The 70% Secret: How the ERA Cuts Your Mod Faster Than Anything Else

The Experience Rating Adjustment (ERA) is one of the most powerful, most overlooked cost-reduction tools in workers’ compensation. In ERA states, medical-only claims receive a 70% discount in the mod calculation — dramatically lowering their impact.

Yet many employers lose this discount without realizing it.

Here’s how it works, and how to use it correctly.

Why the ERA Exists

The rating bureaus created the ERA to encourage employers to report small claims instead of hiding them. Before the ERA, employers often paid minor injuries out of pocket to avoid frequency penalties.

The ERA flipped the script:
Medical-only claims get discounted by 70%.

That means a $10,000 claim counts as $3,000 in the mod.

For employers, this is huge.

The One Thing That Destroys the ERA Discount

A single dollar of indemnity.

If a claim has any indemnity payment — even $1 — the ERA discount disappears and the claim hits the mod at full value.

Example:

Medical-only claim:

• Actual cost: $10,000

• Mod value: $3,000 (ERA applied)

Same claim with $100 indemnity:

• Actual cost: $10,000

• Mod value: $10,100 (no ERA)

Difference: $7,100
And because claims impact the mod for three years, the employer often pays 2–4× that amount in premium.

How Employers Accidentally Lose the ERA Discount

1. Delayed reporting → lost time begins
Lag time creates indemnity.

2. Doctors default to “no work” notes
Without a RTW program, employees go home.

3. No transitional duty
The employee could work — but can’t.

4. Supervisor misunderstandings
Supervisors let employees stay home “for a day.”
That day costs thousands.

5. Claims coded incorrectly at the carrier
A clerical error can cost you 70%.

How to Use the ERA to Your Advantage

1. Build a Reliable Return-to-Work System

To maintain medical-only status, the employee must return immediately to transitional duty. You need:

• A list of light-duty tasks

• Supervisor training

• A RTW coordinator

• Restrictions built into every job

This is mandatory for preserving the ERA.

2. Report Claims Immediately

Fast reporting keeps minor claims from escalating to indemnity.

3. Use Injury Triage

Nurse triage resolves many issues with self-care.
These cases:

• Don’t escalate

• Don’t generate indemnity

• Often don’t become claims at all

• Preserve the ERA discount

4. Train Supervisors Correctly

Supervisors must understand:

“One day of lost time can eliminate a 70% discount.”

Once they understand the financial impact, compliance skyrockets.

5. Audit ERA Compliance Annually

For brokers and employers, this is a competitive advantage.
Most companies leak thousands through ERA errors.

Bottom Line

The ERA is one of the highest-leverage tools in the entire workers’ comp system.

A properly managed medical-only claim carries a 70% discount.
A mismanaged claim loses that discount and becomes three times more expensive.

Use the ERA correctly and you will:

• Lower your mod

• Reduce premiums

• Improve claim outcomes

• Strengthen reporting culture

• Reduce litigation risk

It’s simple, powerful, and often unused.

Michael Stack, CEO of Amaxx LLC, is an expert in workers’ compensation cost containment systems and provides education, training, and consulting to help employers reduce their workers’ compensation costs by 20% to 50%. He is co-author of the #1 selling comprehensive training guide “Your Ultimate Guide to Mastering Workers’ Comp Costs: Reduce Costs 20% to 50%.” Stack is the creator of Injury Management Results (IMR) software and founder of Amaxx Workers’ Comp Training Center. WC Mastery Training teaching injury management best practices such as return to work, communication, claims best practices, medical management, and working with vendors. IMR software simplifies the implementation of these best practices for employers and ties results to a Critical Metrics Dashboard.

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: http://blog.reduceyourworkerscomp.com/

Injury Management Results (IMR) Software: https://imrsoftware.com/

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Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.