Assembly Bill No. 2883 was approved and filed August 26, 2016 and it’s causing quite a disruption with existing businesses. The bill focuses on revising the exceptions as what a defined “employee” is considered. The existing law states that officers and directors of a private corporation, and working members of a partnership or LLC were not required to be covered under the company workers compensation policy unless they opted to be covered.
However, the Assembly Bill No. 2883 revises the exceptions so that a director or officer is required to be covered under the company policy. There is still a, albeit narrow, definition of exclusion, but if they do fall under this exclusion they can only opt out if they sign a waiver under penalty of perjury and file it with the company insurer. The officer and director must own at least 15% of the issued/outstanding stock or a general partner, partnership or managing member of an LLC to be considered exempt.
The specific changes were put in place to discourage companies from abusing the previous exemption. Many companies were listing all employees as directors or officers to avoid having to purchase workers compensation insurance. By requiring the waiver to be signed under penalty of perjury, they hope to ensure employees are properly covered and protected in the event of a work-related injury.
The new bill affects all polices that will be in effect on or after Jan 1, 2017 including policies in force any time after this date.
For more information on this new bill or to review your current workers compensation policy, contact us today at 831.661.5697.
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The Contracting Classification Premium Adjustment Program (CCPAP) is a discount program that can reduce the amount that an employer pays in workers’ compensation premiums.
How does the CCPAP work?
The CCPAP was developed to provide a premium credit for employers in the contracting and construction industry who pay their employees higher than average wages. The CCPAP discount is calculated using the hourly rate of employees who are classified within the construction industry’s contracting class codes.
The system that is used to calculate workers’ compensation premiums groups employees according to risk. For each classification, the employer must pay a certain amount of workers’ compensation premiums based on every $100 of payroll. Since high wages amount to higher workers’ compensation premiums, employers use the CCPAP to lower their premiums to an amount more level with what they would be paying if they paid their employees less. With the CCPAP, employers aren’t penalized for paying their employees higher than average wages.
How does an employer apply for the CCPAP?
An employer must complete the CCPAP application and return it to the National Council on Compensation Insurance (NCCI) within 180 days from either the effective date or the anniversary rating date of the workers’ compensation policy. The CCPAP must be applied for every year.
When completing the application, the employer must determine which calendar quarter data to use. The employer will also be asked to provide a description of operations or its classification, the appropriate classification code, the total wages paid and the total hours worked.
Once the application is received by the NCCI, the average hourly wage will be computed and the CCPAP credit will be generated according to the rules for the state in which the application is being made. The insurance company will then be notified, and the credit will be applied to the policy.
In which states is the CCPAP available?
The CCPAP is not a national program. Each participating state has its own rules, which include qualification and calculation of credits. Some states may also have an hourly pay rate threshold for entry into this program.
To see if the CCPAP is available for your business, consult with Scurich Insurance Services for more information about the program and the potential to lower your workers’ compensation premiums.
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Workers Compensation fraud is a widespread and serious problem that’s not only illegal, but leads to higher insurance premiums for all businesses – including yours.
According to industry experts, Comp-related scams often involve one or more of these “red flags.” Although no one sign should necessarily be cause for alarm by itself, two or more should raise suspicions and could trigger an investigation of the claim:
- Monday morning report of injury. The alleged injury occurs first thing on Monday, or late Friday afternoon, but is not reported until Monday.
- Change in employment status. The reported accident occurs immediately before or after a strike, job termination, layoff, end of a major project, or the conclusion of seasonal work.
- Suspicious providers. The claimant’s medical provider or legal consultant has a history of handling dubious claims.
- Lack of witnesses. No one else saw the accident and the employee’s description does not support the cause of the injury.
- Conflicting descriptions. The employee’s account of the accident doesn’t match with the medical history or injury report.
- History of claims. The employee has filed a number of questionable or litigated claims.
- Refusal of treatment. The claimant declines a diagnostic procedure to confirm the nature or extent of the injury.
- Late reporting. The employee delays reporting the incident without a reasonable explanation.
- Elusiveness. The allegedly disabled employee is hard to reach.
- Instability. The claimant changes physicians, addresses, or jobs frequently
If one of your workers files a claim that has some of these warning signs, be sure to let us know. We’ll work with you and your Workers Comp carrier to check it out.
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It’s frustrating when you suspect that a Workers Compensation claimant is milking the system. However, you can reduce potential malingering significantly if you attend to it from the get-go.
Start by designating a manger as the “firm’s rep,” to ensure that any employee who makes a Comp claim gets a doctor promptly and to inform your insurance company immediately. The rep should transport the employee to the physician, stay at the office during the examination and treatment, and then take him or her home or back to work.
While at the doctor’s office, the firm’s rep should ask the physician about the medical condition, recommended treatment, and a reasonable return-to-work date. If the claimant or physician objects, the rep should assure them that he or she will work with the insurance company to make sure all reasonable and necessary benefits and medical bills are paid.
Resist any employee excuses for not seeing a doctor. If the employee has an attorney, suggest getting a second opinion (which you will provide at no cost). If the claimant already has a doctor, have the firm rep offer to take him or her for a consultation– and ask about diagnosis, treatment, and return-to-work status.
The rep should then: 1) follow up with the employee at least every two weeks – and more often if possible – face to face or by phone; and 2) stay in touch with the claims adjuster to share information about visits with the doctor and claimant that might help him or her return to work as early as possible.
Although these techniques won’t always work, anecdotal evidence suggests that they can reduce malingering claims by up to 70%.
What’s not to like?
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Most states allow company owners and executives to opt out of (or not opt in to) Workers Compensation insurance. But did you know that if you choose this option your Health insurance policy might well not pick up work-related medical claims?
If you carry Health coverage through your company Group plan, you can usually arrange to be covered for work-related injuries under this policy – which then becomes “24-hour” coverage for you. However, many small business owners and managers are insured under the Health Plan of their spouse or parents – which almost always exclude work-related injuries.
Let’s say that you exempt yourself from Workers Compensation and have coverage under your spouse’s Health insurance – and you suffer a serious injury in a work-related, at-fault auto accident. Once you have exhausted the Medical Payments coverage under the company’s Commercial Auto policy, the chances are that you’ll have to pick up the tab for the rest of your medical bills. You might even have to choose between limiting your treatment options or going bankrupt (unpaid medical bills are the nation’s leading cause of bankruptcy).
Even if you have “24-hour” insurance under your own Health policy, this coverage will not reimburse you for income lost during your convalescence.
So, what’s the solution? You might consider buying a Disability income policy – or decide to cover yourself under Workers Compensation, after all.
As always, our agency stands ready to offer our professional advice. Just give us a call.
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A revision to the formula for calculating Workers Compensation rates is saving premium dollars for companies in a large number of states since the first of this year.
The change involves the experience modification (“mod”), the premium credit or debit that businesses receive for their claims experience. The mod compares your claim experience to that of other firms in your industry; if your experience is good, you’ll get a premium credit if not, you’ll receive a debit.
What has changed is the “split point” between the primary and excess portions of a claim. This value is important because the primary portion of each claim has a far larger impact on predicting an employer’s mod than does the excess portion. For the past two decades, the split point has been $5,000. However, inflation has both eroded the primary/excess split point and hurt its predictive power; the mod doesn’t give enough credit to good experience and doesn’t penalize poor experience enough. The change raises the split point to $10,000 in 2013, $13,500 in 2014, and an estimated $17,000 in 2015.
In 26 of the 38 states that have approved the new formula, a survey of more than 75,000 businesses by the National Council on Compensation Insurance found that 62% of them will see their rates fall by 5% or less this year. Another 11% will enjoy decreases of 5% to 10%, while rates will stay unchanged for 4.5%. Fewer than one in four (22.5%) – mostly larger businesses – would see a rate increase.
Our Workers Comp specialists would be happy to discuss the revised experience mod formula with you – and make sure that you enjoy the cost savings that it can provide. Feel free to get in touch with us at any time.
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