The 70% Discount You Might Be Missing in Workers’ Comp

Many employers worry that reporting small injuries will automatically raise their workers’ comp premiums. It’s an understandable concern—especially when trying to keep your experience modification factor (mod) as low as possible. But in certain states, there’s a powerful pricing mechanism designed to encourage employers to report those minor incidents.

It’s called the Experience Rating Adjustment (ERA). And if you’re not using it to your advantage, you could be leaving serious money on the table.

What Is the ERA Discount?

The Experience Rating Adjustment (ERA) is a rule adopted in about 35 states that reduces the impact of medical-only claims on your experience mod calculation. In an ERA state:

Medical-only claims are discounted by 70%.

That means only 30% of the cost of a qualifying claim is used when calculating your mod. For example:

• A $10,000 medical-only claim would only show up as $3,000 in your mod calculation.

• That’s a $7,000 reduction in the number your premiums are based on.

This discount was implemented by rating bureaus to encourage proper claim reporting and reduce the incentive to pay medical bills out-of-pocket.

What Counts as a Medical-Only Claim?

To qualify for the 70% ERA discount, a claim must meet a key condition:

• No indemnity payments—meaning no lost-time wages or disability benefits are paid to the employee.

The moment a claim includes any wage replacement—even a single day of missed work—it becomes a lost-time claim and loses the ERA discount.

This makes return-to-work efforts critical. Even keeping an employee engaged in light-duty work for a short period can protect the discount and significantly reduce your long-term costs.

The ERA Discount in Action

Let’s look at a side-by-side example:

In this example, even a $100 indemnity payment—caused by one day of missed work—removes the discount and adds over three times more to your mod.

The takeaway: Getting employees back to work immediately not only improves outcomes—it protects your mod.

Common Misconceptions About Reporting Small Claims

A frequent question among employers is:

“Should we pay small claims out of pocket to keep them off the books?”

In an ERA state, this approach can actually cost you more. If the employee’s injury escalates later or requires further care, the lack of documentation creates legal and financial exposure.

On the other hand, when you report the claim and it stays medical-only:

• You preserve access to the ERA discount.

• You retain proper documentation and coverage.

• You allow your claims team to manage the case professionally.

Best Practices to Leverage the ERA Discount

To make the most of ERA rules, consider the following steps:

✅ Educate supervisors and frontline managers
Train them to report all injuries, no matter how minor. Stress that early reporting can reduce costs.

✅ Implement injury triage services
Use a nurse triage hotline to determine if care is needed. Many minor cases can be safely managed with self-care, avoiding a claim altogether.

✅ Use transitional duty and stay-at-work programs
Avoid lost-time designations. Even half-days or modified tasks can preserve your discount.

✅ Track ERA applicability by state
Not all states apply the ERA discount. Confirm your jurisdiction’s rules to ensure compliance and strategy alignment.

✅ Coordinate closely with your claims administrator
Make sure your TPA or carrier is properly coding medical-only claims to ensure they receive the ERA treatment.

The Bottom Line

The Experience Rating Adjustment (ERA) isn’t just a technical footnote—it’s a strategic advantage. In eligible states, it allows employers to report small injuries without suffering a full mod penalty.

But the benefit only works when:

• Claims are reported.

• Injuries are managed promptly.

• Employees are kept at work or returned quickly.

If your organization is still hesitant to report small medical-only incidents, it may be time to shift perspective. The ERA discount makes it possible to do the right thing for your employees and your bottom line.

In workers’ comp, the little things matter—especially when they come with a 70% discount.

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.