Important steps to take when investigating a claim

There are several claims management strategies to use when assessing a new claim that occurs in the workplace.

“It is important for employers to have a well-defined internal program in place so that you are prepared to deal with any injuries or incidents that may occur in your workplace,” says Debbie Smith, claims team lead at CompManagement. “The two most important are related to the investigation of a claim and the corresponding documentation. If a claim becomes contested, the steps an employer takes in the very beginning and the attention given to the details may assist them in defending against the claim if warranted.”

Smart Business spoke with Smith about what to look for, red flag indicators and recommended strategies for documenting a workers’ compensation incident.

What are the key factors in an investigation?

Take the time to review the circumstances surrounding the claim. Look at where the incident occurred and take steps to prevent another injury. Take pictures or review security tapes. Ask co-workers what they saw or know about the incident and about the injured worker, such as hobbies and outside activities. Conduct the investigation as soon as possible after an injury occurs so the details are fresh in everyone’s minds.

What are some red flag indicators?

Although the vast majority of claims filed are compensable claims, there are still some red flags that employers should be on the lookout for in order to prevent fraudulent claims from hitting their experience. Some important red flags include:

  • Lapse in injury reporting. A gap between the date of injury and the first notice to the employer could indicate that the injury occurred outside the workplace.
  • Timing of the injury. Was the injury reported prior to a holiday or before/after a weekend?
  • No witnesses. Lack of witnesses or accounts of the incident containing conflicting statements can lead to credibility issues.
  • Vague accident descriptions. Watch for those that do not paint a clear picture of what happened.
  • Work performance. Did the injury follow a disciplinary action? If so, the injury may be retaliatory in nature and lack objective evidence.

What questions should be asked?

Through the course of any investigation, there are five questions that should be asked that include:

  • What was the employee doing just before the injury occurred?
  • What happened?
  • What object or substance directly harmed the employee?
  • Were unsafe acts involved?
  • Were there unsafe conditions involved?

Why is documentation so important?

Any workplace incident should be documented whether or not it results in an injury or illness. The information will help clarify medical conditions related to the claim and can help an employer identify the need for training, additional safety equipment or procedural improvements. Make sure all reports are completed, such as an incident report, supervisor’s report, witness statements and Bureau of Workers’ Compensation paperwork. If a claim is contested, this information will be important to have available to defend against the claim.

What should be documented?

When developing your internal program, keep the following five items in mind:

  • Use the appropriate forms. Supervisors and any witnesses should document the incident, multiple witnesses should submit separate written accounts of the incident.
  • Make it mandatory. Communicate expectations with employees, managers and supervisors for documenting and reporting injuries.
  • Be thorough. The details of an injury are key factors in determining medical conditions that should or should not be included in a workers’ compensation claim.
  • Timing is important. The earlier the incident is reported and documented, the more valuable and accurate the information is from the involved parties.
  • Train your supervisors. All supervisors should understand that documentation should be timely and thorough.

 

Insights Workers’ Compensation is brought to you by CompManagement

Tips on managing workers’ compensation claims

One of the most important phases in the life of a workers’ compensation claim is the very beginning, right when it happens, as time is of the essence.

“It’s important to stay on top of the situation and utilize your resources to explore remain at work options for the injured worker as well as coordinate return to work plans when the employee is able to do so,” says Sean McKelley, assistant vice president of claims at CompManagement. “Working with the Ohio Bureau of Workers’ Compensation (BWC), your Managed Care Organization (MCO) and your Third Party Administrator (TPA) will help you care for your injured worker, modify your workplace to prevent future injuries, and facilitate a safe and early return to work. That will not only control the cost of the claim, but also show the injured worker and other employees that you count on them as valuable contributors to your organization.”

Smart Business spoke with McKelley about simple ways to control costs while assisting injured employees.

What should be done immediately upon learning of a work-related injury?

First and foremost, obtain prompt medical attention for the injured employee with a preferred medical provider in your MCO’s network.

Second, document the injury. Take the time to review the circumstances surrounding the injury. Look at how and where the injury occurred and take the steps necessary to prevent another injury. Take pictures or review security footage. Ask the supervisor and co-workers what they saw or know about the incident and create witness statements. Make sure results of the investigation are documented and complete all required reports such as an incident report, a supervisor’s report and other BWC forms.

What can be done to keep injured workers engaged?

Maintaining good communication with all parties involved in the claim can help to minimize the impact of the claim. Stay in touch with the injured worker while he or she is off work and make sure that he or she understands who the primary contact is at your organization if there are questions about a claim.

Employees who do not hear from their employer often assume the employer does not care about them and may even wonder whether they have a job in the future. A brief call once or twice a week will help maintain their confidence, positive attitude and eagerness to return to work. This averts a prolonged disability absence and helps provide an avenue to discuss salary continuation or a transitional work program, which can have a positive impact on your premium rate.

Why is it important to know the doctors in the area?

Many employers have seen the benefits of establishing a working relationship with medical providers in their area, especially occupational health facilities. As these providers become more familiar with your operation, they are able to better assist with transitional duty programs that may be offered to the injured worker during recovery. A transitional duty program provides alternatives to lost time and allows the employer to keep workers’ compensation disability costs low. Often, with minor modification in job duties or hours scheduled, an employee will be able to return to work following the injury. Sometimes a completely different job position is necessary for the short term, but employers should try to accommodate any physical restrictions. The idea is to return an injured employee to gainful employment activities as soon as possible to avoid the ‘disability trap.’ The BWC also currently offers transitional work grants and an incentive bonus program to qualified employers to assist them with the costs of implementing transitional work programs.

What resources are available?

Use the resources available in Ohio through the BWC, your MCO or your TPA. TPAs are retained by employers to help navigate the BWC system. A TPA is an advocate for the employer. An MCO medically manages an employee’s claim and is a neutral party representing both the interests of the employer and the injured worker so that a safe return to work is possible.

Insights Workers’ Compensation is brought to you by CompManagement

What’s on the horizon in 2015 for Ohio’s workers’ compensation system?

As 2014 comes to a close, we look ahead to the continued changes to be made in the Ohio workers’ compensation system that will bring a few benefits to the employers in the state.

“In 2015, the Ohio Bureau of Workers’ Compensation (BWC) expects to implement several new initiatives that include other states’ coverage, ICD-10 diagnosis codes and a prospective billing system for the collection of workers’ compensation premium versus the current in arrears payment,” says Randy Jones, senior vice president of Ohio TPA operations at CompManagement, Inc.

Smart Business spoke with Jones about why the BWC is planning these changes in 2015 and the advantages that each initiative will bring to employers.

Why is other states’ coverage a problem?

Other states’ refusal to recognize Ohio’s coverage of Ohio employees working temporarily in other states has resulted in fines and ‘stop work’ orders, and has also forced employers to acquire the other state’s policy and pay additional premiums. A solution was implemented in 2008 to segregate out-of-state payroll and have an employer purchase private insurance in the marketplace. This solution has become too expensive and is also not available for certain industries. It has also inflated the employer’s experience modifier — a factor used to calculate premium — because claims continue to be reported to Ohio.

What is the BWC doing to help employers with other states’ coverage?

Through House Bill 493, BWC has been granted the authority to offer limited other states’ coverage. It permits the BWC to enter into a fronting arrangement with an insurer of other states via a request for proposal (RFP) that would provide coverage for employer-requested jurisdictions. Ohio employers would then be able to show proof of coverage, eliminate contingent reciprocity provisions, eliminate the requirement to segregate payroll and be given one combined premium for coverage both in-state and out-of-state. The BWC is expected to issue the RFP by Jan. 1, 2015, and select a provider before the proposed implementation date of July 1, 2015.

Why is the BWC implementing ICD-10 diagnosis codes?

Due to the Health Insurance Portability and Accountability Act (HIPAA), covered entities must convert from the current ICD-9 diagnosis system to ICD-10 in 2015. Although the BWC is exempt from HIPAA, there were still several reasons to implement that included the fact that ICD-9 would not be maintained; medical providers in Ohio would need to treat BWC differently when processing workers’ compensation bills; new diseases would not be listed; ICD-10 is more specific and has approximately 68,000 codes versus the 13,000 under ICD-9; and the impact on Medicare reporting as well as benchmarking for national comparisons. Given these reasons, the BWC is currently modifying its system infrastructure to have the ability to receive both ICD-9 and ICD-10 codes by the deadline date of Oct. 1, 2015.

When it comes to prospective billing, how will employers be able to learn more about it and the changes that are being made to the system?

By now, employers should have received communication from the BWC or their third-party administrator on the key changes for implementation that include earlier enrollment deadlines for premium discount programs, transition credits to be offered, new payment schedules and the implementation of a true-up process. The BWC has plans to continue its communication effort via direct mail; its external website, www.ohiobwc.com; presentations to employer groups; articles in Payroll News; a seminar series to be conducted in the spring of 2015; webinars; social media; newspapers; and sessions to be held at the 2015 Ohio Safety Congress & Expo at the Columbus Convention Center March 31 to April 2.

Employers should have discussions with their third-party administrator and complete a feasibility study to know all of their options for 2015 before automatically re-enrolling in the same premium discount program. Other programs may offer better savings for this next policy year.

Insights Workers’ Compensation is brought to you by CompManagement, Inc.

Ohio workers’ compensation system changes will impact your business

As we approach the end of the calendar year it’s a good time to review a few key events happening for business owners in Ohio in regards to the workers’ compensation system.

“The Ohio Bureau of Workers’ Compensation (BWC) has been moving forward on several initiatives over the past few months that include giving another billion dollars back to employers, settling a lawsuit that has implications for some employers in the state and continuing the implementation of a prospective billing system,” says Mark MaGinn, vice president at CompManagement.

Smart Business spoke with MaGinn about what every employer in Ohio with workers’ compensation coverage issued by the BWC should be aware of right now.

What is the benefit of the Another Billion Back initiative?

Another Billion Back comes on the heels of the Billion Back issued in the spring of 2013. It includes a $1 billion rebate to 3,800 public employers and approximately 184,000 private sector employers, as well as several new programs targeting workplace safety.
The rebate, like the one issued in 2013, is possible because of sound fiscal management that led to strong investment returns. BWC began to issue checks last month to employers that have current mailing addresses on file with the agency. The rebates equaled 60 percent of premiums employers paid for the July 1, 2012, private employer policy year and the Jan. 1, 2012, policy year for public employers.

In conjunction with the rebate, BWC increased its commitment to safety. Up to $35 million has been earmarked over the next two years for several initiatives that include the areas of overexertion, slips, trips and falls, musculoskeletal disorders, health and wellness, firefighter safety training, expansion of the safety intervention grant program for employers to purchase equipment to reduce or eliminate injuries, and the development of safety curricula and funding for skilled labor training programs such as carpentry, welding and plumbing.

What should an employer know about the San Allen case?

BWC has settled the San Allen case, a class action lawsuit filed in 2007 against the State of Ohio over BWC pricing policies that were in place between 2001 and 2008. The settlement administrator mailed eligible employers a class notice with proof of claim form in August. All forms were to be completed in full and postmarked no later than Oct. 22, 2014.

According to the settlement agreement, a preliminary report of payments to be made is expected to be issued by Jan. 14, 2015. More information may be found via the settlement administrator’s website at www.ohiobwclawsuit.com.

When it comes to prospective billing, what are the four things that every employer should know?

With the implementation approaching for the July 1, 2015, policy year for private employers and Jan. 1, 2016, policy year for public employers, it is important to know:

Deadline dates have been moved up approximately 90 days for alternative rating/premium discount programs, such as group rating and group retro. The settlement application deadline and deadlines to pay premium have also changed. It’s important to make note on your calendar of all new deadline dates in order to prevent missed savings opportunities.

BWC will be providing $1.2 billion in premium transition credits for employers in order to prevent a double payment situation and ease into the new payment system.

Private employers will automatically be transitioned to a biannual payment schedule for the first year; public employers will be invoiced monthly. In subsequent years, employers may select their own installment option of monthly, bimonthly, quarterly, biannually or annually.

Since BWC will be providing coverage based on an estimated payroll, employers will be required to report their actual payroll for the prior year and pay any shortage in premium or they will receive a refund if there is an overage. Failure to report in a timely fashion will result in removal from alternative rating/premium discount programs.

Insights Workers’ Compensation is brought to you by CompManagement, Inc.

Prospective billing implementation impacts key dates for Ohio employers

The Ohio Bureau of Workers’ Compensation (BWC) currently collects premium after extending coverage to an employer — i.e. in arrears or retrospective billing. By transitioning to a prospective billing system, the BWC will align with a standard industry practice enabling it to collect premiums before extending coverage. This change will have an impact on many of the key dates for Ohio employers that have been the same for a number of years.

Smart Business spoke with Lisa O’Brien, director of rates and underwriting services at CompManagement, Inc., about upcoming changes that could impact an employer’s coverage status or alternative rating program eligibility, costing them potential savings.

Who will be impacted by the changes?

Prospective billing becomes effective July 1, 2015, for private employers, so they will see changes first. Public employers will not switch to this new billing practice until the Jan. 1, 2016, policy year.

What is the timeline for private employers?

These are the enrollment deadlines for Alternative Rating Programs in the 2015 policy year:

  • Nov. 24, 2014 — Group Rating.
  • Jan. 30, 2015 — Group Retro, One Claim, Individual Retro and Deductible.
  • May 29, 2015 — Destination Excellence.

What are the private employer payroll and premium reporting deadlines?

Payroll and premium reporting during calendar year 2015 are as follows:

  • March 2, 2015 — Payroll due for July 1, 2014, to Dec. 31, 2014.
  • May 1, 2015 — Policy year 2015 estimated premium notice will be mailed by BWC.
  • June 1, 2015 — Policy year 2015 premium invoice will be mailed by BWC for first prospective installment. BWC will pay as part of transition credit.
  • July 1, 2015 — Payroll reports will be mailed by BWC for Jan 1, 2015, to June 30, 2015.
  • Aug. 1, 2015 — Policy year 2015 premium invoice will be mailed by BWC for second prospective installment.
  • Aug. 31, 2015 — Payroll report due for Jan. 1, 2015, to June 30, 2015. No payment will be due for this payroll report as BWC will pay with transition credit. Second prospective installment is due for 2015 policy year. Bi-monthly installment payments will continue through April 2016.

What is the timeline for public employers?

Enrollment deadlines for the Alternative Rating Programs for the 2016 policy year are:

  • May 29, 2015 — Group Rating.
  • July 31, 2015 — Group Retro, One Claim, Individual Retro and Deductible.
  • Nov. 30, 2015 — Destination Excellence.

What are the public employer payroll and premium reporting deadlines?

Payroll and premium reporting during calendar year 2016 are as follows:

  • March 31, 2016 — Policy year 2015 payroll report and policy year 2016 premium invoice will be mailed by BWC.
  • May 15, 2016 — Policy year 2015 payroll report and 2016 premium invoices are due. Both will be discounted by 50 percent as part of the transition credit by BWC.
  • Sept. 1, 2016 — Balance of policy year 2015 and 2016 premium are due. They will be discounted by 50 percent as part of the transition credit by BWC.
  • Nov. 1, 2016 — Policy year 2017 estimated premium notice will be mailed.
  • Dec. 1, 2016 — Policy year 2017 premium invoice will be mailed.
  • Dec. 31, 2016 — Policy year 2017 first prospective installment is due. Employers may opt to defer payment until April 30, 2017.

With the change to how premium is billed, will an organization be able to make installment payments?

In the first prospective year, BWC will invoice and require private employers to follow a bi-monthly payment schedule.
Public employers will be invoiced monthly starting with the 2017 rating year. In subsequent years, employers will have other installment options that include: monthly, bi-monthly, quarterly, bi-annually or annually.

Insights Workers’ Compensation is brought to you by CompManagement, Inc.

What you need to know about BWC’s prospective billing transition credits

As the Ohio Bureau of Workers’ Compensation (BWC) works toward implementing a prospective billing system, it has indicated that transition credits will be given to employers to eliminate any double billing as the change occurs from the current in arrears payment cycle.

Smart Business spoke with Heather Vogus, vice president at CompManagement, Inc., about the details of the transition credit and how it will be applied to an employer’s premium for the policy year.

Why are transition credits being offered?

A one-time premium credit is being given to all state fund employers to aid in the transition to a prospective billing cycle from the current retrospective (in arrears) payroll reporting and premium payment cycle. To eliminate the need for double payments during the transition, BWC will provide $1.2 billion in premium credits. The transition will not cost Ohio employers any extra money.

How will the transition credits work?

Private employers will receive full credit to their final in arrears premium payment due in August 2015, based on their Jan. 1, 2015, to June 30, 2015, payroll. In addition, they will receive a two month or 1/6 credit for the first prospective payment for the July 1, 2015, to June 30, 2016, payroll period.

Public employers will not transition to a prospective billing cycle until the Jan. 1, 2016, policy year. They will then receive a 50 percent credit on their May 2016 premium payment, based on 2015 payroll, and a 50 percent credit on their first prospective payment, based on 2016 payroll.

Who qualifies for the transition credits?

All state fund private and public employers that pay premium during the periods will receive the credit. However, they must be in an active status during the transition. Private employers must be active as of Aug. 31, 2015, and they must file their Jan. 1, 2015, to June 30, 2015, payroll report in order to be eligible to receive the full transition credit for that period. Public employers must be active as of May 15, 2016.

What will the BWC use as premium to calculate the credits?

The premium amount utilized to calculate the credit will be dependent on the rating program that an employer may be participating in for the policy year. For instance:

  • The group rating is dependent on the group rated premium.
  • The individual retrospective rating is based on minimum retrospective premium. The transition credits will not apply to claims costs paid under the retrospective rating plan.
  • The group retrospective rating is dependent on merit rated or base rated premium. The transition credits will not include any group retrospective refunds or assessments.
  • The deductible program is based on the discounted premium. The transition credits will not apply to claims costs paid under the deductible plan.
  • The destination excellence is dependent on merit rated or base rated premium. The transition credits will not be reduced by any lapse-free, go green, safety council rebates or other premium-based bonuses and credits.
  • The individual or base rating is dependent on merit rated or base rated premium.

Why are alternative premium discount program enrollment dates changing and when are the deadlines?

Enrollment dates have been moved up about three months in advance because employers will now be paying in advance for coverage and thus premium paid is impacted by this enrollment. Private employer deadlines for the 2015 policy year include:

  • Group rating: Monday, Nov. 24, 2014, previously last business day of February.
  • Group retrospective rating and other alternative rating programs: Friday, Jan. 30, 2015, previously last business day of April.
  • Destination excellence programs: Friday, May 29, 2015, previously last business day of April.

Enrollment deadlines for public employers do not change for the Jan. 1, 2015, policy year. Public employers will move to prospective billing for the Jan. 1, 2016, policy year so deadlines will change in 2015, not this year.

Insights Workers’ Compensation is brought to you by CompManagement, Inc.

Changes to premium discount programs mean earlier deadlines

As the Ohio Bureau of Workers’ Compensation (BWC) begins its transition to a prospective billing system, it has announced the first changes to be made in order to implement this new system, which involves the enrollment deadlines for premium discount programs.

“In order to implement prospective billing, BWC has created earlier deadlines to sign up for incentive/discount programs,” says John Logue, vice president at CompManagement, Inc. “Employers will have to make their selections sooner than normal as the transition becomes effective July 1, 2015, for private employers and Jan. 1, 2016, for public employers.”

Smart Business spoke with Logue to determine when employers need to be prepared to act this year and next so that they do not miss the opportunity to reduce their annual workers’ compensation premium.

When do private employers need to act for their upcoming policy year?  

Private employer deadlines for the 2015 policy year, which is the first year impacted by prospective billing, have been moved up about three months in advance of normal:

  • The group rating deadline has been changed to Monday, Nov. 24, 2014. It was previously the last business day of February.
  • The group retrospective rating/other alternative rating program deadlines are Friday, Jan. 30, 2015. They had previously been the last business day of April.
  • Destination excellence program deadlines are Friday, May 29, 2015. These have moved from the last business day of April.

Are there other deadline changes outside of the premium discount programs for private employers this year?

Settlement applications (C240 forms) for private employers are due Tuesday, July 15, 2014, for any settlements that are to be applied to the 2015 experience. Previously, this deadline was Oct. 15.

What changes occur this year for public employers?

Enrollment deadlines for public employers do not change for the Jan. 1, 2015, policy year. Employers should enroll by the following deadlines this year:

  • Group rating: Friday, Aug. 29, 2014.
  • Group retrospective rating/other alternative rating programs: Friday, Oct. 31, 2014.
  • Destination excellence programs: Friday, Oct. 31, 2014.

What changes should public employers be aware of for the 2016 policy year?

Public employer deadlines for the 2016 policy year, which is the first policy year impacted by prospective billing for this employer population, are as follows:

  • The group rating deadline will be Friday, May 29, 2015, moved up from the last business day of August.
  • Group retrospective rating/other alternative rating programs will be Friday, July 31, 2015. Previously, the deadlines were the last business day of October.
  • Destination excellence program deadlines are Monday, Nov. 30, 2015, moved from the last business day of October.
  • Settlement applications (C240) are due Monday, Feb. 16, 2015, for settlements to be applied to the 2016 experience. This was previously May 15.

With the implementation of prospective billing and change to enrollment deadlines, will employers end up having two payments at once?

To eliminate having to pay two semi-annual premium payments during the transition, one-time premium credits will be given by BWC to help offset the transition to prospective billing from the current ‘in arrears’ reporting. Private employers will receive a full credit to their final in arrears premium payment due in August 2015, which is payroll between Jan. 1, 2015, and June 30, 2015, and a two-month or 1/6 credit for the first prospective payment for payroll between July 1, 2015, and June 30, 2016. Public employers will receive a 50 percent credit on their May 2016 premium payment, based on 2015 payroll, and a 50 percent credit on their first prospective payment, based on 2016 payroll.

Insights Workers’ Compensation is brought to you by CompManagement Inc.

How Ohio safety council program participation can lead to savings

The Ohio safety council rebate program created by the Ohio Bureau of Workers’ Compensation (BWC) rewards employers for their active participation in a local safety council. It also provides an additional performance bonus rebate for reducing the frequency or severity of workers’ compensation claims.

“With the number of safety councils available across the state with a focus on a variety of industries, employers are able to not only receive information on new safety techniques, products and services to assist their businesses, but also reduce their premium for simply attending these helpful meetings throughout the year,” says Russ Hocutt, vice president at CompManagement, Inc.

Smart Business spoke with Hocutt about how this rebate program works.

How much of a rebate can be earned?

Currently the incentive program enables employers to receive a rebate of 2 percent of their annual workers’ compensation premium through program participation and an additional 2 percent performance bonus based on the reduction of the frequency or severity of claims.

How can a local safety council be found?

BWC’s Division of Safety & Hygiene sponsors more than 80 safety councils across the state, organized through chambers of commerce, trade and manufacturing associations, American Red Cross chapters or other local, safety-minded organizations. A list is available at www.ohiobwc.com.

What are the requirements for the participation rebate portion?

An employer must enroll in a local safety council by July 31. Once enrolled, an employer must attend 10 meetings or events between July 1 and June 30. Two of the 10 meetings may be external educational options such as BWC Safety & Hygiene training courses or industry-specific training. The chief executive officer must attend at least one safety council-sponsored function or meeting. Semiannual reports must be submitted for the calendar year to document attendance. The documentation must be an official certificate of attendance or transcript. Only employers that meet the participation eligibility requirements will be eligible for an additional 2 percent performance bonus.

How is the performance bonus calculated?

Employers that reduce their frequency or severity of claims by 10 percent or more compared to the previous year’s frequency or severity, or employers that maintain both frequency and severity at zero, will receive an additional 2 percent refund of their annual premium, assuming the participation portion of the safety council program is met.

BWC calculates frequency by multiplying the total number of claims reported in the measurement year by 1 million and dividing by the employer’s total reported payroll for that year. Severity is determined by multiplying the total number of days absent during the measurement year by 1 million and then dividing by the employer’s total reported payroll for that year. The measurement period for private employers is claims and payroll reported between July 1 and June 30 compared to the previous year. For public employers, the measurement period is between Jan. 1 and Dec. 31.

What impact would the program have on a midsize company’s premium?

Assuming the participation requirements are met and the employer was able to reduce the frequency or severity of claims as indicated above, a midsize service company could expect the following in annual premium savings, assuming the employer is participating in no other alternative rating programs:

  • Payroll — $3,990,000.
  • Individual discount — 16 percent.
  • Individual premium — $14,683.
  • 2 percent safety council participation rebate —  $200*.
  • 2 percent safety council performance rebate — $200*.

*Based on pure premium which does not include assessments for DWRF and administrative costs for operation of BWC/IC

Savings reflected above do not include the additional savings that can be realized by also participating in programs compatible with the safety council program such as Destination Excellence, Drug Free safety Program, Group Rating (performance bonus only), Group Retrospective Rating (participation bonus only), Large/Small Deductible, Individual Retrospective Rating, or One Claim Program. Always have your third-party administrator conduct a feasibility study to evaluate the best savings options available for your organization.

Insights Workers’ Compensation is brought to you by CompManagement, Inc.

How to use deductibles to lower workers’ compensation premiums

Mark MaGinn, Vice President, CompManagement, Inc.

Mark MaGinn, Vice President, CompManagement, Inc.

The Deductible Program was implemented in 2009 by the Ohio Bureau of Workers’ Compensation (BWC) as another alternative for employers to control their costs while promoting workplace safety. Over the past few years, the program has been enhanced to include a small and large deductible program so that employers of different sizes, hazard groups and risk tolerance levels have options that best fit their organization.

“The Deductible Program can be financially beneficial for those employers that have a focus on their safety efforts and are able to keep their claim costs low,” says Mark MaGinn, vice president at CompManagement, Inc. “An employer should consider having a feasibility study performed by their third-party administrator prior to participating in order to analyze the deductible levels available and ensure it is the best program for their organization.”

Smart Business spoke with MaGinn about how this alternative rating program works.

How does the Deductible Program work? 

Similar to other insurance deductible plans, an employer agrees to pay the portion of a workers’ compensation claim that falls below their selected deductible level in exchange for an upfront premium discount. Claims costs are paid in full by the BWC, then the employer reimburses the BWC for the claim costs up to the selected deductible level. The employer will receive monthly invoices from the BWC until the selected deductible level is reached. All deductible bills must be paid within 28 days of the invoice date.

What deductible amounts are available to choose from?

Deductible levels range from $500 to $200,000. The small deductible program includes levels of $500, $1,000, $2,500, $5,000 and $10,000. The large deductible program includes levels of $25,000, $50,000, $100,000 and $200,000. There is no deductible level available between $10,000 and $25,000. An employer is limited to 25 percent of its annual premium if the deductible selected is less than $10,000, and 40 percent of annual premium if the deductible is $25,000 or more.

How does an employer join the Deductible Program?

An employer must complete a BWC Application for Deductible Program (U-148) to enroll in the Deductible Program, and meet eligibility requirements. The enrollment deadline for private, state-funded employers is the last business day in April for coverage beginning July 1, and for public employers it is the last business day of October for coverage beginning Jan. 1. Changes to the deductible level or withdrawal from the program are not allowed until the next policy year.

Is there any method to cap the annual out of pocket?

Employers selecting a deductible level of $25,000 or more have the option to request an annual aggregate stop-loss limit of three times the deductible, allowing them to cap the potential annual out-of-pocket expense that may arise from participating in the program.

How is the Deductible Program savings projection calculated?

Based on the deductible level chosen and the employer’s hazard group, which is based on the employer’s manual classifications and risk level, the BWC will establish the savings percent. This discount can range anywhere from 1.4 to 26 percent for small deductible options and is applied to the employer’s standard premium.

An example for a midsize service company selecting a $5,000 deductible within the small deductible program:

• Payroll — $5,000,000.

• Individual premium — $460,000.

• Deductible discount savings — $32,000.

• Premium with discount — $428,000.

• Plus estimated deductible billing — $10,000.

• Net premium — $438,000.

• Net savings — $22,000.

In addition to this savings, deductible payments under the small deductible program will not be charged to the claim, therefore possibly reducing future rate calculations. λ

Savings reflected above do not include the additional savings that can be realized by also participating in programs compatible with either the small or large deductible program, such as the Go Green or Safety Council discounts.

Mark MaGinn is vice president at CompManagement, Inc. Reach him at (800) 825-6755, ext. 65868 or [email protected]

Insights Workers’ Compensation is brought to you by CompManagement, Inc.

 

How to use deductibles to lower workers’ compensation premiums

Mark MaGinn, Vice President, CompManagement, Inc.

Mark MaGinn, Vice President, CompManagement, Inc.

The Deductible Program was implemented in 2009 by the Ohio Bureau of Workers’ Compensation (BWC) as another alternative for employers to control their costs while promoting workplace safety. Over the past few years, the program has been enhanced to include a small and large deductible program so that employers of different sizes, hazard groups and risk tolerance levels have options that best fit their organization.

“The Deductible Program can be financially beneficial for those employers that have a focus on their safety efforts and are able to keep their claim costs low,” says Mark MaGinn, vice president at CompManagement, Inc. “An employer should consider having a feasibility study performed by their third-party administrator prior to participating in order to analyze the deductible levels available and ensure it is the best program for their organization.”

Smart Business spoke with MaGinn about how this alternative rating program works.

How does the Deductible Program work? 

Similar to other insurance deductible plans, an employer agrees to pay the portion of a workers’ compensation claim that falls below their selected deductible level in exchange for an upfront premium discount. Claims costs are paid in full by the BWC, then the employer reimburses the BWC for the claim costs up to the selected deductible level. The employer will receive monthly invoices from the BWC until the selected deductible level is reached. All deductible bills must be paid within 28 days of the invoice date.

What deductible amounts are available to choose from?

Deductible levels range from $500 to $200,000. The small deductible program includes levels of $500, $1,000, $2,500, $5,000 and $10,000. The large deductible program includes levels of $25,000, $50,000, $100,000 and $200,000. There is no deductible level available between $10,000 and $25,000. An employer is limited to 25 percent of its annual premium if the deductible selected is less than $10,000, and 40 percent of annual premium if the deductible is $25,000 or more.

How does an employer join the Deductible Program?

An employer must complete a BWC Application for Deductible Program (U-148) to enroll in the Deductible Program, and meet eligibility requirements. The enrollment deadline for private, state-funded employers is the last business day in April for coverage beginning July 1, and for public employers it is the last business day of October for coverage beginning Jan. 1. Changes to the deductible level or withdrawal from the program are not allowed until the next policy year.

Is there any method to cap the annual out of pocket?

Employers selecting a deductible level of $25,000 or more have the option to request an annual aggregate stop-loss limit of three times the deductible, allowing them to cap the potential annual out-of-pocket expense that may arise from participating in the program.

How is the Deductible Program savings projection calculated?

Based on the deductible level chosen and the employer’s hazard group, which is based on the employer’s manual classifications and risk level, the BWC will establish the savings percent. This discount can range anywhere from 1.4 to 26 percent for small deductible options and is applied to the employer’s standard premium.

An example for a mid-sized service company selecting a $5,000 deductible within the small deductible program:

• Payroll — $5,000,000.

• Individual premium — $460,000.

• Deductible discount savings — $32,000.

• Premium with discount — $428,000.

• Plus estimated deductible billing — $10,000.

• Net premium — $438,000.

• Net savings — $22,000.

In addition to this savings, deductible payments under the small deductible program will not be charged to the claim, therefore possibly reducing future rate calculations.

Savings reflected above do not include the additional savings that can be realized by also participating in programs compatible with either the small or large deductible program, such as the Go Green or Safety Council discounts.

Mark MaGinn is vice president at CompManagement, Inc. Reach him at (800) 825-6755, ext. 65868 or [email protected]

Save the date: Deductible Program enrollment for private employers ends April 30 for the 2013 policy year.

Insights Workers’ Compensation is brought to you by CompManagement, Inc.