The 8 Sections of Your Workers Compensation Insurance Policy

The 8 Sections of Your Workers Compensation Insurance PolicyEvery employer buying workers compensation coverage knows it is an insurance policy for the costs associated with injured employees, but few employers ever read the actual policy. The primary reason most people do not read the insurance policy is because it is written in “insurance speak” or legalese. The following is an effort to translate a generic workers compensation insurance policy into everyday English so more people can understand it.

 

 

A workers compensation insurance policy is actually divided into two parts. The first half covers what most employers think of in workers compensation. The second part is the “Employers Liability Insurance.” Part two is designed to cover instances where workers compensation insurance does not apply and an employee brings a lawsuit against the employer. Part one’s coverage and workers compensation statutes are so broad that it is rare for an employee to be able to bring a claim under Part two. For the purposes of this article, we will only be addressing what is typically found in Part one of the policy coverage

 

 

Section A – What the Insurance Covers

 

Workers compensation insurance will pay for injuries caused by accidents, or for illness/disease caused by being exposed to an unfavorable environment. Accidents and illnesses also include death. This section limits the coverage to the policy period. The injuries or illness has to be caused by conditions associated with the employee’s employment. If the work comp claim brought by the employee is for work-related illness, the employee’s last day of exposure to the conditions causing the illness must occur within the policy period.

 

 

Section B – What the Insurance Company Pays

 

The insurance company agrees to pay for all benefits as defined by the workers’ compensation statutes of the state where the employer does business. The insurance company agrees to make timely payment of these benefits.

 

 

Section C – The Right to Defend Claims

 

The insurance company reserves the right to determine which claims it will pay willingly and which claims it will contest. In exchange for the insurance company making this decision, the insurance company agrees to pay the cost of defending the employer from any claim brought against the employer. This allows the insurer to investigate and settle claims as it deems appropriate. It also includes the insurer’s right to not to defend a claim if it is not covered by the policy.

 

 

Section D – Additional Things Paid By Insurance

 

The insurance company agrees to pay the cost associated with the claim in addition to benefits provided by the work comp laws. This includes such things as:

  1. Attorney fees and expenses.
  2. Surveillance and extraordinary investigative expenses.
  3. Medical management expenses (triage, nurse case managers, etc).
  4. Court cost.
  5. Employer’s expenses incurred at the request of the insurer, excluding loss of earnings.
  6. Appeal bonds.
  7. Any other expenses incurred by the insurer.

 

 

Section E – When There Exists Other Insurance

 

If the employer has a self-insurance retention or large deductible, the insurer will not pay until the employer has met its financial responsibility under the policy. Also, (this rarely happens), if the employer has other workers compensation insurance that will pay for the employee’s injuries, the insurance company will not pay more than its share of the benefits.

 

 

Section F – What the Employer Must Pay

 

The insurance policy makes the employer responsible for payments when the employer:

 

  1. Intentionally fails to comply with a safety law or regulation.
  2. When the employer has serious and/or willful misconduct.
  3. When the employer knowingly employs someone in violation of the law.
  4. When the employee brings a claim against the employer for discharging, coercing or discriminating against the employee for bringing a work comp claim.

 

Also, if the insurance company is compelled to make a payment in one of these situations, the employer agrees to reimburse the insurance company for all cost associated with the situation.

 

 

Section G – The Right of Recovery

 

In exchange for the insurer paying the work comp claim, the employer and the employee agree the insurer will have the right to recover the cost of the claim from a third party who is at fault for the injury (think auto accident or equipment malfunction).(WCxKit)

 

 

Section H – Legal Stuff

 

This section includes several miscellaneous conditions including:

  1. Most states consider notice to the employer of a work comp claim to be notice to the insurer.
  2. An employer’s bankruptcy does not relieve the insurance company from paying the work comp claims.
  3. The insurance company agrees it is primarily responsible for any benefits owed under the policy.
  4. The legal jurisdiction is the state where the employer is located.
  5. The insurance company agrees the policy conforms to the applicable law.
  6. The insurance company agrees to pay any special taxes or assessments that arise due to the issuance of the insurance policy.
  7. Anything in the policy that conflicts with the state law is modified to comply with the state law.

 

Not every workers’ compensation policy will follow this generic outline, but the above outline should assist you in understanding your workers’ compensation insurance policy.

 

 

 

Michael Stack - AmaxxAuthor Michael Stack, CEO Amaxx LLC. He is an expert in workers’ compensation cost containment systems and helps employers reduce their workers’ comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is a co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder & lead trainer of Amaxx Workers’ Comp Training Center .

 

Contact: mstack@reduceyourworkerscomp.com.

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

 

©2018 Amaxx LLC. All rights reserved under International Copyright Law.

 

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

3 Workers’ Comp Payroll Deductions Most Often Missed by Employers.

3 Workers’ Comp Payroll Deductions Most Often Missed by Employers

.

If any of your workers are getting overtime, are those extra dollars included in your workers’ compensation premium calculations? If you answered ‘yes,’ you may be artificially inflating your payroll; i.e., paying higher premiums than is warranted.

 

Overtime, double time, and severance pay are typically allowed as deductions for workers’ compensation premium calculations. Yet companies large and small often overlook these three points. Knowing what deductions are allowed in your jurisdiction(s) and understanding how to apply them can save payers big dollars — immediately.

 

 

Accurate Payroll & Class Codes

 

Injury management is the area where most workers’ compensation cost-cutting strategies are focused, and with good reason. Reining in workers’ compensation costs through safety efforts, effective return-to-work programs, and best practices in medical management are proven to contain overall costs. But risk management is only part of the equation.

 

If you’re not reviewing your payroll (remuneration) and class codes for accuracy, you may be missing significant opportunities to quickly and easily reduce workers’ comp costs. Depending on the jurisdiction, there can also be an opportunity for deductions from uniform allowances, to officer excess and gratuities, to employer-provided perks. Ask your premium auditor or audit manager to reveal deductions you are allowed to take and still have an accurate assessment of your risk.

 

 

The Big 3

 

A majority of jurisdictions allow deductions for

 

  • Overtime pay
  • Double time pay
  • Severance pay

 

Workers’ compensation premiums are designed to assess risk exposures appropriately. But paying someone double time to work on a Sunday, for example, doesn’t double his risk of injury; nor days paying out a golden parachute to a worker who has left the company. Taking allowable deductions can drastically lower your payroll — and your workers’ compensation premium.*

 

*Note: Compared to a guaranteed cost structure, employers in a high-deductible program may not be as greatly impacted by payroll deductions due to the significant latitude carriers possess with adjustments and credits/debits in the premium formula.

 

 

How to Do it

 

Getting the most out of allowable deductions is dependent on accurately presenting your payroll. Your workers’ compensation premium is based on your gross payroll (remuneration) including, for example, salaries, commissions, bonuses, vacation, holiday and sick pay.

 

Overtime and other payments can be excluded. But it’s important to exclude only premium portion greater than the standard rate:

 

Here’s how to figure your payroll with overtime deductions:

 

Say your company pays overtime — time-and-a-half — for someone who works on a Saturday and double time for working on Sunday. A worker who makes $10 per hour would get $15 for working on a Saturday and $20 for working on a Sunday. Let’s say he worked 8 hours both days.

 

To determine accurate payroll, you would deduct the $5-per-hour extra he made on Saturday and the $10-per-hour extra he made on Sunday. To calculate the exclusion:

 

Saturday                                  8 Hours x $5 =   $40

Sunday                                    8 Hours x $10 = $80

 

Total amount excluded from payroll = $120 ($40 for Saturday and $80 for Sunday)

 

You only need to pay premium on the worker’s regular $10-an-hour rate for the extra hours he worked, not the additional dollars.

 

Employers need to maintain payroll records that show the regular rate of pay, the overtime earnings, and a summary by type of operation performed, in order to get credit for the overtime excess.

 

It’s also important to understand that increases in wages are not eligible for exclusion. If you increase a worker’s base wage, that increased amount would need to be included in the payroll.

 

For severance pay, the calculation is easy. You can exclude these dollars paid to someone who no longer worked at the company to the extent it does not include pay for time worked or accrued vacation.

 

While these deductions may not seem significant, they can add up quickly and result in major savings.

 

 

Conclusion

 

You want to make sure your employees are properly covered for any work-related injuries they incur. However, you don’t want to pay any more workers’ compensation premium than necessary.  Knowing and applying allowed deductions can go a long way to dramatically reducing your workers’ compensation premiums while still paying the appropriate amount.

 

 

 

Michael Stack - AmaxxAuthor Michael Stack, CEO Amaxx LLC. He is an expert in workers’ compensation cost containment systems and helps employers reduce their workers’ comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is a co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder & lead trainer of Amaxx Workers’ Comp Training Center .

 

Contact: mstack@reduceyourworkerscomp.com.

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

 

©2018 Amaxx LLC. All rights reserved under International Copyright Law.

 

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

Overcome Financial Fears Which Prevent A Successful Workers’ Comp Settlement

Overcome Financial Fears Which Prevent A Successful Workers’ Comp SettlementMany injured workers who settle their workers’ compensation claims struggle with how to ensure they’ll have enough money throughout their lives. There are many issues to consider in addition to continuing medical care – paying monthly bills, funding a child’s education, and unexpected expenses that may arise. There may also be concerns about complying with various government programs, such as Medicare and future tax implications.

 

Partnering with an expert settlement consultant is a must for any injured worker thinking of settling his workers’ compensation claim. There are many issues to consider and personal decisions to be made. A competent, experienced professional who spends time getting to know the injured worker and his loved ones can provide invaluable insight and guidance in the process.

 

 

Decisions, Decisions

 

Many people expecting a large sum of money opt for a large cash windfall over a long-term plan.  Sadly, despite their best efforts to preserve it, many of these individuals find the money is soon depleted. Statistics show this happens all too often.

 

Injured workers who settle their workers’ compensation claims are no different. But those who have the benefit of working with an expert can realize the myriad options involved in a settlement regarding how, when and what amount of money they can collect to meet their specific needs.

 

As an example, we’ll take a hypothetical case.

 

John is 57 years old and has been receiving workers’ compensation benefits for 7 years after being severely injured in a work-related accident. John is tired and frustrated with the workers’ compensation system and would like more control over his medical decisions. However, he has significant worries about the settlement amount. He doesn’t know how much would be appropriate to cover his lifetime medical costs and is concerned that he will run out of money too soon. He also has several outstanding debts that must be repaid soon. And he has a family and is worried he won’t have money to address their needs, now and in the future.

 

Finally, there is the issue of Medicare. He’s been told his medical care would need to be funded through a special fund to ensure Medicare is not forced to pay for treatment that should be covered through workers’ compensation. He doesn’t quite understand that or what his obligations would be.

 

 

The Solution

 

John and injured workers like him could have much improved, empowered lives — if they had an experienced, capable settlement consultant available to help. Such an expert could spend time with John and his family and sort out their various needs:

 

  • Money to pay off immediate expenses
  • Medicare and its requirements
  • College education funding for his children
  • Wedding expenses for his eldest daughter and her boyfriend
  • Funds to eventually help care for his aging parents

 

What John and many others may not understand are the various legal changes over the years that have made a long-term settlement plan much more appealing. For example, the government allows structured settlement payments to be income tax-free if they are the result of a physical injury, sickness or wrongful death. Congress has established specialized annuity contracts to meet the special needs of injured people, and to address the concern that too many people spend their money quickly. The idea is to incentivize injured workers and their families to take their settlement money in a series of guaranteed future payments.

 

Contrary to what some may believe, there is also the option to take some of the money upfront, and/or as a future lump sum payment. There are no constraints on how the money is paid. For example, it can be

 

  • Monthly
  • Quarterly
  • Semi-annually
  • Annually
  • Any combination

 

The amount paid is also adjustable. There could be a set amount for a few years, then increasing payments to handle anticipated future needs. The money can also be paid out over the person’s lifetime, or set up to continue being paid to heirs upon the person’s death.

 

In the case of ‘John,’ the settlement could be set up to receive money upfront to pay off his debts, then a stream of steady payments and influxes of larger sums at various points in the future to take care of his family’s needs. A competent settlement consultant can also put John in touch with other professionals such as:

 

  • Lifetime medical care management.
  • Lien resolution
  • Financial planning.
  • Tax consequences.
  • Government benefit programs.
  • Legal issues.
  • Retirement planning.
  • Insurance concerns.

 

 

Summary

 

Life is complicated and planning for a lifetime of medical management and financial stewardship from a workers’ compensation settlement is overwhelming and difficult. Working with a settlement consultant who understands the fears, needs, and concerns of the injured worker can both save significant settlement costs and bring peace of mind that lasts a lifetime.

 

 

 

Michael Stack - AmaxxAuthor Michael Stack, CEO Amaxx LLC. He is an expert in workers’ compensation cost containment systems and helps employers reduce their workers’ comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is a co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder & lead trainer of Amaxx Workers’ Comp Training Center.

 

Contact: mstack@reduceyourworkerscomp.com.

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

 

©2018 Amaxx LLC. All rights reserved under International Copyright Law.

 

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

Educate Stakeholders on Effective Alternatives to Opioids

Educate Stakeholders on Effective Alternatives to OpioidsA combination of ibuprofen and acetaminophen does a better job of relieving acute pain than opioids. Despite clear evidence that the combination of the less dangerous medications provides equal or greater pain relief, many physicians still prescribe opioids for injured workers with pain.

 

This statement was just one point made in a recent session at the Workers’ Compensation Institute’s Annual Conference in Orlando presented by:

 

  • Marcos A. Iglesias, Chief Medical Officer of Broadspire
  • Mark Pew, senior VP for Product Development & Marketing at Preferred Medical.

 

 

The Problem

 

The opioid epidemic in the U.S. has been well documented in recent years. Researchers say Americans consume more opioids than any other country, regardless of the myriad physical and psychological problems associated with their unnecessary use.

 

While stakeholders in the workers’ compensation system have made progress in curbing the unnecessary use of opioids in recent years, it will take a concerted effort of educating providers as well as employees about chronic pain, and effective treatment alternatives said Iglesias and Pew.

 

Findings released by the Society for Internal Medicine on a one-year comparison of patients with chronic low back pain who were treated with either opioids or ibuprofen included:

 

  • No difference in function
  • Those given opioids had statistically worse pain control

 

Among the side effects of opioids are

 

  • Drowsiness
  • Confusion
  • Nausea
  • Constipation
  • Euphoria
  • Slowed Breathing

 

Because opioids repress the respiratory system, using them can result in hypoxia — a condition in which too little oxygen reaches the brain. It can lead to coma, permanent brain damage or death. The drugs can be especially dangerous when combined with other medications, such as benzodiazepines, certain antidepressants, some antibiotics, and sleeping pills.

 

 

Expectations

 

Even in the face of the research and statistics, many providers continue to look to opioids as the gold standard for pain management. One of the biggest problems is the mindset of western medicine and civilizations.

 

“There is an expectation in the U.S. that we shouldn’t feel pain, we are reducing the supply of opioids, but not limiting the demand,” Pew said. “There needs to be an effort in this country to educate people and change their minds about pain, so they realize opioids are not the answer” added Iglesias.

 

Eliminating all pain forever is just not realistic for many people. But they can — and do — learn to cope with their pain and live happy, normal, and functional lives.

 

 

Education

 

In addition to realigning expectations, education is key to reducing unnecessary opioid use. Many people may not be aware of the extent of the problem. “One-third of individuals that are taking an opioid do not know they are taking it,” Iglesias explained. “There needs to be more awareness in the population.”

 

Additional points stated include:

 

  1. Locus of control. Unlike in some other countries, many people in the U.S. have a passive acceptance of medical treatment and believe somebody or something should take care of the problem. Typically, many think a pill is the answer. However, drugs often mask the problem rather than addressing the root cause.
  2. Employers can take actions to improve the fitness levels of employees. Encouraging more walking, providing healthier foods in vending machines and making all programs free of charge are suggestions to get started.
  3. Self-advocacy. Injured workers and others should be encouraged to take charge and be responsible for their medical care.
  4. Reduce unrealistic expectations. Employers can work with medical providers to create and send a letter to injured workers outlining what to expect after an injury occurs. It can include suggestions on how to manage pain and some options.
  5. Sleep hygiene. Sleep is crucial for recovery from injuries. There are a variety of non-pharmacological recommendations to help people get more and better sleep.
  6. Education on dealing with depression can go a long way in helping injured workers cope with their pain and injuries. They should be encouraged to work with the Employee Assistance Program, if applicable, or given community resources that may be helpful.
  7. Behavioral techniques. Cognitive behavioral therapy (CBT) has been shown to be one of the most effective ways to help people cope with chronic pain. It is short term, skill-based, and typically does not incur a psychiatric diagnosis. Along with CBT, additional behavioral techniques include:
    • Mindful meditation.
    • Deep breathing skills.
    • Increased physical activity.
  8. Focus on function rather than pain. Focusing on pain only makes the level of pain increase. Discuss function rather than pain with an emphasis on progress.
    • Iglesias example “you told me you picked up the mail, last time we talked you weren’t able to get off the couch.”

 

Conclusion

 

The persistent opioid crisis has taken years to develop and will take a multifaceted effort to reduce and eliminate.  An improved focus by employers and payers on the education of opioid alternatives is a positive step toward better treatment and outcomes.

 

 

 

Michael Stack - AmaxxAuthor Michael Stack, CEO Amaxx LLC. He is an expert in workers’ compensation cost containment systems and helps employers reduce their workers’ comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is a co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder & lead trainer of Amaxx Workers’ Comp Training Center.

 

Contact: mstack@reduceyourworkerscomp.com.

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

 

©2018 Amaxx LLC. All rights reserved under International Copyright Law.

 

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

 

3 Critical And Simple Steps For Workers’ Comp Supervisor Training

Have ever been watching a sports game whether on TV or in person, and you see and feel the momentum shift? The team with the positive momentum can’t seem to do anything wrong. And the team with the negative momentum can’t seem to do anything right.

 

Hello, my name is Michael Stack, CEO of AMAXX, and this concept of momentum I believe is the most underrated and powerful force in our world today. And if we can harness this power of momentum, and if we can understand it and apply it to our work comp programs, the benefits can be immeasurable.

 

 

Positive or Negative Starts At First Reaction from Supervisor

 

How this plays out is really right at the start of that claim. That interaction between the employee and the supervisor. That’s going to set the tone for how the entire claim is going to go. So, you need to train your supervisors on how to respond accordingly. And the good part is, it’s really not that difficult. There’s a couple of simple steps that they need to do, that they need to take, that they need to have the right mindset in how to respond to those injuries, that can start building that positive momentum in your favor.

 

 

Step #1: Demonstrate Care

 

So let’s talk about hat these couple of simple steps are. First thing the supervisor needs to do is demonstrate care. First thing they need to do is demonstrate care. How are you feeling? I’m sorry you got injured. Is there anything I can do to help? And then listen and problem solve. Again, listen and problem solve. Very simple as far as responding to their injury. Demonstrate care.

 

 

Step 2: Set Expectations

 

Next piece here, set expectations. Set expectations for what’s going to happen, and how this work comp program is going to work for that employee, answering some of these simple questions, like how is the employee going to get paid? Are they going to be able to return to work? How is that all going to work. And then how is the medical treatment going to work? How are they going to get their treatment? What doctor are they going to be able to see? How are they going to get their prescriptions filled? Are they going to have to pay a deductible?

 

I heard a lot of stories from my cousin that got injured, and that didn’t really go to well for him. So, set those expectations, answer those questions. Really let them know what’s going to happen.

 

 

Step 3: Facilitate Medical Care with Injury Triage

 

And then the final thing is facilitating the medical care. Coordinating and facilitating that medical care. And the best practice here is to really make this very simple for your supervisors, but I’m just going to guess they’re probably not trained as medical professionals. They probably don’t know exactly what to do with a shoulder injury. Leverage a third part injury triage provider. Have that supervisor and that employee call the nurse hotline together. They’ve walked through millions of calls on how to handle that shoulder injury, and they can get to that individual employee to the right treatment in the right time frame.

 

Very simple steps for your supervisors to follow at the time of injury, that can build that positive momentum for that claim. Again, my name is Michael Stack, CEO of AMAXX. And remember, your work today in workers compensation, it can have a dramatic impact on your company’s bottom line. But it will have a dramatic impact on someone’s life. So, be great.

 

 

 

Michael Stack - AmaxxAuthor Michael Stack, CEO Amaxx LLC. He is an expert in workers’ compensation cost containment systems and helps employers reduce their workers’ comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is a co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder & lead trainer of Amaxx Workers’ Comp Training Center .

 

Contact: mstack@reduceyourworkerscomp.com.

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

 

©2018 Amaxx LLC. All rights reserved under International Copyright Law.

 

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

 

6 Common Mistakes Made In A Workers’ Comp Premium Audit

6 Common Mistakes Made In A Workers’ Comp Premium AuditAn annual premium audit is a great opportunity to review your workers’ comp class codes and included payroll for accuracy.  Employers that understand the process and prepare early should, at the very least, have no surprises from the audit. Unfortunately, far too many organizations view the audit as a necessary evil, don’t take the time to understand it, and are later presented with a bill they did not expect and may not even be able to pay.

 

The best way to face a premium audit is head on. That means knowing what to expect and preparing ahead of time, along with avoiding the most common errors.

 

 

The Audit

 

Insurance carriers conduct premium audits to verify a company’s payroll for the period during which it provided coverage. It occurs after the policy expires to determine the accuracy of the payrolls for that year to see if the premium must be adjusted. If the payroll exceeds the estimated projected payroll, the carrier will send a bill seeking more money. On the other hand, if the payroll is lower than projected, the employer may get money back.

 

Insurers conduct audits to ensure the premium paid to them accurately reflects the company’s risk. That includes making sure the business and employees are properly classified. It’s imperative to have the proper documents and information ready for the audit.

 

Here are common errors employers make — and how to avoid them.

 

  1. Failing to include deductions. Everything in the payroll is not necessarily subject to the workers’ compensation premium. The allowable exclusions vary among states, but several are universal to all jurisdictions, such as

 

  • Overtime (premium portion, or the half part of time and half)
  • Double time (premium portion, or the double part of double time)
  • Severance pay

 

Severance pay for someone who has not worked at the organization incurs no risk and, therefore does not need to be included in the workers’ compensation premium calculation. Overtime and double time pay may be excluded — to a certain extent.

 

For example, if ‘Joe’ makes $10 per hour, but you give him overtime, or time-and-a-half for working weekends, the extra portion of his pay can be excluded. So, if Joe works 8 hours on Saturday at a rate of $15 per hour, the extra $5 per hour, or $40 (8 hours x $5 per hour) can be excluded. The same exclusion applies for double time.

 

Depending on the jurisdiction, additional deductions may apply.

 

  • Officer excess
  • Uniform allowances
  • Tips/gratuities
  • Employer-provided perks
  • Bonuses

 

  1. Neglecting to inform the auditor. You will be charged for your $100,000 in overtime, double time and severance if you do not report them to the auditor!

 

  1. Omitting the necessary paperwork. Once you’ve informed the auditor of the deductions you’ve found, you need to back it up with the proper paperwork. For example, if a portion of your payroll went for severance pay, you will need the proper documentation. Other documents you may need to have at the ready include:

 

  • Payroll records
  • Payroll tax returns
  • Certificates of insurance
  • Invoices for contracts that show a breakdown of labor and materials

 

  1. Forgetting to consider state differences. In addition to the overtime, double time and severance pay exclusions, jurisdictions often have additional deductions. However, they are not the same in every state. A multi-state employer that assumes exclusions in one state apply to another may be sorely mistaken. You can check your state’s Basic Manual, ask your insurance broker, or ask your premium auditor to direct you to the allowable deductions for a particular jurisdiction.

 

  1. Improperly classifying employees. Your business operation determines what your ‘governing class’ will be; i.e., the classification code in which the bulk of your employees will fall. Employees such as clerical workers who incur little risk may fall into a different category, but only if they NEVER do other work. For example, if ‘Sally’ is an administrative assistant but once or twice a year she is involved with inventory control on the manufacturing floor, she cannot be classified in the clerical class.

 

  1. Failing to ask questions. If you’re not sure which classification applies to your company or you don’t know what paperwork is required to back up your deductions, ask. Resources are typically available through state insurance bureaus, NCCI, or your broker or insurer.

 

Conclusion

 

Premium audits don’t need to be a gut-wrenching ordeal. Document and prepare for the premium audit on an ongoing basis, so you don’t have to spend hours or days getting ready. Asking the right questions, understanding deductions that apply, and gathering the proper documentation will make the process smooth and painless.

 

 

 

Michael Stack - AmaxxAuthor Michael Stack, CEO Amaxx LLC. He is an expert in workers’ compensation cost containment systems and helps employers reduce their workers’ comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is a co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder & lead trainer of Amaxx Workers’ Comp Training Center .

 

Contact: mstack@reduceyourworkerscomp.com.

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

 

©2018 Amaxx LLC. All rights reserved under International Copyright Law.

 

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

Essential Elements of Effective Work Comp Settlement Agreements

Essential Elements of Effective Work Comp Settlement AgreementsThe only good file is a closed file! That is the mantra of any seasoned workers’ compensation claims professional.  Getting to the state of happiness requires skill, some luck and a lot of exceptional legal drafting when memorializing any settlement agreement.  Failure to do this can result in delay and added costs to a workers’ compensation program.

 

 

Outlining the Nature of the Dispute

 

The requirements for workers’ compensation settlement agreements vary in each jurisdiction.  Never forget to understand the essential requirements and include them in your settlement agreement.  Failure to do so will only cause future problems.  A general survey of state workers’ compensation laws note the following basic requirements:

 

  • Materials Facts: Any settlement agreement should have a statement of admitted material facts.

 

  • Matters in Dispute: The disagreements between the parties should also be stated.  It is important to allow the compensation judge or commissioner reviewing the document to know what matters are to be decided by the settlement agreement.

 

  • Positions of All Interested Parties: The claims and contentions of each party must be stated in the settlement document.  These statements outline what is in

 

A settlement agreement should also specifically outline what is being settled and how the issues are resolved.  The main item in this area is a lump sum or annuity payment to an injured worker and various agreements regarding medical providers and other interested parties. A settlement consultant should be brought in to explain the options and benefits of receiving the money via periodic payments compared to a single lump sum.

 

If any issues remain in dispute, it is important to detail those matters. Statute or rule also govern payments under a settlement agreement.  Failure to make timely payments can result in an assessment of penalties.

 

 

Types of Settlement Agreements

 

The types of settlements available under a workers’ compensation system vary in each jurisdiction.  In some instances, the parties are not able to close out future medicals.  In other instances, this is the norm.

 

  • Full, Final and Complete – Including Future Medicals: Under this type of settlement, all workers’ compensation benefits are forever closed out.  If you want something closed out, be sure it is clearly stated in the settlement document.

 

  • Full, Final and Complete – Future Medicals Open: This is a settlement where all indemnity benefits (TTD, TPD, PPD, and PTD) are closed out. Medical benefits are typically only closed out through the date of settlement or some other specified period of time.  The employee remains eligible for future medical care and treatment provided it is reasonable, necessary and causally related to the work injury.

 

  • Partial or “To-date” Settlements: This is a type of settlement where only certain benefits are closed out, or all workers’ compensation claims are resolved through the date of settlement.  Again, it is important to specify with precision what benefits are being closed out and through what date of the closure.

 

A competent workers’ compensation attorney should be part of this conversation.

 

 

Never Forget the Basics!

 

Regardless of jurisdiction, there are several guiding principles to keep in mind:

 

  • A workers’ compensation settlement may never really be final. Most workers’ compensation acts allow for rescission of the settlement or for it to be vacated should it be determined there was a mutual mistake of fact, fraud or significant unanticipated change in the employee’s medical condition.

 

  • All settlements are presumed to be fair, reasonable and in conformity with the workers’ compensation act. Extra scrutiny can apply in instances where the employee is not represented by an attorney.

 

  • A workers’ compensation settlement must be memorialized in writing and approved by a compensation judge or industrial commission. Failing to receive this stamp of approval can render your settlement agreement meaningless.

 

 

Conclusions

 

Like any legal document, a settlement agreement needs to be carefully drafted and written with precision.  Failure to do so can cause unnecessary (and unanticipated) future expenses.

 

“Sloppy, imprecise drafting can lead to legal wrangling. A single word in reciting the terms of a settlement, for example, can bring about intense litigation over interpretation. In drafting settlement agreements, lawyers should, quoting novelist Vladimir Nabokov’s advice to writers, ‘have the precision of a poet,’ leaving out the poet’s creativity, originality or artistic flourishes. Had the lawyers here been more studious and careful in choosing a single word (‘plus’), this case undoubtedly would not have been necessary.”  Paluch v. UPS, 2014 Ill. App. LEXIS 283 (Ill. Ct. App. 1st 2014)

 

 

 

Michael Stack - AmaxxAuthor Michael Stack, CEO Amaxx LLC. He is an expert in workers’ compensation cost containment systems and helps employers reduce their workers’ comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is a co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder & lead trainer of Amaxx Workers’ Comp Training Center .

 

Contact: mstack@reduceyourworkerscomp.com.

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

 

©2018 Amaxx LLC. All rights reserved under International Copyright Law.

 

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

Be The “Maverick” of Your Workers’ Comp Program

 

Hey there, Michael Stack here, CEO of Amaxx. This past weekend, over the Labor Day Weekend, my family and I spent a couple days in Washington DC, our nation’s capital. Now, our visit happened to coincide with the funeral services for Senator John McCain, to honor his life and his legacy.

 

 

Senator McCain Was Maverick of the Senate

 

Now Senator McCain was known as the maverick of the senates. Now, there were several reasons for that and very specific, instances where he earned that nock name and that reputation. But, the primary reason was, Senator McCain did things differently and took a path often different than the way things had always been done.

 

Senator McCain earned that reputation, earned that nick name as maverick because he did things differently than the way things had always been done. It earned him a tremendous life and a tremendous and highly respected career. If you look at your organization and worker’s compensation, I want to speak to very specific practices that may be happening within your company, very negative practices.

 

 

Do Things Differently Than Have Always Been Done

 

First one is punishing injured workers for filing claims, punishing injured workers for filing claims. The other side is encouraging injured workers, or encouraging employees not to file a claim at all. You may know in your heart, and of course, there’s tremendous data and research to back this up, that that’s not the right thing to do.

 

You’re serving up high workers comp cost, you’re serving up poor injured worker outcomes on a silver platter to your organization by doing either one or both of these two practices. But,it;s the way it’s always been done at your organization. I want to encourage today to take inspiration from Senator McCain’s life and legacy to change those practices. Those two very specific practices, to change those practices within your organization because when you do, you’ll be putting your program on the right track. To improve those injured worker outcomes and drastically drive down your worker’s comp cost.

 

Get on Michael Stack, CEO of Amaxx and remember, your work today and worker’s compensation can have a dramatic impact on your company’s bottom line, but it will have a dramatic impact on someone’s life, so be great.

 

 

Michael Stack - AmaxxAuthor Michael Stack, CEO Amaxx LLC. He is an expert in workers’ compensation cost containment systems and helps employers reduce their workers’ comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is a co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder & lead trainer of Amaxx Workers’ Comp Training Center .

 

Contact: mstack@reduceyourworkerscomp.com.

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

 

©2018 Amaxx LLC. All rights reserved under International Copyright Law.

 

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

16 Point Checklist To Determine If You Need A Workers’ Comp Claim Audit

16 Point Checklist To Determine If You Need A Workers' Comp Claim AuditSelf-insured employers can have a good safety program, an established return-to-work program and knowledgeable nurse case managers, and still pay way too much on their workers’ compensation claims.  Ineffective claims management can wipe out most or all of the cost savings achieved through your efforts to control cost.  Whether you have your own claims office, or have a third party administrator (TPA) handling your workers’ compensation claims, poor claims handling will always result in higher claims costs.

 

 

Need to Know If Following Best Practices

 

The challenge for the risk manager is to know whether or not the work comp claims are being handled properly.  The risk manager can personally be involved in each claim for compliance with the Best Practices for Workers’ Compensation claims guidelines, but that defeats the purpose of having company claims adjusters or a TPA if the risk manager has to direct all the work on the claims.

 

An alternative approach is to have the claims supervisor or claims manager review each claim file for proper claims handling, but that often results in minimal improvement.  The claims supervisor or claims manager has a vested interest in not pointing out what could be construed as their failure to properly manage the claim adjusters.

 

 

Determine If You Need An Independent Claims Audit

 

The best solution to determine the quality of the claims handling is to bring in an independent claims auditor.  The independent claims auditor has no conflict of interest when reviewing the claim files and can provide an unbiased evaluation of the quality of your claims handling.  Here is a checklist to determine if you need a claims quality audit.

 

[  ]     You have noticed deviations from your Best Practices guidelines

 

[  ]     You have noticed gaps in the investigation of claims

 

[  ]     Information that should have been known during the initial investigation of the claim turns up later in the life of the claim

 

[  ]     The adjusters are not staying current on their diary system

 

[  ]     You have received an inquiry from the Industrial Commission, Work Comp Board, or Insurance Commissioner’s office

 

[  ]     You have received complaint calls from employees or from the employees’ supervisors or managers

 

[  ]     Your claim cost is increasing faster than the rate of inflation

 

[  ]     The average age of your claims is increasing

 

[  ]     Your claims are open longer on average than your industry’ average

 

[  ]     Your loss run contains errors on loss location, injury description, type of claims

 

[  ]     Your claim reserves are being stair-stepped (many reserve changes on one file)

 

[  ]     Your actuary’s recommended reserves differ significantly from the reserve on the files

 

[  ]     You have noticed significant reserve increases right before claim settlement

 

[  ]     You have noticed missed subrogation opportunities

 

[  ]     You have noticed experienced adjusters being replaced with adjuster trainees or significant personnel turnover in the claims office

 

[  ]     The adjusters have high caseloads

 

 

A Claim Audit Is Recommended If You Checked One or More Above

 

If you checked one of the above categories you should consider an independent claim file audit.  A claim quality audit is recommended if you have checked two or more of the above categories.

 

 

 

Michael Stack - AmaxxAuthor Michael Stack, CEO Amaxx LLC. He is an expert in workers’ compensation cost containment systems and helps employers reduce their workers’ comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is a co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder & lead trainer of Amaxx Workers’ Comp Training Center .

 

Contact: mstack@reduceyourworkerscomp.com.

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

 

©2018 Amaxx LLC. All rights reserved under International Copyright Law.

 

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

 

 

Making the Most of Work Comp Mediation

Making the Most of Work Comp MediationUsing mediation as a tool to reduce workers’ compensation program costs is a growing trend across the country.  There are a number of reasons for its increased use.  This includes the fact it involves all parties, allows the employer and employee to have a voice in claim settlement and for creative remedies that would otherwise not be available in a judicial setting.

 

 

How Does Mediation Work?

 

There is no set formula for a successful mediation.  It will typically involve an agreed upon neutral third-party who evaluates the case and moves the adverse parties toward settlement.  More successful mediations are held in-person and can include a mix of joint sessions or when the parties are separated into different private rooms.  Whenever a mediation is conducted, it is important for all interested parties to be present and free from distractions.

 

 

Preparing for Successful Mediation

 

There are a number of steps that parties interested in settlement should take in order to prepare for mediation.  Important steps should include:

 

  • Accurately review the claim to determine exposures and properly set reserves. Obtaining proper settlement authority and discussing settlement options is a must for defense counsel;

 

  • Determine if the case is ready for mediation and whether settlement could include bigger issues such as the closure of all future medicals;

 

  • Identify all potential intervention interests and place them on notice, if necessary. Failure to include a necessary party may be fatal to an otherwise great settlement;

 

  • Have realistic settlement expectations – and also understand what the expectations of the other party might be.

 

 

Securing the expertise of a settlement consultant can be a valuable tool prior to mediation. Prior to settlement, they can work closely with the injured worker to gain deep insight into his needs and desires and help all parties attain a successful settlement.

 

It is also important to prepare a confidential case analysis letter for the mediator.  This is an opportunity to help the neutral third-party understand not only the strengths and weaknesses of your case, but how you view the claims of the employee.  This correspondence should also include expert medical and vocational reports.  By providing this information to the mediator in advance, you can spend less time providing background information while actually at the mediation and more time moving the case toward settlement.

 

Information provided to the mediator directly related to the mediation and settlement of a claim is generally considered confidential and not admissible in court at a later date.  Be sure to fully understand the confidentially rules applicable to your jurisdiction before submitting information.

 

 

Getting to Yes: Tips for Settlements

 

It is important to keep an open mind when preparing for a workers’ compensation mediation.  Failing to do so will only lead to further frustration and lack of settlement.  Here are some tips to reach a settlement at mediation:

 

  • Prepare a Strategy: This includes playing “devil’s advocate” and discussing the pros and cons of various defenses.  A complete case evaluation should also take place and have a firm understanding of what the opening offer should be, likely counter-offers and the bottom line.

 

  • Keep Interested Parties Posted: In many instances, cases fail to settle at mediation because the parties have not placed interested medical providers on notice of their potential intervention claims.

 

  • Come Prepared for Settlement: Cases often settle at mediation and then languish as defense counsel and the attorney for the injured party exchange multiple drafts of settlement agreements. Proactive stakeholders should bring a laptop computer and portable printer, if available.  This allows the attorneys to have a copy of the settlement documents in hand, ready to review and reach a true final settlement.

 

 

Conclusions

 

Stakeholders interested in reducing workers’ compensation costs should examine the use of mediation as an opportunity to make their programs effective and efficient.  This can include the use of mediation as a tool to streamline the settlement process.

 

 

 

Michael Stack - AmaxxAuthor Michael Stack, CEO Amaxx LLC. He is an expert in workers’ compensation cost containment systems and helps employers reduce their workers’ comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is a co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder & lead trainer of Amaxx Workers’ Comp Training Center .

 

Contact: mstack@reduceyourworkerscomp.com.

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

 

©2018 Amaxx LLC. All rights reserved under International Copyright Law.

 

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

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