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LEGALLY SPEAKING
LEGALLY SPEAKING Avoiding premium increases in workers’ compensation insurance
THOMAS P. CLEMENT MRA Vice President, Operations and General Counsel Contact Thomas at tclement@retailers.com
Workers’ compensation claims are an unfortunate reality for employers of all sizes. Most importantly, employers want their employees to be safe and free from any harm. This is easier for some types of jobs than others. Those working in construction or heavy manufacturing may be more susceptible to injuries on the job than other types of work, but the potential for harm exists in all professions.
Beyond keeping employees free from harm, employers also want to limit their workers’ compensation claims and return employees to work as soon as possible, thereby avoiding increased premium costs. This can be effectively accomplished through both the timely reporting of claims and the implementation of a return-to-work program.
In Michigan, wage loss benefits for employees begin after they are unable to work for seven days. If a disability lasts for at least 14 days, retroactive benefits for the first seven days are paid. Wage loss benefits continue as long as wage earning capacity is reduced because of the disability. However, employees cannot continue to receive benefits if they have received and refused a reasonable job offer. Taking this into consideration, the wisest course of action for an employer is to report a workers’ compensation claim immediately upon learning of an employee’s disability, assist the employee in getting the care they need, and explore return to work possibilities. Timely reporting is just one piece of the puzzle, however. An employee who is disabled in the course of their employment for seven days of work or more and truly unable to return to work will receive benefits regardless of when reporting occurs. On the other hand, many employees may be able to return to work in some capacity thereby reducing or eliminating the benefit they are owed. Employers would be well served by developing a return-to-work program designed to get employees the care they need and back to work. A return-towork program should clearly state that its purpose is to get employees the care they need and back to work through temporary, transitional job duties through a modification of the original job or a different job altogether until they can return to their original position. A prime example would be a delivery driver who can no longer lift heavy packages but may be able to take phone calls and schedule deliveries while he or she recovers. This type of program will make clear that you value your employees and are committed to getting them back in the workplace as soon as possible. It will also reduce or eliminate the benefits that need to be paid and help to maintain a favorable MOD. For a sample return-to-work policy, please visit retailersinsurance.com.
Immediate reporting and assistance in receiving care are vital to a workers’ compensation claim because the seven-day clock for wage benefits starts at the time of the injury, regardless of when the claim is made. A claim reporting delay may result in immediate and retroactive payment of benefits without the ability for the employer or the insurance carrier to timely assess the validity of the claim or explore return to work possibilities that would limit exposure. As a result, delayed claims may increase, sometimes dramatically, the cost of the claim and have a negative impact on the employer’s experience modification factor (“MOD”). The MOD is the standard by which an insured’s loss experience is calculated and has a direct result in premium costs. Simply put, failing to report claims in a timely fashion can make your premiums go up and have a direct impact on your bottom line!
As much care as employers take to avoid workplace injuries, they do occur. While you may not be able to guarantee against a claim, you can take steps that may have a positive impact on the workers’ compensation premium you pay.
Keeping workers’ compensation premiums from increasing is a constant challenge for business owners. So much so, we continue the conversation about it on page 11, where our insurance experts address the top five common costly mistakes that also impact premiums.
