Know the Difference Between Permanent Partial Disability and Permanent Total Disability

When an employee reaches maximum medical improvement (MMI) but still has medical issues from his/her on the job injury or occupational disease, the employee will normally be eligible for permanent disability benefits. Most of the states recognize two types of permanent disability benefits. While the names vary by state, the most common used names are:
1.      Permanent partial disability (PPD)
2.      Permanent total disability (PTD)
Independent Medical Evaluation:
In most jurisdictions when the treating physician states the employee has reached MMI, the workers compensation adjuster reviews the medical report and evaluates the disability rating assigned by the treating physician. If the disability rating is high, or if the adjuster has any reason to suspect it is not correct (for example – the treating physician has a history of providing high disability ratings), the adjuster will request an independent medical evaluation (IME) [also known as an independent medical examination].   The IME doctor reviews the medical records and performs an examination of the employee. The IME doctor then provides a disability rating based upon the results of the examination. (WCxKit)
Employment:
If the medical providers – the treating physician and the IME doctor – agree the employee has recovered enough to return to some type of employment, but will always be partially disabled, the employee is classified as PPD and will be paid PPD benefits per the state statutes. If the medical providers both agree the employee is unable to return to any type of employment, the employee will be considered PTD and will be paid PTD benefits per the limitations in the state workers comp statutes.
Permanent Partial Disability:
PPD benefits are paid to employees who have a permanent physical impairment but can return to some type of work. The amount of PPD benefits can be either a percentage of a body part, a percentage of the body as a whole, or a set scheduled amount.   The calculation of the benefit amount will depend on which of these three types of ratings is given.
When a percentage of a body part or a percentage of the whole body is used by the physicians to give their opinion of the disability rating, in most jurisdictions they use the American Medical Association (AMA) Guide to the Evaluation of Permanent Impairment. The physician will review the employee’s disability and compare it to the description provided in the AMA Guide. An example – the physician following the AMA Guide determines the employee has a 15% loss of use of a leg. [When the employee is given any rating to a body part, as opposed to a whole body rating, the employee will be classified as permanent partial disabled.]
The adjuster will then take the disability rating for the leg and multiply it by the number of weeks the state statutes allow for a leg. If the state law states a leg is worth 200 weeks, a 15% rating for the leg would equal 30 weeks (200 X .15). The adjuster would then multiply the number of weeks by the PPD compensation rate. (Most states set the PPD compensation rate at the same level as they set the temporary total disability rate paid to the employee before the employee reached MMI). If the PPD rate is $500, then the amount paid for PPD would equal $15,000 ($500 x 30).
In about 40 states, the statutes have a schedule for the lost of a body part. Examples of body parts listed on the state schedule would include an eye, an ear (hearing), a finger, a hand, an arm, a toe, a foot and a leg. The complete loss of the body part is still considered as PPD as the employee will still be able to return to some type of employment. An example would be the complete loss of a finger. Per the state schedule the finger is worth 10 weeks. With the PPD rate of $500, the PPD benefit paid to the employee would be $5,000 (10 x $500).
Permanent Total Disability:
When the treating physician and the IME doctor agree the employee will never be able to return to any type of employment, the employee is given a disability rating of 100%. With a 100% whole body disability rating, a PTD rating is almost automatic. (WCxKit)
The adjuster will take the 100% disability rating for the whole body and multiply it by the number of weeks the state statutes allow for whole body. If the statutes states the whole body is worth 400 weeks, a 100% rating equals 400 weeks. The adjuster would then multiply the number of weeks by the PTD compensation rate. (Most states set the PTD compensation rate at the same level as they set the temporary total disability rate paid to the employee before the employee reached MMI, but some states have a lower PTD rate then the rate for temporary disability). If the PTD rate is $500, then the amount paid for PTD would equal $200,000 ($500 x 400). [It should be noted that some states do not put a cap on the maximum number of weeks a PTD person may receive. The employees in those states receive their disability payments for life].
It is not unusual for the treating physician to give a higher rating than the IME doctor (especially in states where the employee selects the treating physician). If the treating physician rates the employee as 100% disabled, but the IME doctor (reviewing the same medical records and AMA Guide) rates the employee at 60% disabled, it becomes a question for the Workers Compensation Board (also known as the Industrial Commission in some states) to determine whether or not the employee is PTD. The Workers Comp Board will often have a doctor they select examine the employee and give a third opinion as to the level of disability before making a final decision.
Another area where disagreement arises about PTD is when the employee has suffered severe injuries and is unable to return to work for your company, but is not classified by the doctors as 100% disabled.   A number of issues will come into play in determining PTD. The nature and degree of physical impairment, the educational level of the employee, the age of the employee, the ability of the employee to be retrained for other suitable work, and the availability of suitable work, are all factors in a determination of PTD.

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.  Contact:  RShafer@ReduceYourWorkersComp.com

FREE TOOLS
WC IQ TEST:  http://www.workerscompkit.com/intro/
WORK COMP CALCULATOR:   http://www.LowerWC.com/calculator.php
MODIFIED DUTY CALCULATOR:   http://www.LowerWC.com/transitional-duty-cost-calculator.php

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.
 
©2010 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com.

Workers Compensation Information for 29 Industries Gives Employers Free Industry Specific Cost Containment Help

 

Amaxx’s Workers Comp Cost-Containment Resource Center for Employers now provides workers compensation insurance-related information twenty-nine industry groups.
The industries covered are: agriculture, amusement parks, banks, casinos, construction, commercial fishing, logging and sawmills, oil and gas exploration, longshore and harbor workers, industrial equipment manufacturers, telecommunications, food and beverage manufacturers, restaurants, professional services, schools, state and local governments, insurance companies, temporary staffing agencies, hospitals and nursing homes, entertainers, sports teams, printers and publishers, janitorial services, hotels and motels, transportation companies, retail chain stores, and horseracing. (WCxKit)
The new material includes sample transitional duty jobs for each industry. Transitional duty reduces unnecessary employee time out of work, cutting costs dramatically and is also called modified duty, alternate duty or light duty. Over 40% of workers compensation costs are related to indemnity payments (lost wages) paid when employees lose time from work so controlling these costs is paramount when developing a work comp cost-containment program.
Companies with effective transitional duty programs have lower experience modification factors. Companies with the highest return to work ratios – 95% of injured employees returning to work within one to four days – have the lowest mods, according to the 2010 RIMS Benchmark Survey. The new information in the Resource Center can be used to start a return to work program for your company. (WCxKit)
The Resource Center is located at http://www.LowerWC.com and focuses on helping employers get a grip on decreasing their workers compensation costs. It contains several free resources including the Work Comp IQ Test, Transitional Duty Cost Calculator and Work Comp Sales Calculator.
 
About Amaxx: Amaxx Risk Solutions publishes the website www.LowerWC.com an online publication which provides suggestions, articles and resources for managing workers compensation costs. Amaxx is the developer of The Workers Comp Kit®, a comprehensive workers comp cost-containment resource for employers sold by Advisen Ltd. The Workers Comp Kit is an easy-to-use assessment, benchmarking and improvement plan with all the tools to reduce your company’s workers comp costs. The application is a best-in-business process that is based on 20 years of experience lowering workers compensation costs while improving overall program efficiency.

 

For more information, contact Rebecca Shafer, 860-553-6604, info@ReduceYourWorkersComp.
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WC GROUP:  
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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.
 
©2010 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com.

Nova Scotia Rates Decrease or Hold Steady for Most Employers

Just over half of WCB-covered employers in Nova Scotia will see their rates for workplace injury insurance decrease or hold steady next year, the WCB announced.

Meanwhile, the number of employers receiving rate surcharges based on their claims costs is increasing by about 16% over last year.

These numbers indicate that on the whole, we’re seeing pockets of improvement in the symptoms of Nova Scotia’s workplace injury epidemic,” said WCB Chief Executive Officer, Nancy MacCready-Williams.
 
Still, we are far from a cure. There are too many clear instances of injury’s human and financial impact, and there is still real need for improvement.”

Rates are decreasing or holding steady for 52% of employers, while 48% will see an increase. The average rate of $2.65 per $100 of assessable payroll remains unchanged. Rates are based on the overall claims cost in an industry, combined with a firm’s own experience. They range from a low of $0.60 to a high of $10.15 per $100 of payroll in 2011.

Ninety-two employers will receive a surcharge in 2011, up from 79 in 2010. Surcharges help to more fairly allocate the costs of Nova Scotia’s workplace injury, and they provide strong encouragement for employers to make improvements in their safety and return-to-work performance. 

To be surcharged, an employer’s claims costs must be at least three times their industry average for at least four consecutive years. Surcharges are cumulative and can add an additional 20% to a firm’s base rate each year.

Employers receive two warnings – one in each of the preceding two years – before they are surcharged. As a result of a workplace fatality resulting from a car crash in 2008, the WCB is among the 253 employers receiving a surcharge warning notice.

Sometimes it’s easy to think that those who work in an office environment are not susceptible to workplace hazards. But workplace injury can happen to anyone. Over the past two years, we have been humbled, saddened and moved to action by the tragic loss of one of our own,” said MacCready-Williams. (WCxKit)

We encourage all employers to read their experience rating statement (mod) closely, and to act upon it toward improving the health and safety of their workplaces, and the province as a whole.”

Author Robert Elliott, executive vice president, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers Compensation costs, including airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. Contact:  Info@ReduceYourWorkersComp.com or 860-553-6604.
 
 

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.
 
©2010 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com.

Top 7 Myths about Workers Compensation

No employer sets out to waste money on workers compensation, but many employers do so unwittingly. The following seven myths are financial mistakes often made by employers in the handling of their workers compensation insurance program.

1.    Workers Comp is a Cost of Doing Business

Too many employers think of workers comp as a state mandated expense, just a cost of doing business which cannot be controlled. However, a properly managed workers comp program can have a major impact on the cost of workers comp by avoiding the cost of claims through a safety program, and by controlling the cost of claims through claim management and medical management.   The cost of the workers comp program should be viewed in terms of the return on investment. When approached from this perspective, the financial profitability of managing workers compensation is absolute.

2.    Injured Employees are a Drain on the Company

When an employer wishes an injured employee would “just go away,” they are making a terrible mistake. The cost of employee turnover (due to workers comp or any other reason) has a negative impact on the profitability of the company. Depending on the industry, the cost of hiring, training and supervising a new employee can be from 50% to 100% of the annual salary for the job position. (WCxKit)
Instead of treating the injured employee as a nuisance, the employer is much better served by communicating with the employee that they are needed at work. The employer who has a return to work program in place prior to an injury, and who offers the employee a modified duty position until the employee is able to handle their prior job fully, will benefit through lower cost of employee turnover and lower indemnity cost.

3.    Workers comp Can be Measured by the Cost of the Premium

If an employer thinks the way to measure the cost of workers comp is by the price of the insurance premium, they are measuring only a small part of the total cost of workers compensation. The cost of workers comp not only includes the direct cost of the premium, but also includes the much larger indirect cost of lost production, lost supervisory time, temporary replacement cost or overtime cost, increased training, equipment or property damage, lower morale and unhappy customers.

4.    The Insurance Carrier should be Selected Solely on Price

It is tempting for an employer to think all insurance carriers are alike and to make the selection of the insurance company (or the third party administrator if self insured) based on the price quoted. The wise employer looks beyond price to the quality of service the insurance carrier provides. The quality of the claim handling by the insurance carrier should be the primary factor. A low initial price for the insurance coverage will not last very long if the claim handling quality is poor, as the experience modification factor will come into play in calculating the next premium. The financially savvy employer investigates the level of service provided by each insurer under consideration and the track record of the insurers in raising (or lowering) the premium charged.

5.    The Broker Relationship is Unimportant

When the broker and the employer have a relationship only as salesperson and customer, the employer loses out on a valuable resource. If the employer selects a broker who has an in depth understanding of workers compensation, a partnership in controlling and managing the workers comp cost can then develop. With a strong relationship between the employer and the broker, the employer has a knowledgeable source of information readily available to assist with the management of the workers comp program.
6.    Lower Job Classification Rates will Equal Lower Cost
Employers often believe that a reduction in the job classification rate means a lower cost of insurance. That is not always so. The calculation of the workers comp premium is based on the job classification code rate, the total amount of payroll and the experience modification factor. The calculation of the premium is: the job classification rate X $100 of payroll X the experience modification factor. If the employer has had higher than average workers comp cost compared to other employers with the same job classification codes, the overall cost of workers compensation will most likely increase due to the higher experience modification factor being used to calculate the insurance premium. (WCxKit)

7.    Safety Programs Cost Too Much

Unenlightened employers when faced with lower profit levels often look at the safety program as a place where cost can be cut.    When safety programs are cut or eliminated, there is an increase in both the number of work place injuries and the severity level of the injuries. The experience modification factor shoots higher, resulting in significant increases in the cost of the workers comp insurance premium.
Summary
Workers comp myths are easy to believe. The common factor through all the myths is taking the path of least effort. When the employer puts forth the effort to understand workers compensation and to properly manage the workers comp program, the myths fade away and are replaced by sound financial decision making.
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.
Contact: RShafer@ReduceYourWorkersComp.com
 or 860-553-6604.

  \ Join WC Group:  http://www.linkedin.com/groups?homeNewMember=&gid=1922050/

Modified Duty Calculator:  http://www.LowerWC.com/transitional-duty-cost-calculator.php

 
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.

©2010 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact
Info@ReduceYourWorkersComp.com.

New Mexico Business Closed Over Workers Comp Coverage Flap

Officials in New Mexico closed a San Juan County business for alleged non-compliance with the state’s workers compensation insurance coverage requirements.
 
According to New Mexico Business Weekly, a representative from the New Mexico Workers Compensation Administration, accompanied by New Mexico State Police, closed and locked the doors of Four-Four Inc, aka H&S Enterprises, dba Circle S. The company’s operations include pipeline work and convenience stores. (WCxKit)
State officials withthe Workers Compensation Administration compliance bureau said the company allowed its workers comp insurance to lapse as a result of non-payment of premiums in September 2009. This is the third time the company is out of compliance since 2007, according to state officials. The firm has five different business locations, and the lapse places a number of employees at risk, according to state officials. (WCxKit)
The WCA moved to close the business until such time as it acquires and provides proper workers comp insurance coverage

Author Robert Elliott,
 executive vice president, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers’ Compensation costs, including airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing.  Contact: Robert_Elliott@ReduceYourWorkersComp.com  or 860-553-6604.  
 
FREE IQ Test:   http://www.workerscompkit.com/intro/
WC Calculator:  http://www.LowerWC.com/calculator.php
TD Calculator:  http://www.LowerWC.com/transitional-duty-cost-calculator.php 

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.
  
©2010 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact
 Info@ReduceYourWorkersComp.com 

Employer Assistance Program Helps Employers Avoid Delinquency and Fight Fraud

We don't hear about EAP's much anymore in the work comp industry, so I thought you would like to read about new Employer Assistance Program offered by Washington State’s Department of Labor & Industries (L&I) helps employers avoid becoming delinquent on their workers compensation accounts.
The program and new tools to fight fraud were announced at a recent press conference held by Gov. Chris Gregoire and L&I Director Judy Schurke at the L&I Seattle office. More than 4,800 Washington state businesses have been assisted by the new program.
“Like families across Washington, businesses have seen incomes drop but still have bills to pay,” Gregoire said. “When it comes to workers compensation, businesses face another challenge: they are undercut by an underground economy in which some businesses operate without legally required protections for their workers, and try to succeed on the backs of honest businesses that follow the law.” (WCxKit)
To help businesses during this difficult economic period, L&I launched the Employer Assistance Program last year, allowing struggling businesses to extend payment of their workers comp premiums to manage their cash flow more effectively if they find themselves in trouble.
The program was created after L&I discovered more than half of the 13,000 employers delinquent with their workers comp accounts had previously held stellar records making their payments. Initially scheduled to last nine months, L&I announced they will continue the Employer Assistance Program due to the slow pace of the economic recovery.
“I want to tell employers if you have a good payment history with L&I but you’re having trouble paying your workers comp premiums now, we want you to contact us and let us help you,” Schurke said. “We can set up a payment plan and, in many cases, waive late penalties and interest.”
The press conference was also an opportunity to unveil new fraud-fighting tools, looking for employers who don't pay their premiums, medical providers who overbill and injured workers who file fraudulent claims. Cheating the system is not a victimless crime, but one hurting workers, employers and taxpayers by driving up premium costs for everyone.
The new programs include Detecting Unregistered Employers, or DUE, scheduled to begin in Fall 2010. The program uses software to flag businesses who fail to register with the state and pay into the workers comp system. (WCxKit)
"Our return on investment for fraud prevention has been eight to one – for every one dollar we spend we bring back eight dollars to the Workers Compensation Trust Fund,” Schurke said. “Our goal is to make sure Washington is the least fraud-friendly state in the nation.”
Author Robert Elliott,  executive vice president, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers’ Compensation costs, including airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing.  Contact: Info@ReduceYourWorkersComp.com  or 860-553-6604.  
FREE IQ Test:   http://www.workerscompkit.com/intro/
WC Calculator:  http://www.LowerWC.com/calculator.php
TD Calculator:  http://www.LowerWC.com/transitional-duty-cost-calculator.php 

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.
  
©2010 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact
 Info@ReduceYourWorkersComp.com 

Volunteer Fire Departments Receive Coverage Under State Operated Insurance Program

West Virginia – State volunteer fire departments will receive broad form insurance coverage through the Board of Risk and Insurance Management (BRIM) effective September 1, 2010 to June 30, 2011, according to a press release from Governor Joe Manchin's office.
“I am grateful BRIM has stepped in to provide insurance coverage, and peace of mind, for our VFDs,” Manchin said in a statement. “In addition, the BRIM coverage will provide the Volunteer Fire Department Workers Compensation Task Force much needed time to further study all aspects of the workers compensation challenge affecting volunteer firefighters.” (WCxKit)
Prior to BRIM's action, 281 volunteer departments in the state were en route to losing broad form coverage, which now is provided by Brickstreet set to expire June 1, 2010, but was extended to September 1, 2010. There are 426 fully volunteer fire departments in the state.
 “The 60-day extension from BrickStreet, while generous, did not allow us time to find a permanent solution,” Manchin continued. “BRIM’s action is a temporary solution that will allow VFDs to receive continual broad form coverage while providing ample time for the task force to fully study the issues and find a permanent solution.” (WCxKit)
Earlier in July, Manchin temporarily obtained relief for VFDs from workers compensation premium increases from BrickStreet. The BRIM coverage will give the stakeholders time to find a permanent solution to the problem, he added.
  \ Author Robert Elliott,  executive vice president, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers’ Compensation costs, including airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing.  Contact: Info@ReduceYourWorkersComp.com  or 860-553-6604.  
 
Work Comp Calculator:  http://www.LowerWC.com/calculator.php

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.
  
©2010 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact
 Info@ReduceYourWorkersComp.com

What Should a Small Business Do If They Have Not Complied with Workers Compensation Laws

If you are a large employer it is impossible (and also illegal) to fail to carry workers compensation insurance. Most states maintain a database of employers in their state. The states compare the information reported to them by insurers and approved self-insurers on who is insured against:

 

  1. information reported to them by the department of labor (list of employers paying unemployment insurance)
  2. information reported to them by the department of state (list of corporations and partnerships). (WCxKit)
  3. information reported to them by the department of commerce (businesses collecting sales tax)

 

If you are a large employer, you will quickly get a notice from the department of insurance if for any reason your workers comp coverage expired and you did not replaced it.

 

[The State of New York’s database contains 800,000+ employers in New York compiled from these and other sources].

 

But what if you are a very small employer, not incorporated or a partnership, and you do not collect sales taxes? Each state sets its own requirements for when an employer is “big enough” to be required to purchase workers comp coverage. In most states, excluding limited exceptions noted in various state statutes, an employer must carry coverage once their small business meets the state specific requirements for number of employees. The number of employees needed to require a business to carry workers comp insurance varies by state from one to five employees, with three employees being the most common threshold for requiring workers compensation insurance.

 

Let’s consider the small business in a state where three employees is the threshold for requiring workers comp coverage. The owner of the business started out with just himself doing everything related to his business. As time went on, he became more established and hired an assistant. Soon the business reached the point where he had to hire a part-time secretary. He never thought about having workers compensation insurance for his assistant and his part-time secretary.   Then the big break comes. In order to handle the new business he hires two additional employees to work with him and his assistant.   With the pressure to handle the new business plus training the two new employees, workers compensation insurance never crosses his mind.

 

A few months later, one of the new employees suffers a workplace injury, tripping, falling and breaking an arm. Now the owner of this small business realizes he needs workers comp insurance. As the business owner cannot buy workers comp insurance retroactively, he has unknowingly joined the ranks of the self-insured. His small business will need to pay all the medical bills his employee incurs as a result of this accident, plus the business will need to pay at least two-thirds (higher in a few states) of the employee’s wages while the employee is off work. [The owner of this small business might be better off to pay the employee’s wage the entire time he is off work and arrange for the employee to return to work on modified duty as soon as possible].

 

The business owner after paying for the employee’s medical bills and wages realizes he should have had workers compensation insurance, and wonders what can he do to get legitimate?   First, he should contact his business insurance agent and report he needs workers comp coverage as he has hired two additional employees. The insurance agent will be glad to write the coverage for the business, but can only write with an inception date in the future (hopefully the next day).

 

Depending on the state where this hypothetical business is located, the business owner may have problems besides paying the workers comp claim of his employee, such as:

 

  1. Criminal prosecution for non-compliance with the law.
  2. A civil fineor penalty imposed on the business by the state (some states have hefty fines in the thousands of dollars).
  3. The employeeobtaining an attorney when he realizes the business owner has no workers comp insurance, and the attorney exercising the option to pursue a tort claim and suing the business owner.

 

Let’s assume the insurance agent for the business elects not to ask too many questions and is able to place the small business with a workers comp insurance carrier. Other than the expenses of paying the workers comp claim, and buying workers compensation insurance coverage for the future, the business owner gets out of this problem with no further cost. But, he still will probably lay awake at night wondering if the state will find out and prosecute him and/or fine his business. (WCxKit)

 

Another example of a small business getting into trouble by not knowing the workers comp laws could be a Canadian business expanding into the United States. At first they check the laws of the first state they expand into and learn you must have two employees to be required to buy workers comp coverage. Since they only have one salesman in the state, they elect to not buy workers comp insurance.

 

Then the Canadian company has a change in the risk management department.   The new risk manager sees they do not have workers comp coverage for their United States salesman, so he concludes it is not required. The Canadian company is successful and they add additional salesman to the same state.   Within 5 years they have six salesmen working from their homes. Then someone in the Canadian company asks about workers comp coverage for the six salesmen.

 

They wish to be legitimate, but what can they do?  They cannot buy workers comp coverage in arrears — no carrier will sell them a policy covering a time frame in the past. They can buy workers comp coverage going forward.   Depending on the workers comp statutes of the state they are in, they may be fined for their failure to have the coverage. Their best bet is to talk with a knowledgeable insurance broker who can guide them in obtaining coverage and address with the state any penalty they may have to pay. (WCxKit)

 

If you need assistance in obtaining workers comp coverage for your small business for the first time, please contact us and we will be glad to provide you with assistance and guidance in the selection of your workers comp insurance broker.

 

Disclaimer:  This article is not intended to be legal advice. If you have questions of a legal nature about failing to comply with the workers comp statutes of your state, please consult with your attorney or legal adviser.

 


Author Rebecca Shafer,
 J.D./ Consultant, President, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers’ Compensation costs, including airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing.  Contact: RShafer@ReduceYourWorkersComp.com  or 860-553-6604.


WC Calculator: 
 http://www.LowerWC.com/calculator.php
TD Calculator:  http://www.LowerWC.com/transitional-duty-cost-calculator.php

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.


©2010 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com

 

The Basics of Assigned Risk Plans – Workers Comp 101

Numerous states have assigned risk plans for workers' compensation. These plans provide workers' compensation coverage for employers who are required to have coverage but are unable to obtain the coverage from the standard insurance carriers within their state. It is often thought assigned risk plans are for employers with unsatisfactory loss history or for employers in hazardous occupations. While these are reasons employers end up in assigned risk plans for workers' compensation, there are various other reasons as well.  
 
New businesses and small businesses without loss experience history often have difficulty in obtaining work comp insurance and have to obtain their work comp coverage from the assigned risk plans.   Assigned risk plans in some cases can be the lowest cost option for the employer, especially for employers who have been canceled by their former insurance company. Also companies in high-risk fields, companies with poor loss experience and companies with poor payment history end up in assigned risk plans.
 
Small employers may end up in assigned risk plans simply because their small number of employee results in their workers’ compensation insurance premium being lower than the amount the standard work comp carriers will accept. Many work comp carriers will set a minimum premium of $2,500 which is more than the experience rated premium should be for the very small employer.
 
Employers in assigned risk plans are often involved in occupations with higher than average risk such as the construction trades, trucking, logging, farming and heavy manufacturing.   The loss history and payment experience of these employers is also often the reason they are unable to obtain workers' compensation coverage from standard insurance companies.
 
In some situations the employer relies on the insurance agent to locate and purchase the coverage for workers’ compensation. The employers often have no knowledge of insurance and are not involved in making the decision as to where to obtain work comp insurance.   Many times the employers placed in the assigned risk plans are unaware they are in the assigned risk plan or they do not know why they are in the assigned risk plan.
 
In some states as much as 75% of employers in the assigned risk plans will be new and small businesses. The assigned risk plan will provide the required workers’ compensation coverage while the business develops enough loss experience history for standard work comp carriers to be able to rate the business. Typically the new business will have enough loss history within three years to be rated by the standard work comp insurers and will leave the assigned risk plan.
 
A problem often associated with assigned risk plans is the use of a guaranteed cost program where the premiums are set with no regard to the actual losses incurred by the employer. This often results in the assigned risk plan losing money. In most states the remedy for the underwriting loss is to make an assessment against the standard insurance carriers, which they pass on to their policyholders. This results in the employers not in the assigned risk plan subsidizing the employers who are in the assigned risk pool.
 
If the assigned risk plan uses retrospective rating where they can assess the employer additional premium based on the employer's actual loss history, the employer bears the cost of its loss history, subject to caps on the maximum additional premium.
 
If an employer (other than a new business) has remained in an assigned risk plan for more than two years due to a poor loss history, the employer should be considering an in-depth review of their safety program and their risk management program.   A determination should be made as to what were the causes of the injuries and what can be done to prevent the injuries from occurring. They should take advantage of the assigned risk plan's safety programs (or they can contact us about our safety course
 
Some employers remain in the assigned risk plan when they no longer need to do so. If an employer has remained in the assigned risk plan for more than two years, the employer should be consulting with their broker or agent to see if they can obtain better work comp rates outside of the assigned risk plan. (workersxzcompxzkit)
 
Summary:
Assigned risk plans are necessary for those employers who are unable to obtain workers’ compensation coverage from the standard insurance companies. The employers who are in assigned risk plans should be reviewing their risk management and safety programs for ways to improve their loss history. As assigned risk plans normally have higher premiums than standard workers’ compensation insurance, the employers should seek work comp coverage from the insurance companies available to them.
 
Author Rebecca Shafer J.D., Consultant, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers’ Compensation costs, including airlines, healthcare, manufacturing, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. She can be contacted at:   RShafer@ReduceYourWorkersComp.com or 860-553-6604.
 
Podcast/Webcast: Occupational Health Strategies    Click Here:

WC Calculator: http://www.reduceyourworkerscomp.com/calculator.php

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.
 
© 2010 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ ReduceYourWorkersComp.com.

Massachusetts Lowering Workers Comp Rates To Attract Business

“A deal” to cut back rates  for workers’ compensation insurers is reported out of Massachusetts Attorney General Martha Coakley’s office.

The agreement reached
with the State Rating Bureau of the Division of Insurance means insurance companies who had been looking for an average rate increase of 4.5% will see a reduction in their current rates by 2.4% beginning in September.

As a result of the deal
, Massachusetts businesses will reportedly save around $75 million, according to the Attorney General’s Office.

By lowering the cost of workers’ compensation insurance, we can continue to promote job growth in Massachusetts by attracting new businesses and allowing current businesses to grow. This settlement protects insurance customers and ensures that they do not overpay for workers compensation insurance,” Coakley commented. The average increase expected of 4.5% would have cost employers more than $40 million in extra premium payments, Coakley said.

According to Paul Meagher
, president of the Workers’ Compensation Rating and Inspection Bureau of Massachusetts, a private, non-profit association of insurers, filing workers’ comp rates on behalf of member insurers with the Division of Insurance, said “In today’s uncertain economic climate, maintaining a healthy voluntary market for workers’ compensation insurance will likely be a challenge given the continuing increase in claims severity and low expected industry investment returns. (workersxzcompxzkit)

Along with the rate decrease
the deal necessitates workers’ comp insurers to undergo another rate review in 2011, so the Attorney General and the State Rating Bureau may seek further rate reductions next year as appropriate.

The settlement requires
final approval from the state commissioner of insurance.   
 
Author Robert Elliott, executive vice president, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers’ Compensation costs, including airlines, healthcare, manufacturing, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. He can be contacted at:  Robert_Elliott@ ReduceYourWorkersComp.com or 860-553-6604.

Podcast: KNOW the New OSHA Recordkeeping Rules — OR Risk Fines and Criminal Penalties.  Click Here:   http://www.workerscompkit.com/gallagher/podcast/Non_Compliance_with_Recordkeeping_Standards/
 

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.
 
©2009 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com 

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