Workers’ comp insurance is designed to cover employees should they become injured or sickened while on the job. It protects employees from being responsible for covering medical expenses for accidents and injuries that occur while they are working. Workers’ comp also protects employers by ensuring that they cannot be sued for payment of medical expenses by their employees.
Workers’ Comp Insurance Basics
In California, the law is pretty clear about the responsibilities of the employer when it comes to providing workers’ comp insurance. Even those companies who have only one part-time employee are required to have such insurance.
The penalties for not providing workers’ comp insurance are fines up to $10,000, sentencing to the county jail for not more than one year or both. California can also levy additional penalties of up to $100,000 against uninsured employees. Employers are required to bear the full cost of this insurance.
Is Workers’ Comp Required if There are no Employees?
California does not require you to have workers’ comp insurance if you are self-employed. However, while it is not required, it does not mean that such insurance is not a wise investment – not only for your own health but also for the health of your company. Think about the consequences of an injury that causes you to be unable to work.
If you are the sole employee of your business and you become injured while performing your job duties, it could spell disaster for the long term viability of your business. Common injuries such as those incurred as the result of a car accident or during a slip-and-fall could result in you being unable to fulfill your job duties. Without workers’ comp insurance, you might find it difficult to keep your business afloat while you are recuperating. You could also find yourself struggling to pay your personal bills as well.
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If you believe you don’t need Workers Compensation insurance, here’s a reality check:
Myth. I only have a few employees, or mostly part-time employees.
Reality: Workers Comp makes sense no matter how many employees you have. It helps cover medical expenses and lost wages for employees with job-related injuries and protects against lawsuits from injured workers if you’re found negligent. What’s more, some customers and clients may require you to carry it.
Myth: My employees won’t sue me.
Reality: Never say never. Injured workers might well sue to pay medical bills that could run into millions – not to mention pain and suffering or punitive damages. Workers Comp provides legal defenses that can slash your liability.
Myth: Workers Comp is too expensive. If one of my employees is injured, I’ll just pay out-of-pocket.
Reality: Weigh the cost of coverage against potential losses from an injury, especially if the employee sues. The longer a worker is off the job, the more it costs to cover lost wages and productivity. Severe injuries can take weeks or months to heal– or even lead to permanent impairment.
Myth: I provide a safe workplace. My employees won’t get injured.
Reality: Mistakes happen even in the “safest” workplace. Many companies post signs proclaiming the number of days without an injury on the job, but rarely do they read “365 days” Even the most minor mishaps can cause major damages.
Myth: Medical costs in the Workers Comp system are too high.
According to the National Council of Compensation Insurance, the medical cost inflation rate for Comp has been similar to that for Group Health insurance during the past several years. Legislation and regulations have led to the expansion of cost-containment programs.
To make sure you have this essential protection, at an affordable cost, just give us a call.
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When your insurance company issued your Workers Compensation policy, you paid an estimated premium for the term of the policy. This rate was based on the nature of your business and your estimated payroll. However, once your policy expires, the insurance company conducts a premium audit to gather data about your actual costs for the applicable policy term. If there is any shortfall, you are responsible for the difference between the original estimate and actual premium.
Naturally, you want to keep the difference between the estimated and actual rate as low as possible. Consider the following list of tips:
- Have all necessary records available for the auditor.
- Break down your payroll by classification code so that the auditor doesn’t have to classify any unexplained payroll. Leaving the decision up to the auditor could result in having the payroll placed in the highest classification.
- Separate overtime wages from regular wages. This allows the auditor to discount the overtime wages back to regular wages.
- Exclude tips, severance pay, meal and travel advances and bonuses paid for inventions, because none of these are included in Workers Compensation premium calculations.
- Divide uninsured subcontractor billings into material and labor costs since you are only required to pay premiums for labor. If you don’t have an actual split, figure on 50% for each. One important exception to this is for heavy equipment operators who are employed as subcontractors. In this case, use a third of their total billings as reportable labor costs.
- Don’t include short- or long-term disability payments in the data given to the auditor because these are excluded from premium calculations.
- Be sure to cap all covered officers’ payroll at the maximum for your state.
- Exclude wages paid to employees who are on active military duty because their wages aren’t included in premium calculations.
- Present the auditor with all Certificates of Insurance for covered subcontractors so you aren’t charged for them.
- Classify all employees in the lower-rated payroll classifications if you aren’t sure about where they should be classified. However, you should never deliberately misclassify an employee.
- Be sure you make the auditor aware of all employees who do only clerical work and are physically located away from the shop floor. These employees qualify to be classified in the lower rated clerical codes. If your clerical staff isn’t physically separate from the shop, you should consider changing their work location.
Contact our office for more information.
Content provided by Transformer Marketing.
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Medical losses paid for California workers compensation claims remained relatively flat from 2012 to 2013, but payments for Medicare reimbursement and medical cost containment programs saw an uptick during that period, according to a new analysis.
California workers comp insurers and self-insured employers paid $5.2 billion in medical losses in 2013, up from $4.8 billion in 2012, the San Francisco-based Workers’ Compensation Insurance Rating Bureau of California said Thursday in a statement. Of those losses, payers placed $129 million into Medicare set-aside accounts in 2013, up from $92 million in 2012.
The Medicare Secondary Payer Act requires self-insured employers and insurers to act as primary payers for workers comp and liability claims involving Medicare beneficiaries. The U.S. Centers for Medicare and Medicaid Services advises workers comp payers to set up Medicare set-aside accounts to pay for future medical costs for a beneficiary’s injury.
California comp payers also reimbursed $6 million to Medicare in 2013 for treatment that had been already provided to workers comp claimants for their occupational injuries, up from $3 million for such reimbursements in 2012, according to the WCIRB report.
The bureau noted that insurers and employers paid $446 million in 2013 for medical cost containment programs related to California workers comp claims, up from $414 million in 2012. Costs for such programs have increased every year in California since 2009, the report showed.
Content provided by http://www.businessinsurance.com/article/20140627/NEWS08/140629851?tags=|59|338|70|329|74|339|304|92
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When it comes to Workers Compensation claims, companies are looking constantly for ways to reduce claims and reduce costs.
Ascribing the cost of Workers Compensation claims to applicable internal departments can encourage supervisors and managers to pay more attention to training and safety programs and more carefully monitor injured employees returning to work. Some companies have even deducted the claim cost from the budget of the ascribed department instead of a general company fund as an additional incentive to curb Workers Compensation costs. Through implementing a few procedures that place Workers Compensation expenses directly on internal departments, employers have more control over prevention and injury management measures that can decrease the severity and frequency of workplace injury. The reduced claims and Workers Compensation premiums add up to a substantial amount of savings.
Safety goals can be met by communicating directly with all potential Workers Compensation employees. Use a claim and injury history to identify high-risk employee groups. Then, on a departmental level, discuss the injury management process with employees. Communication will improve as employees are given a chance to discuss how they feel the job could be performed with less risk of injury. It also gives the employer an opportunity to modify safety procedures or dangers in the work environment, such as faulty equipment or inadequate work protocols that are identified by employees.
A common problem related to workplace injuries is a lack of prompt reporting. Too often supervisors don’t appropriately acknowledge workplace accidents. The hope is that the incident will not result in time off of work or medical expenses. However, putting an initial injury off and not reporting it immediately often actually results in increased costs. Managers and supervisors need to know that they aren’t saving money when they don’t report injuries immediately. One study of more than 50,000 temporary total disability and permanent partial disability claims showed:
- Injuries reported one to two weeks following the incident were 18% more expensive than those reported within a week of the incident.
- Injuries reported three to four weeks after the incident were 30% more expensive than those reported within a week of the incident.
- Injuries reported after four weeks of the incident were 45% more expensive than those reported within a week of the incident.
Showing supervisors and managers statistics such as these will help to ensure timely injury reporting, especially if Workers Compensation costs will be coming out of the departmental budget. Although the goal is prevention of workplace injury, once an employee has been injured, the objective should turn to a timely and safe return to work. This can best be achieved if both employer and employee share a desire to obtain the most effective care, which will help to expedite recovery and a safe return to the job.
Since each department is faced with the claim cost coming out of their own budget, managers and supervisors can take a more active role in assisting injured employees returning to work. For example, instead of the usual claim adjuster or attorney contacting the injured employee, the company concern can be conveyed through the department head(s).
One last element is fraudulent claims. Although deliberate fraudulent claims are a rarity, they do exist. These fraudulent claims will be much more difficult to file when Workers Compensation costs are analyzed departmentally.
Accidents are going to happen. There simply isn’t a way to prevent all accidents and eliminate all claims. But, it is realistic to reduce the frequency and severity of workplace injuries by making the department responsible directly, whether by penalty or by reward, for a safe work environment.
Content provided by Transformer Marketing.
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Is everything possible being done to protect your company from the costly impacts of Workers Compensation claims? As an employer, you know that injuries will happen. However, this doesn’t mean you shouldn’t try to prevent them by knowing the dynamics and some of the solutions recommended by the experts.
Minor Injury, Major Claim. It’s the small injuries that often result in big claims. Some statistics show that 80% of workplace injuries are inconsequential, meaning they just require first aid or a trip to a physician. Eight percent of such claims are sprains and strains to the neck, back and various joints. However, these types of injuries account for an estimated 80%-90% of the system’s costs. Major claims are likely to follow if the frequency of such seemingly inconsequential injuries isn’t addressed.
Falsified/Exaggerated Claims. Claims that didn’t actually occur or that occurred outside the workplace are only representative of a small fraction of claims. However, employers can implement tip lines, video surveillance, drug screenings both before employment and after accidents, and so forth to reduce false claims:
The larger problem is from exaggerated injuries. Employers can take these steps to address exaggerated claims:
- Get injured employees immediate and appropriate treatment.
- Even if duties need to be temporarily modified, get injured employees back to work as quick as possible.
- Ensure supervisors communicate with injured employees and convey their concern and support.
- Do as much as possible to reduce the disruption employees may face post-injury.
- Assess and address behavioral issues that could be driving an injured employee’s disability.
Observing Patterns. Experts have recognized that there are patterns of reoccurring claims within groups, such as among certain industries or particular groups of employees. For example, more injuries may be seen in equipment operators that don’t receive proper eye screenings. Overweight employees tend to have more injuries than those of an average weight. The healing of injuries may be longer and more difficult among diabetic employees. Overexertion, meaning doing too much; too fast; and/or too frequently, is one of the primary causes of sprain and strain injuries. This often comes from an employee demanding more of their body than it’s capable of doing. The challenge is that this is a human behavior. Studies have shown that the majority of workplace injuries are from unsafe acts, not unsafe conditions. In other words, even in the absence of workplace hazards, injuries will happen. Additionally, there are also patterns of reoccurring fraudulent and exaggerated claims, such as an employee that seems to repeatedly have accidents.
Claim Reduction. Begin at the hiring process, ensuring that potential employees are capable of doing the physical and mental demands you’ve listed in the applicable job description. It’s important to understand that injury prevention must be embraced at the leadership level to be effective. Statistics show employees are most likely to have injuries when they feel their management doesn’t care. You might also consider:
- Excellent workplace safety programs.
- Efficient communication programs that allow you, injured employees, and insurance adjusters to easily communicate.
- A post-injury protocol, specifying the immediate reporting of an injury to appropriate personnel.
- Routing injured employees to seek medical care from a provider specializing in occupational injuries.
- Staying in touch with both the injured employee and their medical provider, making sure that you communicate your concern and care to the employee as they recover and accommodate any physical restriction recommended by the provider upon their return.
Cost Mitigation. Employers can take several routes to reduce the financial impact of claims. Transitional duty programs that enable an injured employee to continue some capacity of working as they recover would be one example. Research shows that around 40% of employers don’t currently have a transitional duty program. Another example would be referencing treatment guidelines to determine typical recovery times for various injuries. This information can be used to approximate how long it should take an injured employee to be treated and recover. Employers may consider having an on-site clinic for employees to go for both acute injuries and everyday health issues. Partnering with a physical therapy network may be a consideration. Research has shown that companies affiliated with physical therapy networks see injured employees returning to full-duty work 30% faster.
Wellness, Don’t Be Afraid. Lastly, some employers are apprehensive about implementing wellness programs because they’re concerned that participation itself may cause injuries. However, the risk of such is far outweighed by the many benefits of a wellness program, including claim-related benefits like healing faster and being able to resume work sooner. Remember, the success of any program comes from it being accepted from the top down.
Content provided by Transformer Marketing.
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