Learn 15 Cost Savings From Transitional Duty in Workers Compensation Programs

Every workers compensation insurance company, every insurance consultant, LowerWC website and blog, and just about anyone else who understands the field of workers compensation recommends employers have a Return to Work (RTW) program. As an employer you hear repeatedly how a RTW program will substantially reduce your cost of workers compensation – as much as 20% to 50%.

Too often the workers comp experts state the employer will achieve cost savings from a transitional duty or early RTW program without explaining exactly what the cost savings are. Or, they state the RTW program shortens the life of the claim resulting in a lower claim cost and a lower experience modification factor being used in each of the next three years when your next workers comp premium is calculated. That is very true, but there are many other cost savings resulting from a transitional duty or early RTW program. Let’s consider some of them.

The advantages and benefits from a transitional duty or early RTW program include:

1. Lower claim handling cost by shortening the life of the claim, often preventing a medical only claim from becoming an indemnity claim (this can have a majorimpact on your experience modification factor mentioned above).
2. Lower medical case management cost as employees who return to work on modified duty have an overall faster recovery time than employees who are not offered transitional duty.
3. A significant decrease in legal defense expenses as few employees who are back at work contest their workers comp claims before the workers comp board or court.
4. If the employee rejects the transitional duty job, the probability of success of a request before the workers comp board to terminate benefits is much higher than when no job offer has been made.
5. An increase in settlement leverage when a valid job offer has been made to an employee.
6. An increase in employee morale which results in lower absenteeism.
7. A reduction in the replacement labor costs (including the expense of locating, hiring and training additional staff to do the work of the injured employee).
8. A decrease in overtime wages for other employees to do the work of the injured employee.
9. The loss of productivity is minimized.
10. Lower wage replacement cost – either salary continuation or indemnity benefits paid. Remember, sometimes employers pay employees MORE than the wages earned in their own workplace if an employee works elsewhere and then cannot work due to the injury on Job #1.
11. Lower medical cost as the recovery time is shorter for employees who remain active after an injury. (WCxKit)
12. A lower frequency of lost time claims as the employees know they are expected back at work as soon as their physician allows them to perform modified duties.
13. Lower use of Family Medical Leave Act time.
14. A reduction in American with Disabilities Act (ADA) claims.
15. A shorter claim duration which decreases the amount of time management must devote to following the claim.

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To calculate some of the monetary savings, use the Modified Duty Calculator: Transitional Duty Cost Calculator

While we are focusing on the employer’s cost savings of transitional duty and an early RTW program, the employee also benefits from transitional duty. We will cover those in a subsequent article.

A properly managed transitional duty position will have significant cost savings for the employer. The cost savings are both immediate and in the future for the employer. The smart employer will plan for the transitional duty and early RTW program to maximize their cost savings.

Author Rebecca Shafer, JD, President of Amaxx Risks Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker and website publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing.

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers comp issues.

©2010 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law.

ESSENTIAL: This article is Return-to-Work Essentials content.