need to have the perfect system in place before you being to implement a program — it’s better to begin somewhere, with 1-2 steps than to take no action. If you have any type of deductible, virtually every claim dollar within your deductible. If you are in a mod-rated program, two companies that do exp rating reviews are www.cutcompcosts.com or www.zapcomp.com to have your experience mod reviewed. I am not endorsing these resources, just getting you started in finding resources. Make sure to tell them you read about them here on www.ReduceYourWorkersComp.com.
For more cost-saving tips go to WC Cost Reduction Tips.
Show the REAL cost of workers’ comp with the Real Cost Calculator.
Workers’ Comp Kit® is a web-based online Assessment, Benchmarking and Cost Containment system for employers. It provides all the materials needed to reduce your costs significantly in 85% less time than if you designed a program from scratch.
Do not use this information without independent verification. All state laws are different. Consult with your corporate legal counsel before implementing any cost containment programs.
©2008 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com
Companies frequently misdiagnose the cause of their high workers comp costs. As a result, until the key cost drivers are determined, any changes that are made could increase a company's problems. For example, one company I worked with thought they were being charged too much for nurse case management and were preparing to tell the TPA to stop using the service. Prior to that change being implemented, I invited the risk manager to tour a TPA's claim facility. Our tour of the facility gave her (and me) an appreciation for how well the claims were being handled.
During the tour, she saw first hand that the nurses were totally integrated into the claim handling operation, and were in an excellent position to challenge compensability on questionable claims.
During our tour, I learned the company did not have a professional safety manager. I felt THAT was a larger problem than the cost of nurse case management on individual claims and brought the issue to the attention of the producer and account coordinator. As a result, the company began recruiting for an experienced safety professional, and coordinated loss control support for the new safety director.
Note: Not every company needs a full-time safety professional, but many do. The company in this example had dozens of retail locations in many states.
For the 7 Biggest Mistakes Companies Make. Learn more about the assessment process. For more cost-saving tips go to WC Cost Reduction Tips. Show the REAL cost of workers' comp with the Real Cost Calculator. Do not use this information without independent verification. All state laws are different. Consult with your corporate legal counsel before implementing any cost containment programs. ©2008 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com
MYTH: Employees stay out of work intentionally because they don't want to go back to work. REALITY: While it may be true in some cases, that's generally not the case. Employees often do not come back to work because a company will offer them a transitional duty assignment while they recuperate. In some situations, where an employer has only a few, narrow job classifications in their operation, there are not many transitional duty options; in these situations the employer must "think outside the box" to locate jobs which are not obvious at first glance. A construction site is an example of an employer where transitional duty jobs are not plentiful. People are better off with a destination to go to every day. Employees are motivated to come back to work because they have friends in the workforce, they need a steady daily routine, and they do not want to become de-conditioned while not working. In many cases, employees become depressed with the loss of their routine. Give injured employees a destination to go to each day! Make sure the position you provide them is a productive task and valued to the operation. For more cost-saving tips go to WC Cost Reduction Tips. Show the REAL cost of workers' comp with the Real Cost Calculator. Do not use this information without independent verification. All state laws are different. Consult with your corporate legal counsel before implementing any cost containment programs. ©2008 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com
The top reason you should switch your claims administrator (a TPA or insurance company claims administrator) is because they aren’t doing a good job.
My experience is that the more you pay, the more you get and that the problem in these situations is more likely with the risk management department (sorry team, but that’s the truth) than the TPA; however, that’s just a generality, but it’s a generality with 20 years of experience.
BUT, how will you KNOW they aren’t doing a good job? You will review your files. Well, YOU won’t review your files, you will hire someone to review them unless you are very experienced at reviewing file and have reviewed them for many companies. You will need an MD and a senior claims expert.
1- Poor Outcome – Return to work not achieved and insufficient medical review are examples of poor outcomes. Claims were paid when not compensable, compensability has not been recognized by adjusters and no resources are available to recognize such situations. If resources are available, they are not utilized on YOUR account. This is not an isolated incident, but has been found multiple times. You have your own medical advisor and the TPA makes it very difficult to utilize this internal company resource. Poor outcome can be caused by many factors including high staff turnover, poor management, poor internal systems and lack or internal training programs.
2- Intolerable Working Relationship / Poor Communication – the relationship with the adjusters has broken down and you have replaced the adjuster with another, perhaps you have done this many times, but for some reason the relationship is a negative one and never seems to improve. The supervisor can’t seem to remedy the situation.You’ll examine your own role in this type of situation, and get independent verification that you are not causing the problem. You will benchmark your losses to make sure it’s adversely affecting your loss experience.
3- Too expensive – value not in proportion to cost. You pay for a more experienced team, with many resources, but the outcome of the claims is still poor. You have verified this several times with an independent auditor, your broker, and an MD serving as your medical advisor. You have benchmarked your Cost Per Employee and Cost Per Claim and have determined that the costs are significantly higher than industry average.
In any switch, I would likely move PART of the business to see if you are pleased with the service you get from another provider. My experience is that the more you pay, the more you get. Generally the problem in these situations is more likely to be with the operations within the company than the TPA; however, that’s just a generality, but it’s a generality with 20 years of experience. Problems with claims administration tend to be isolated to individual offices rather than being system wide.
For more cost-saving tips go to WC Cost Reduction Tips.
Show the REAL cost of workers’ comp with the Real Cost Calculator.
For workers’ compensation abbreviations.
Do not use this information without independent verification. All state laws are different. Consult with your corporate legal counsel before implementing any cost containment programs.
©2008 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com
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