Top 5 Misconceptions Surrounding Workers Compensation

June 18, 2019 by

Top 5 Workers compensation mythsEveryone has opinions on what workers comp is. Some are correct, but most are misconceptions. The commercials seen on TV about people collecting hundreds of thousands of dollars are not true for the average claim.  When looking at the bottom of the screen it indicates that the people on the commercial are actors, not even the real claimants.  Most of the marketing material surrounds auto and liability accidents, where pain and suffering are translated into a certain dollar amount.  This is not exactly true in workers comp.  There is no pain and suffering payment.  Insurance companies/TPAs are there to provide reasonable and necessary medical treatment and wage loss.  Some states even allow a permanent partial disability payment, or impairment rating, on top of wage loss, but that is it.

 

 

Below we discuss the top 5 misconceptions surrounding the mystery world of workers compensation.  Not all of these will apply exactly to every jurisdiction but are general.  Remember to discuss with the adjuster and counsel any exact questions surrounding certain details regarding.

 

 

  1. Workers Compensation is not Welfare

Compensation is not a free payment a worker is entitled.  Just because you are injured at work, it does not mean a guaranteed payment or coverage for medical/wage benefits.  There are a lot of criteria to meet in order for a claim to be compensable.  Even if the claim is compensable, it also does not mean anything can be done.  Claimants have to play by the rules and do as they are told by the adjuster.  The adjuster must make the effort and take the time to explain to each claimant what the rights are, and what they can and cannot do. The biggest issue is miscommunication between the carrier/TPA and the claimant, so having an open dialogue will end any misconceptions that a claimant may have in regards to what their rights are, and what is covered; if indeed the claim is determined to be compensable.

 

 

  1. Nobody gets rich from Workers Compensation

Depending on the jurisdiction, employees give up the right to sue in civil court in exchange for what are essentially no-fault benefits.  Workers compensation pays lost wages, medical care, and vocational rehabilitation.  Pain and suffering as an additional payment is not available or applicable to a compensation claim.  The amount of money a person receives is a percentage of average gross pay.  There are typically no increases for inflation, and each state has a maximum limit that a person can get per week as workers comp payments.

 

Michigan, for example, has a maximum rate of $921 per week (as of 2019).   So even grossing $2000 per week as an average weekly wage, that amounts to $921 per week in Michigan.  High-wage employees that fall into these criteria are usually not very happy when they find this out, but the rules are the rules.  These statutes are set up within the workers’ compensation system, and they have to be followed by all parties.  Even if a claim is settled for a certain amount of dollars, it is typically not a retirement jackpot.  It may end the exposure for the carrier/TPA, but these claims that settle for very high amounts of money are the result of a very serious, extremely disabling injury.  And even those are few and far between.

 

 

  1. Workers compensation benefits will be stopped if the worker declines reasonable employment.

If the employer offers up a light duty job, within the injured employee’s medical restrictions, a claimant cannot refuse it and still get paid wage loss benefits.  This opens a Pandora ’s Box, because an issue will come up about whether this light duty job is something an injured worker is trained to do or is the job offer seen as an insult to their professional skills, etc.  If there is a welder sitting in a chair staring at a clock for a job, then maybe a case could be made that this work is not a benefit to the company.  For light-duty jobs, they have to be deemed something that the employer gets a “gain” from performing, and almost all jobs within an employment facility can fall within these parameters.  Certainly, if you provide a degrading job that is of no benefit, then you may get into legal trouble.  But in all reality, I do not think any employer would take a risk in stopping a compensable case by trying to make a person sit outside and stare into space.

 

 

The bottom line is any light duty job, that provides a service to the employer, must be performed if it is offered to the injured worker.  If the worker declines, then wage benefits will cease.

 

 

  1. Workers comp fraud is extremely low

Actual workers comp fraud is less than 10% of all claims.  And that number may even be high; I would go as low as 5% or less.  For a case to be deemed as fraudulent, it must meet certain criteria within whatever state statutes are in the jurisdiction.  That is hard to meet, and most cases will not even come close to being worth the pursuit of fraud in a legal court case.  If a certain worker is claiming to be out of work, and you get surveillance of them outside roofing their house, this may not make the case actual “fraud,” it falls more within the injured worker not following their medical restrictions and going outside of their treatment plan as deemed appropriate by their treating doctor.  This will provide the adjuster with the ammo to dispute ongoing benefits, but not exactly to pursue the case as overall fraud.

 

 

Workers comp fraud, as a whole, is not a major problem within the worker comp system.  Sure there are a lot of people that do not follow their medical restrictions, or they may miss doctor appointments, or ignore physical therapy demands, but this provides only a dispute for ongoing medical benefits, not fraud.  There is a difference between the two.  If you think you have an actual fraud case, you need to discuss it right away with the carrier/TPA and counsel before taking any such action to pursue official fraud in a legal venue.

 

 

  1. The vast majority of workers comp claims are paid and do not go to court

Generally, most comp cases are accepted, the injured worker gets treatment, and eventually goes back to work.  The idea that someone stays home and avoids work when they are able to actually work is not the norm.  Sure, there are those people out there who try to do what they can to avoid going back to work, but after an independent medical exam (IME) is performed, or after some surveillance discovers them being active out and about running errands, they are quickly flushed out and denied ongoing benefits.

 

Typically after a denial, and wage loss payments stop, these workers get on the wagon and get their treatment, so they can return to work and have their comp case end.   Some will run to plaintiff counsel and try to get what they feel they are entitled to, and they will file for mediations and hearings, but the litigation usually is settled before a case is tried in front of a judge.  Doctors can disagree on the causal relation of an injury, and this can speed up the case to go into litigation, but these cases are typically settled within 2-6 months.  A low percentage of claims will stay in the litigation system, and go on for months or years, but these cases are usually quite complex and can involve several defendants and several employers, and that contributes to the complexity and the duration of the litigation.  For the most part, on the normal workers’ comp claim that gets disputed and goes into litigation, these cases resolve themselves in the early stages of litigation and the files eventually close. But even those cases are not the common ones.  The common claims are legit injuries, where benefits are paid and the worker returns back to work at full duty within whatever timeframe is needed depending upon the severity of the injury.

 

 

Summary

 

Everyone may have heard of someone that tried to get away with milking the comp system.  Most of these people are caught through a good investigation, and their cases get resolved.  The stereotype of work comp being a total pain can be true in some cases, but for the most part, work comp claims are legit, paid, and the worker returns back to work.  There are always some exceptions, but if all parties communicate, know what their rights are, and know what they can and cannot do, their claims are resolved as quickly as possible and everyone can move on with their respective lives.

 

 

 

Rebecca ShaferAuthor Rebecca Shafer, JD, President of Amaxx Risk Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and 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. She is the co-author of the #1 selling book on cost containment, Workers Compensation Management Program: Reduce Costs 20% to 50%. Contact:.

Contact: RShafer@ReduceYourWorkersComp.com.

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

 

©2019 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.

 

 

Filed Under: WC 101 Tagged With: ,

The Search for Great Workers Comp Cost Containment Information

May 3, 2012 by Leave a Comment

One of the most difficult aspects of being a risk manager, workers compensation coordinator or workers comp manager is finding adequate resources on the subject of workers compensation. With each state having their own unique way of doing things, finding specific information can be daunting.   Of course you can Google any workers compensation subject and you will get a ton of information with some of it being useful or on point, but usually most of it does not apply. 

 
 
Good sources of information on workers compensation are available.  The U.S. Chamber of Commerce publishes annually an excellent guide called Analysis of Workers Compensation Laws, which is packed with tables showing how each state applies the law in different categories. A new print version is published only once yearly which may be a drawback for some, and it's published in the middle of the year, so the 2011 is the most current version until about July.

Also, each state will have their own website for workers compensation with some being more user friendly than others. Many state specific websites will cite the law by chapter and paragraph, but unless you are an experienced lawyer, that does not do much good. [WCx]
 

 
Other great source of information online are found at www.WorkersCompensation.com and their paid service Workers Compensation Research which provides updated state information as well as fill-in flash forms. Many carriers and self-insured employers use these forms and research tools.
 
 
There are technical schools, both on-line and classroom settings, that offer workers compensation training, but these courses are usually geared toward people who need state specific training to pass the state examination for a workers compensation adjuster’s license.  In a similar vein are the on-line webinars designed to teach you the basics in order to get the adjuster’s license or agent’s license.  These schools do not address the primary need of business, workers compensation cost control.
 
 
If you do an internet search for workers compensation cost control, you will find various articles on safety, or efforts to sell you a workers comp insurance policy with an insurance carrier. 
 
 
Recognizing the need for a multi-facet resource on workers’ compensation that employers can use to control their workers’ compensation cost, we created a detailed guidebook that is geared toward the needs of employers, Manage Your Workers Compensation Program, Reduce Costs 20-50%.
 
 
Our guidebook is focused on the information the employer needs to control workers compensation cost. It will show you how to plan and implement the workers compensation cost control strategy. There are in-depth chapters available.
 
  • Working with adjusters or TPA
  • Injury management best practices
  • Communicating with employees
  • Post-injury response
  • Reporting claims
  • Directing medical care
  • Return to work programs
  • Medical cost containment
  • Other cost containment services
  • Physical rehabilitation and physical therapy
  • Pharmacy benefit management
  • Fighting fraud
  • Training staff to control workers comp
  • Claim resolution and settlement
  • Safety and loss control
 
If you are just starting a workers compensation management program or realizing the need to overhaul the existing program, our guidebook will assist in assessing company needs, designing and developing the program, training and implementing the program, and monitoring and managing the workers comp program.
 
 
 Workers Compensation Management Program, Reduce Costs 20-50% places in one handy resource the information you need to control  workers compensation cost.  You could spend hundreds of hours researching on the internet and not find all the information we have compiled for you.  We believe our guidebook is the best available.  Please contact us to learn more about Manage Your Workers Compensation Program, Reduce Costs 20-50%.
 
 
Author Rebecca Shafer, JD, President of Amaxx Risk 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. She is the author of the #1 selling book on cost containment, Manage Your Workers Compensation: Reduce Costs 20-50% www.WCManual.com. Contact: RShafer@ReduceYourWorkersComp.com.
 

Our WORKERS COMP BOOK:  www.WCManual.com
 
WORK COMP CALCULATOR:  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.
 
©2011 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact

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Filed Under: Implementation and Rolling Out Your Program, Risk Management Tagged With: , , , ,

WC Basics 101 – Kansas Workers Compensation

January 26, 2012 by Leave a Comment

Workers Compensation Laws change frequently. This is only a summary; a complete copy of the most up-to-date version can be found at: www.WorkCompResearch.com , an excellent service.

In Kansas workers compensation coverage is compulsory as to all employment, including corporate executives and employees of charitable organizations.  Coverage is elective for individuals, partners or the self-employed.   There are some exceptions.  Real estate brokers and real estate salespeople on commission are excluded from the compulsory requirements.  Also, farm labor and employees of any employer whose gross annual payroll is $20,000 or less are excluded from compulsory coverage.

 
Obtaining Coverage
To obtain workers compensation coverage in Kansas, the employer has three options which are
 
  • purchasing a workers compensation insurance policy from a state approved insurance company
  • applying to and being approved for self-insurance status with the Kansas Department of Labor.
  • being a part of a group-funded self-insurance plan that has been approved by the Kansas Department of Labor

Claim Reporting
The employee must provide notice of the injury to the employer with 10 days and up to 75 days with just cause.  The actual claim of the employee must be served on the employer within 200 days after the accident, or last payment, or within 1 year of the employee’s death with death occurring within 5 years after the date of the accident.  WCxKit
 

Medical Benefits
In Kansas, the employer selects the medical provider for workers compensation claims.  The employer is required to provide all reasonable and necessary medical care free of any charges to the employee. The employer is also liable for up to $500 of employee incurred medical bills at a non-authorized doctor.  The employee can also apply to the Director of Workers Compensation for a change of doctors. The employee is entitled to all medical treatment needed to cure or relieve the effects of the injury.  Prayer or spiritual treatment is permitted by agreement.
 

Temporary Total Disability Benefits
The temporary total disability (TTD) benefits are calculated as two-thirds of the employee's average weekly.  The maximum amount of TTD benefits that can be paid is $555.00 per week.  The state maximum is subject to annual increase/decrease each July 1st, based on the state’s average weekly wage.  The state minimum weekly benefit is $25.
The first 7 days of disability (the waiting period) is not paid to the injured employee unless the employee is disabled for more than 21 days.  TTD benefits can be paid until a cap of $100,000 has been reached.
 

Temporary Partial Disability Benefits
In Kansas if the employee is able to return to any type of work, but at a lesser rate of pay then the amount the employee was earning prior to the injury, the employee is entitled to temporary partial disability (TPD) benefits.  The TPD benefits are paid at two-thirds of the difference between the pre-injury wage and the post-injury wage.  The TPD benefits are paid for up to a maximum of $100,000.  The TPD benefits plus the post-injury pay rate cannot exceed the state's maximum indemnity benefits rate.
 

Permanent Partial Scheduled Disability
Kansas uses a Schedule to establish the value of an injury to all extremities, the shoulders, eyes and hearing.  Each body part has a set number of weeks it is worth with a shoulder being worth 225 weeks of compensation and the number of weeks decreasing with other extremity body parts having lesser value down to a toe, other than a big toe, being worth 10 weeks of compensation.   A 20% loss of use of the arm, which is scheduled at 210 weeks, would result in a permanent partial scheduled disability award of 42 weeks (210 weeks X 20%).

Permanent Partial General Disability

When the employee sustains a permanent partial general disability of a body part not listed on the Kansas Scheduled Injuries list and the employee is not permanent totally disabled, the employee receives permanent partial general disability. If the employee is able to return to work and is earning at least 90% of the average weekly wage, the employee is given a percentage of the whole body impairment based on the AMA Guidelines, Fourth Edition.  The maximum in weeks is 415 weeks.  An employee with a 10% rating would get an award of 41.5 weeks of compensation.  The maximum an employee can collect for permanent partial disability is $100,000.
 

Permanent total disability
Kansas permits the employee to collect a maximum of 415 weeks of indemnity benefits for all types of indemnity combined, but the total amount of benefits collected for permanent total disability is $125,000 instead of $100,000 (the amount of TTD benefits paid to the employee is included in the $125,000 indemnity benefit cap).
 

Death Benefits
The burial expenses in Kansas are covered for a work-related death up to $5,000.  The death benefits for a dependent spouse and children follow the same guidelines as TTD benefits – two-thirds of the average weekly wage – currently a maximum of $555 week, and a minimum survivor’s benefit of $370 per week, except there is a dollar maximum for death benefits in the amount of $250,000 with children, or $200,000 without children.  If there is no spouse and no dependents, the death benefit is reduced to $25,000.  WCxKit
 

Vocational Benefits
Vocational Rehabilitation is on a voluntary basis in Kansas. However, once it is started, it cannot be terminated without the agreement of the employee.  The vendor of the vocational rehabilitation may be changed for good cause supported by substantial evidence.  If so, the employee may select the replacement vendor from a list of three qualified vendors provided by the employer.
 

Author Rebecca Shafer, JD, President of Amaxx Risk 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. She is the author of the #1 selling book on cost containment, Manage Your Workers Compensation: Reduce Costs 20-50% www.WCManual.com. Contact: RShafer@ReduceYourWorkersComp.com.
 

NEW 2012 WORKERS COMP BOOK:  www.WCManual.com
 
WORK COMP CALCULATOR:  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.
 
©2011 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com.
Filed Under: WC 101 Tagged With: , ,

Washington State Workers Compensation 101

July 31, 2011 by Leave a Comment
Workers Compensation Laws change frequently. This is only a summary; a complete copy of the most up-to-date version can be found at:  www.WorkCompResearch.com an excellent service.  http://workcompresearch.com/  
Washington State is one of the four remaining monopolistic states (where the state government is the insurer rather than private insurance companies). In the November 2, 2010 election, there was a measure on the state ballot to privatize Washington’s workers compensation system, but it was rejected by the voters.
Compulsory Coverage
Employers with one or more employees must have workers compensation insurance for the employee(s). Sole providers, partners, corporate officers, and the manager of a limited liability company may elect to exclude themselves from the workers compensation insurance coverage requirements. Workers compensation coverage is not required for a newspaper carrier, a beautician or barber renting booth space, a child under age of 18 employed on the family farm, a domestic or gardener for a private home as long as only one person is employed, and a person working for a religious or charitable organization in exchange for sustenance. (WCxKit)
Obtaining Coverage
To obtain workers compensation coverage in Washington, the employer has two options which are:

1.      Participate in the state monopolistic workers compensation insurance program administered by the Washington State Fund in the Department of Labor & Industries.

2.     Meet standards set by Washington State to be a self-insured employer. (About 400 employers in Washington are self-insured, but they are the largest employers covering between one-fourth and one-third of the total workforce.)

Claim Reporting
The employee must submit to Department of Labor & Industries or the self-insured employer a claim application within one year of the injury or within two years of the doctor’s diagnosis of an occupational disease. The medical providers of employees covered through the State Fund are required to submit the Report of Industrial Injury or Occupational Disease. The medical providers to employees of employers who are self-insured are required to submit to the employer the Self Insurer Accident Report. If the employee is unable to return to work, the physician is required to submit the Activity Prescription Form.
Cost of Workers Compensation
Washington is the only state that allows the employers (who purchase workers compensation insurance from the State Fund) to deduct a part of the cost of workers compensation from the employees’ wages. The employer can deduct up to half of the cost of the premium portion that pays the medical benefits and the portion of the premium that pays the cost of living increases for the injured workers drawing life-time compensation benefits – known as pensions. Employers must pay the entire portion of the premium that is used to pay lost time compensation and pensions. Overall, employees pay approximately 27 percent of the total work comp premium to the state.
Self-insured employers can deduct from the employees wages: 1) one-half of the Supplemental Pension Fund assessment; 2) one-half of the Asbestos Fund assessment; 3) the self-insurance Overpayment Reimbursement Assessment.
Medical Benefits
The employee selects the medical provider of their choice. If the employee is not satisfied with the medical care provided, the employee can change doctors at will. If the employee is not satisfied with the medical recommendations of the selected medical provider, a second opinion can be obtained if approved by the  claims administrator.
All reasonable and necessary medical care is covered by workers compensation. There are no time limitations or monetary limitations on the medical benefits. All billing of medical services by medical providers must be in compliance with the fee schedules published each year by the State Fund.
Temporary Total Disability (TTD)
When an employee in Washington State is certified by the medical provider as unable to return to work, the State Fund or the self-insured employer will pay TTD. The compensation rate varies from 60% to 75% of the gross wages, depending on the employees martial status (or registered domestic partnership) and how many dependents the employee has (60% for the employee, 5% additional for a spouse, and 2% additional for each additional dependent, up to 5 additional dependents).
The maximum amount of TTD benefits that can be paid is 120 percent of the state average monthly wage. The minimum amount of loss time compensation benefits that can be paid is 15 percent of the state average monthly wage. The maximum amount had been recalculated each year, with the new rate going into effect on July 1st. On June 5, 2011 a one-year freeze on time loss benefits was signed into law. The TTD benefit maximum for July 1, 2011, through June 30, 2012, will be the same as the previous year. The monthly dollar maximum TTD benefit for July 1, 2011, through June 30, 2012, is $4,715 and the monthly minimum TTD benefit is $185.
The first 3 days of disability (the waiting period) are not paid to the injured employee unless the employee is disabled for more than 14 days. TTD benefits can be paid for as long as the medical provider keeps the employee off work.
The Stay-at-Work Program instituted by the Labor & Industries office effective June 15, 2011 is taking a very proactive approach to providing modified duty to injured employees. In the new program the Labor and Industries office will reimburse employers for half of the worker’s wages while the employee is on working on modified duty. The Stay-at-Work Program is designed to speed workers’ recovery, prevent long-term disability, and reduce cost for both the State of Washington and for the employer.
Permanent Partial Disability Benefits
Washington State employees are paid permanent partial disability (PPD) benefits for any permanent disability suffered as the result of an on-the-job injury. Washington State uses a schedule of injuries for limbs, vision and hearing. The total loss of a body part is worth a set dollar amount stated in the schedule. A partial loss is paid as a percentage of the set dollar amount.
For non-scheduled injuries, the maximum period of payments is not specified. The maximum dollar amount for permanent partial disability is currently (February, 2011) $149,116 but subject to change each July 1st. Payments are based on a percentage of disability.
Permanent Total Disability (PTD)
The amount of indemnity compensation for PTD is calculated the same as for TTD. PTD is paid for the balance of the employee’s life, but the State Fund or the self-insured employer is allowed an offset for the amount of Social Security benefits the employee receives. PTD benefits are referred to as pension. The injured employees drawing a pension also get an annual cost of living increase. There is no provision in the state workers comp law for a settlement of PTD claims. Therefore, the Washington State Fund has a funding problem now with half of all workers comp payments going to people drawing lifetime pensions.
In an effort to reduce the amount of money being paid for PTD, effective June 15, 2011, workers who are age 55 or older have the option to negotiate a settlement agreement with periodic payments rather than staying in the work comp system or being retrained for another job. The workers who opt for the settlement agreement will continue to be eligible for medical care.
Death Benefits
The burial expenses in Washington State are covered for a work-related death up to $7,709.32. The death benefits for a dependent spouse are 60% of the average monthly wage plus 2% for each dependent child up to 5 children. The maximum and minimum amounts follow the TTD guidelines. There is no lifetime maximum amount or dollar maximum for death benefits.   If the spouse remarries, the spouse receives 24 months of death benefits or the lifetime annuity value, if less. Children receive benefits until age 18 or until age 23 if a full-time student. Disabled children can receive death benefits beyond the age of 18.
Vocational Benefits
Washington workers compensation law also includes discretionary vocational benefits (the State Fund or the self-insured employer determines whether or not they will offer vocational benefits). Vocational rehabilitation is in the best interest of the employer and the employee as placement in a new job reduces or eliminates the amount of PPD that will be paid, and stops the employee from making a claim for a lifetime pension (PTD). (WCxKit)
If the injured employee is unable to return to their prior job due to disabilities from the on-the-job injury, and the employee does not have the skills for a different job, a vocational counselor can be assigned to work with the employee. If the employee declines the vocational counseling, medical and indemnity benefits can be terminated. The vocational counselor will develop a training plan that is reviewed and approved by the Department of Labor & Industries. The vocational plan includes a job goal based on the employee’s skills, interest and medically documented limitations. It can include schooling or on-the-job training for up two years.
Workers Compensation Laws change frequently. This is only a summary; a complete copy of the most up-to-date version can be found at: www.WorkCompResearch.com an excellent service.  http://workcompresearch.com/  
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. See www.LowerWC.com for more information. Contact:RShafer@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.
 
©2011 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com
Filed Under: Implementation and Rolling Out Your Program, Insurance Issues, Rates, Premiums, WC 101 Tagged With: ,

Workers Compensation 101

July 13, 2011 by Leave a Comment
Workers compensation is a type of insurance employers are required to have to provide benefits to employees who are injured on the job or become ill due to on the job exposures. Workers compensation (work comp) insurance provides the injured employee with medical benefits and partial wage replacement benefits. All 50 states, the District of Columbia, Guam, the Virgin Islands and Puerto Rico have workers compensation statutes. Each jurisdiction has their own unique provisions as to what their work comp laws provide.
 
 
Work comp provides benefits to the injured employee without regard as to whose fault the accident was. In return for the guaranteed benefits, the employee can not bring legal action against the employer if the employer was in someway negligent and caused the accident.   The employee is not compensated for any pain and suffering that occurs as a result of the accident. (WCxKit)
 
 
Work comp has been referred to as a combination of health insurance, disability insurance and life insurance for employees. When the employee is injured or has an occupational disease, work comp pays the medical bills like health insurance does and provides partial wage replacement like disability insurance does. If the employee dies as a result of the injury or occupational disease, work comp will pay benefits to the dependents as a form of life insurance. Work comp does not pay any of these benefits if the employee injury occurs away from the job.
 
 
Employers in Ohio, North Dakota, Puerto Rico, the Virgin Islands, Washington State and Wyoming are required to purchase their workers compensation insurance from the state/territory government. In the other states, D.C and Guam, the employers can buy their work comp coverage from a private insurance company or in most states, self insure, if they are large enough to handle the financial risk. Some states allow smaller employers to join together to self insure. About a dozen states give the employer the option of buying the insurance from the state government. Texas is the only state that classifies work comp as voluntary insurance. If a Texas employer does not have work comp coverage, the injured employee can bring a lawsuit against the employer for their injuries.
 
 
In most jurisdictions there are four primary types of benefits available to the employee. They are medical benefits, disability benefits, vocational rehabilitation and death benefits. Medical benefits pay for all types of medical expenses including doctors, hospitals, prescriptions, durable medical equipment and other medical providers (like nursing services, chiropractors, physical therapist, etc). 
 
 
Indemnity benefits can be broken down into four primary types in most jurisdictions:
 

1.      Temporary total disability

2.      Temporary partial disability

3.      Permanent partial disability

4.      Permanent total disability

 
Temporary total disability benefits are the most common indemnity benefit. The injured worker receives on a weekly or a bi-weekly basis a portion (two-thirds in most jurisdictions) of their average weekly wage until they are able to return to work. 
 
 
If the injured worker is able to return to work , but only for a part of the time, or at a reduced rate of pay, temporary partial disability benefits are provided to make up a portion of the lost income until the employee is able to return to work full time.
 
 
When the employee receives a permanent injury and will be partially disabled as a result of the injury, permanent partial disability is paid to the employee to compensate for their future loss of earning capacity due to the partial disability. 
 
 
If the employee receives an injury that is very severe, and the employee will never be able to return to any type of work, the employee is paid permanent total disability benefits which can either be for a set of number of weeks (for example – 500 weeks) or is paid disability benefits for life, depending on the state law.
 
 
Vocational rehabilitation benefits are designed to assist the employee who is permanently partial disabled and is unable to return to work for the employer. The vocational rehabilitation benefits assist the employee in being trained for another job or obtaining the education needed to perform other work. (WCxKit)
 
 
Death benefits (usually in amount similar to the weekly disability benefits) are paid to the surviving spouse, dependent children or other dependents of an employee who is killed on the job or dies as a result of an occupational disease. Death benefits vary by jurisdiction, with some jurisdictions requiring death benefits be paid to the surviving spouse for life while other jurisdictions cap death benefits at a certain number of weeks (for example 400 weeks) or at a set dollar amount (for example ($250,000). Dependent children usually receive a portion of the death benefits until they are 18, or 22 if attending college. Surviving spouses normally lose the death benefit if they remarry.
 
 
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. See www.LowerWC.com for more information. Contact:RShafer@ReduceYourWorkersComp.com .
  
 
 
 
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.
 
©2011 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com
Filed Under: WC 101 Tagged With: , ,

KENTUCKY WC 101 Answers to Basic Workers Comp Questions

September 3, 2009 by 1 Comment

1.  How long does an injured employee have to file a claim?

Prior to the filing of a claim,  an injured employee must give notice of an accident or injury.  Notice of an accident must be given to the employer “as soon as practicable after the happening thereof.”  342.185.    A claim for benefits based on a traumatic injury must be filed within two years of the date of injury or death or the last voluntary temporary total disability benefits made by the Employer, whichever is later.  KRS 342.185.  When temporary total disability benefits have been paid, an IA-2 form must be filed electronically with the Office of Workers’ Claims in order to start the statute.  The time limit for filing an occupational disease claim is typically three years.  Other conditions require a careful review of the statute.  KRS 342.316.

2.  What kinds of injuries qualify for workers’ compensation benefits?

In order to be compensable,  an injury must be received in the course of and arising out of the employee’s employment.  Generally, this does not include injuries sustained going to and coming from work, injuries or disabilities caused primarily by the natural deterioration of some part of the body, injuries that are entirely psychological in nature without some physical component, pre-existing conditions not aggravated by the injury, or injuries caused by the employee being under the influence of drugs or alcohol.  However, there will be situations where exceptions do apply.

3.  What types of benefits are available to an employee who files a worker’s compensation claim?

An employee  is eligible  to receive temporary total disability (TTD) benefits if the injury or disability prevents the employee from returning to his or her pre-injury position of employment.  The amount of the TTD benefits is calculated as a percentage of the employee’s wages, with a maximum and a minimum amount.  Prior approval does not have to be obtained from the Office of Workers’ Claims before terminating temporary total disability benefits.  The employer must have reason to believe that the injured worker has (1) reached maximum medical improvement or (2) been released to return to work.   KRS 342.0011 (11)(a).  It is not reasonable to terminate TTD  where an employee is released to perform minimal work but not the type of work customary or that the employee was performing at the time of injury.

If the employee’s  injury or disability results in some type of permanent disability, the employee may be eligible for permanent partial disability (PPD) benefits.  PPD benefits are calculated using a formula based, in part, upon the percentage of residual whole person impairment recommended by a physician. Weekly benefits are paid over a 420-week or 520-week period depending upon the extent of the disability. 

An employee  may also be entitled to vocational rehabilitation if unable to return to the type of work previously performed.  These benefits usually do not extend past fifty-two weeks.  

If the injury  or disability renders the employee unable to engage in sustained remunerative employment utilizing the employment skills that he or she has or may reasonably be expected to develop, that employee may be eligible for permanent total disability benefits.  These benefits, which are calculated in a manner similar to the TTD benefits, continue for the remainder of the claimant’s lifetime or until the employee qualifies for social security retirement benefits. (workersxzcompxzkit)

If an employee’s death  is caused by his or her workplace injury or occupational disease, the spouse and/or dependants of that employee may also be entitled to death benefits.  In the case of a dependant spouse, such death benefits are payable for life (or until social security retirement age) with a two-year dowry benefit upon remarriage. 

Author: David D. Black, Partner. David Black is an attorney at Dinsmore & Shohl in Cincinnati, OH. He can be reached at David.Black@dinslaw.com or 513-977-8143.

We are accepting short articles* (200-300 words) on WC cost containment. Non-salesy, written from employer’s viewpoint. To: Info@ReduceYourWorkersComp.com. Subject Line: “Blog Submission.” Name/Title, Company, Phone/Cell, Short Bio. See http://www.reduceyourworkerscomp.com/. We will contact you. *Non-compensable.

WC IQ Test: http://www.workerscompkit.com/intro/
Books: http://www.reduceyourworkerscomp.com/workers-comp-books-manuals.php
WC 101: www.ReduceYourWorkersComp.com/workers_comp.php

New Article: Return to Work in Unionized Companies
http://reduceyourworkerscomp.com//Return-to-Work-Programs-Unionized-Companies.php

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker about workers’ comp issues.

©2008 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com

Filed Under: Litigation Management, WC 101 Tagged With: ,

The Basics of Workers Compensation

February 22, 2009 by Leave a Comment

What is Workers’ Compensation?

This is a general overview of workers’ compensation. State laws vary greatly and they change frequently, so make sure to check the law in your state for information specific to your state. Federal and state laws govern the payment of and entitlement to workers’ compensation. Federal government employees are covered under different guidelines than state employees and employees of private businesses.

Workers’ Compensation Basics

If you have a worker who is injured on the job, worker’s compensation kicks in to provide benefits.

Workers’ Compensation = Workers’ Comp = WC*
*Formerly referred to as Workmans’ Compensation.

Rule #1: The injury must occur in the “course and scope of employment.” Not all employees are covered but most are. Ask your claims adjuster, if you are unsure if an employee is covered or if the injury occurred out of and in the course of employment.

What Costs are Covered

If an employee is injured on the job, they are entitled to payment of:
1-Medical bills
2-Hospital bills
3-Lost wages (called “indemnity payments”). If an employee is working two jobs, he/she may be entitled to payment of lost wages from BOTH jobss.
4-Rehabilitation
5-Medications
6-Mileage to/from medical providers
7-Permanency, scarring, scarring or residual loss of earning capacity

REMEMBER: Specific benefits vary by state so check the state you’re doing business in for the specifics.

WC Calculator www.ReduceYourWorkersComp.com/calculator.php
TD Calculator www.ReduceYourWorkersComp.com/transitional-duty-cost-calculator.php
WC 101 www.ReduceYourWorkersComp.com/workers_comp.php

Do not use this information without independent verification. All state laws are different. Consult with your corporate legal counsel before implementing any cost containment programs.

©2008 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com

Filed Under: WC 101 Tagged With:

Workers Comp 101 — The Basics of Workers Compensation

August 15, 2008 by Leave a Comment

Chances are, if you are on this blog, you are looking for solutions to the high cost of workers comp. The place to start is to learn what workers comp is and is not.

Workers Compensation, often shortened to workers comp, work comp, workmans comp is a system of state and federal statutes providing benefits to injured employees — these are called “occupational injuries.” Such benefits are necessary because in the early part of the 1900’s if an employee was injured on the job they were essentiall “disposed of”, fired, then due to what was often a disabling injury, they could not find employement elsewhere. So, a system of compensation was legislated to provide for these people. And, hopefully to encourage safer workplaces.

If an employee is injured on the job, they are entitled to payment of medical care, hospital care, medical testing, lost wages (called “indemnity” benefits), medication, transportation to/from the medical provider, rehabilitation and if there is permanent injury, then there is likely a benefit for “permanency” and scarring.

Workers Comp varies by state and jurisdication. For example, if your company is based in Maryland, benefits are administerd according to Maryland laws. Just click on the map to find your state’s regulations: http://www.workerscompkit.com/resources.php.

If your are a federal governmental agency, benefits are administered by Federal Employees’ Compensation Act (FECA) . Click on that category at the top of drop down menu. Dockworkers, and several other categories of employees, for example those working on ships or offshore, for example, may be covered by other regulations such as the Longshore and Harbor Workers’ Compensation Act (LHWCA) even though you, as the employer, are physically located in the State of Maryland. (this is only an example). Some employees may be covered by state laws, others may be covered by LHWCA.

So, first, determine what statutes apply to your companies situation. You can ask your risk manager, insurance adjuster or human resource manager to find out.

Look for the next entry in WC 101 series next week. Sign up for the RSS feed or email updates in the top right corner of the blog. If you are ready to move along more quickly, look at our home site by clicking on the elephant in the right column, and go to WC 101. http://www.reduceyourworkerscomp.com/workers_comp.php

Filed Under: WC 101 Tagged With: , ,

What is a Third Party Administrator (TPA)?

June 10, 2008 by Leave a Comment
Never fear – Workers Comp 101 is here.
 
TPA is a common acronym meaning third-party administrator.
There are two types of claims handlers: Third -Party Administrators (TPAs) and insurance companies.
An insurance company has adjusters that handle claims. Independent companies also have adjusters to handle claims. (WCxKit)
 
1.      A TPA is an independent company that adjusts claims.
2.      A TPA's focus is on administering workers compensation benefits in accordance with state laws.
3.      "Unbundling" occurs when an insurance company allows the employer to use a TPA.
 
 
There are three types of workers compensation claim offices. They are:
The insurance company claims office.
The third party administrators’ claims office.
The in-house claims office of the self insured employer.
 
 
While their approach to handling the work comp claims may be very similar and all three types of claim offices must abide by the same regulations in their state, the organizational structure of the claims office will differ, sometimes significantly.
 
 
In the areas where the insurance company has some volume of claims, but not enough to justify the cost of operating their own claims office, they will enter into a contract with a third party administrator (TPA) to handle their claims for them.
 
 
The TPA claims office will be set up basically the same as the insurance company claims office. The primary difference between the claims office of the insurance company and the TPA is in the ownership of the claims office. The TPA is a separate company from the insurance company. The TPA claims office will have very limited, if any, contact with underwriting, sales, and the other departments of the insurer.
 
 
While the claims handling activities are transferred to the TPA, the insurer or the self-insured employer who contracted with the TPA for claim service remains financially liable/obligated to pay the cost of the claims. The insurance company can not contract away its responsibility to its policyholders.
 
 
The TPA will handle claims for several different insurance companies and/or self-insured employers at the same time. Through combining the claim volume of claims of several companies, there are enough claims to justify the cost of the claims office.
 
 
The reason large employers self-insure their claims are to reduce the cost of workers compensation. Since the self-insured employer does not have an insurance company to handle their claims, they have two choices, utilize a TPA claims office or create their own claims office. The self-insured employer can create an “in-house claims office.” The claim manager, claim supervisors, claims adjusters and support staff are all employees of the self-insured employer. By utilizing their own employees to handle the work comp claims, the employer reduces the operational cost of insurance. The primary drawback of an in-house claims office is the employer usually does not have the expertise necessary to adjust claims and must hire employees with the necessary skills. The in-house claims office is usually unrelated to the primary business field of the self-insured employer.
 
 
The primary reason there are three types of claims offices is the cost of administration of claims. The insurance company claims office is the most cost efficient way for it to handle a large volume of claims. The TPA claims office provides smaller insurers, self-insured employers and large insurers with limited volume in an area, with a lower cost way of administering claims than having their own claims office. The in-house administration of claims is also tied to the ability of the large self-insured employer to handle work comp claims more cost effectively than contracting the claims handling to a TPA. (WCxKit)
 
 
Remember: In addition to the cost of workers compensation premiums and losses, you also pay for a third-party administrator(TPA) or insurance company to administer claim benefits.

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. See www.LowerWC.com for more information. Contact: Info@ReduceYourWorkersComp.com.

 
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.
 
©2011 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com.
Filed Under: TPA and Claims Administration Tagged With: ,

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