Some employers do not know they can reduce their workers compensation insurance premiums by having a drug-free workplace program. While the employer will realize that a drug-free workplace will reduce the number of accidents that occur on the job, the employer often misses another cost savings of a drug-free workplace – a reduction in their workers compensation insurance premium.
In Georgia, if the employer gets their drug-free workplace program certified by the Georgia State Board of Workers Compensation, they receive a seven and one-half percent (7.5%) reduction of their workers compensation premium. If the employer submits a copy of their certificate of a drug-free workplace each year to their workers compensation insurance carrier, they continue to get the 7.5% reduction in their total work comp premium.
Self-insured employers in Georgia can also get in on the savings. The self-insured employer submits a copy of their drug-free workplace program certificate with their annual payroll report. The self-insured employer can reduce the amount of money they set aside for “premiums” which in turn will reduce the amount of company is annually assessed by the Georgia State Board of Workers Compensation.
The state statutes in Alabama, Arkansas, Florida, Mississippi, South Carolina, Tennessee, Virginia and Washington State all have provisions for a five percent (5%) discount on workers compensation premiums for having a drug-free workplace. Some of these states require an annual certificate like Georgia, so check with the state department that administers workers compensation in your state.
Ohio, the largest of the four remaining monopolistic states (states where the state government is the sole provider of workers’ compensation insurance), has a state sponsored program “Drug-Free Safety Program”. The Ohio Bureau of Workers’ Compensation has a tier program where employers participating in their Basic level safety program receiving a four percent premium discount and employers participating in their Advanced level safety program receiving a seven percent premium discount. Group experienced rated employers can receive a three percent premium discount for participating in the Advanced level safety program.
In Hawaii, employers who provide both a health program and a safety program which includes a drug-free workplace policy also receive a five percent (5%) insurance premium discount. (The difference between Hawaii and the other 5% discount states listed above is you have to have both a safety program and a health program to get the 5% discount).
The state statute in Idaho does not specify the amount of premium reduction the employer will receive for a drug-free workplace. Their law states that the employer who provides drug and alcohol testing of all prospective employees and current employees shall qualify for a workers compensation premium reduction.
What if you do not live in the states discussed above? You may still get an insurance premium reduction for having a drug-free workplace. Some workers compensation insurers offer voluntary premium reductions for having a drug-free workplace program. The requirements and qualifications for a voluntary premium reduction by the insurer vary from insurance company to insurance company. Ask your broker what premium reduction you might receive from your workers compensation insurer for having a drug-free workplace program. Find out what the requirements of your work comp insurance company are to receive a voluntary premium reduction.
Note: While talking to the broker, also ask about any premium reduction for having a certified safety program – you should work to get all the work comp premium discounts you can get.
The five percent premium reduction (7.5% in Georgia, up to 7% in Ohio) is not the only savings your company will get from having a drug-free workplace program. Other benefits include:
- A significant reduction in the number of workplace accidents follows the introduction of a drug-free workplace program. The reduction in the number of workplace accidents leads to a reduction in the work comp premium based on your accident history.
- Employers who have a drug-free workplace program have less absenteeism.
- A drug-free workplace program also leads to an increase in productivity.
- Approximately 40 states allow the insurance company to deny work comp benefits to an employee who test positive for drugs or alcohol following an accident. You need to have a drug-free workplace program in place in order to test them employees following an accident.
A drug-free workplace program makes financial sense even without consideration for the reduction in workers comp insurance premiums. When you add the reduction in premiums from having the drug-free workplace program to the reduction in premiums from having fewer workplace accidents after the drug-free program is started, the drug-free workplace is the way to go.
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. See www.LowerWC.com for more information. Contact: RShafer@ReduceYourWorkersComp.com or 860-553-6604.
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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.
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