Can a High Deductible Plan Help Lower Your Mod?

When it comes to structuring your workers’ compensation insurance, high deductible plans offer flexibility, savings potential, and a level of control that guaranteed cost programs simply don’t. But how do these plans interact with your experience modification factor (mod)—and what should you consider before switching?

Understanding the role of your mod in both guaranteed cost and high deductible programs is essential for making informed financial decisions that impact your total cost of risk.

First, a Quick Refresher on the Mod

Your experience modification factor (mod) is used to compare your actual losses to what is expected for a company of your size and industry. This figure:

• Is based on the past three years of claim history (excluding the most recent policy year).

• Is calculated by your state rating bureau or NCCI.

• Affects how much you pay for workers’ comp premiums—especially in guaranteed cost programs.

A mod:

• Below 1.00 means you’re performing better than average and receive a discount.

• Above 1.00 indicates worse-than-average claims performance and leads to higher premiums.

High Deductible Plans: How They Work

In a high deductible plan, the employer agrees to retain a portion of the risk by paying claims up to a certain dollar threshold—often $100,000, $250,000, or more—per claim. The insurer covers any costs above that deductible.

What makes these plans appealing?

• Lower upfront premiums

• Greater pricing flexibility

• Opportunity to capture savings with strong claims management

But even with a high deductible, your mod still matters—and it can still be influenced by claims that fall within your deductible.

How Your Mod Is Affected in a High Deductible Plan

A common misconception is that because you’re paying claims yourself up to the deductible, those claims won’t impact your experience mod.

But that’s not how it works.

All claims—whether paid by you or the carrier—are included in the mod calculation.

Here’s why:

• Your mod is calculated based on the total incurred value of each claim, including reserves, regardless of who pays the bill.

• If you have frequent losses under your deductible, your mod can still increase, driving up the rates applied to your payroll.

So while you may enjoy lower fixed costs with a high deductible, poor claims performance can still result in mod-driven pricing increases.

Pricing Flexibility: The Real Advantage of High Deductible Plans

Here’s where high deductible plans offer unique leverage.

With a guaranteed cost plan, your mod is a fixed multiplier applied to your premium. If your mod is high, you pay more—plain and simple.

But in a high deductible plan, your carrier has more room to adjust:

• Credits and debits can be applied based on your risk profile, program structure, and claims trends.

• A strong return-to-work program, low lag time, and documented improvement can help offset a bad mod.

• Underwriters can consider your trajectory rather than just your mod score.

In other words, your mod still plays a role—but perception of risk becomes equally important.

This gives employers more tools to influence pricing, negotiate terms, and recover from a bad year.

Reporting and Transparency Still Matter

Even in a high deductible program, proper claims reporting is essential.

Why?

• Mod calculations still rely on accurate loss data.

• Delays or inconsistencies in reporting can lead to incorrect reserves, which inflate your total incurred values and hurt your mod.

• Transparent reporting and proactive claims handling show carriers you’re a reliable risk partner—potentially leading to better pricing.

Whether you pay the first $100,000 or not, every claim still leaves a footprint in your data. Managing that footprint is key.

When a High Deductible Plan Makes Sense

High deductible plans are ideal for employers who:

• Have strong cash flow and can absorb larger short-term costs

• Want more control over claims handling and program design

• Have proactive safety and return-to-work programs in place

• Are frustrated by premium swings due to mod volatility

It’s a great fit for companies that are serious about workers’ comp performance—and want the ability to capitalize on improvements quickly.

Best Practices to Maximize the Benefits

To make the most of your high deductible plan while protecting your mod:

✅ Invest in injury prevention and safety training
Preventing the claim is still the most cost-effective strategy.

✅ Use nurse triage and early reporting systems
Reducing lag time improves claim outcomes—and reduces reserves.

✅ Develop a strong return-to-work program
Avoid lost-time claims that raise your primary loss totals and hurt your mod.

✅ Collaborate with your TPA or carrier
Ensure proper reserving, close claims quickly, and communicate openly.

✅ Track and measure mod drivers
Use your mod worksheet to identify trends and focus areas for improvement.

Final Thoughts

High deductible workers’ comp plans give you more control over your costs—but they don’t eliminate the impact of your experience mod.

If your claims are frequent or poorly managed, your mod will reflect that—regardless of who pays the bills. But when paired with strategic claims handling and strong internal practices, high deductible plans open the door to pricing flexibility and long-term savings.

In short: high deductible plans won’t hide your claims history—but they will reward you for managing it well.

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.