Ouch! Don't let workers' comp costs squeeze your bottom line.
In the first quarter of 2002-the most recent statistics available--employers on average paid 21 percent more for workers' comp coverage than they did a year earlier, according to the Workers' Compensation Insurance Rating Bureau of California, a trade group that analyzes data and recommends pure premium rates to the state Department of Insurance.
During that period, California employers paid $3.8 billion in premiums for workers' comp insurance. The bill for the year was $11.9 billion and California is already on track to exceed that in 2003.
And, thanks to Assembly Bill 749, higher benefits will be applied to claims starting Jan. 1. By the time the bill's fully implemented in 2006, the bill will increase employers' costs by 22.8 percent.
A FEW HIGHLIGHTS OF AB 749
* Maximum workers' compensation benefits for temporarily and permanently disabled workers will increase 20 percent--from $490 to $602 per week--beginning Jan. 1.
* Disabled benefits will increase to $728 per week in 2004, and $840 per week in 2005, and annually thereafter based on cost-of-living adjustments in the state's average weekly wage.
* Benefits for workers who are permanently partially disabled will see an increase from the current rate of $170 per week to $230 by 2006 (the rate increases gradually each year in the interim).
Despite the dire statistics, there are steps--many inexpensive--that employers can take to minimize workers' compensation costs. Among those steps:
1. Make job site safety a priority every day. A safe workplace can lower your claims cost by preventing accidents in the first place. Ensuring job safety generally is an inexpensive investment compared with what your costs would be following an accident.
For example, if some of your employees must lift or move heavy objects, make sure they have the proper equipment to do so. Or, make sure hallways and areas surrounding offices and cubicles are open and free of items that could hinder or impede walking traffic.
For more information on how to make your workplace safe, visit the California Division of Workers' Compensation website at www. dir.ca.gov/dwc/dwc_home_page.htm. Remember to tailor your safety program to your business' conditions.
2. Fix dangerous conditions. When you become aware of a job site hazard--repair it immediately. Failure to do so could result in a "serious and willful misconduct" suit against your business should someone get injured because of the hazard. These types of suits carry severe penalties. And what's more important, you--not your carrier--would pay these penalties because you failed to take action.
3. Train supervisors. In workers compensation law, supervisors are included in the definition of "employer." Ensure that all supervisors know what is required of employers, including how to keep a workplace safe, how to take workers' comp reports if an employee is injured and who to contact if an incident occurs.
4. Report employee Injuries promptly. As soon as you are aware of an injury, notify your carrier by completing and sending the Employer's Report of Occupational Injury or Illness. The report requires you to provide information such as the nature of your business, the type of injury or illness suffered by the employee and how it occurred. Other necessary information includes the employee's salary and work hours, which are used to compute benefit payments. Your complete statements in each of these sections are necessary.
Doing this immediately, when the facts are fresh, lessens the chance of errors being made on the forms, which could lead to higher costs down the road.
To help make timely reporting easier, some carriers have 24-hour claims service that allows you to report an injury and complete a report over the phone.
5. Provide the employee with a claim form as soon as possible. You're required to provide the employee with an Employee's Claim for Workers' Compensation Benefits form within one working day of learning of an injury. The employee should return the completed form to you. When you receive the employee's completed claim form, sign it, date it and then immediately forward the original to your carrier. The first indemnity payment must be made within 14 days of your knowledge of a disabling injury.
Failure to provide timely benefits may result in a penalty, which may be levied against you as the employer--not your insurance carrier--if it is determined that you did not file the claim form with your carrier on time.
Remember, signing the employer's report and the employee's claim for benefits does not constitute acceptance of a claim.
6. Exercise medical control. Did you know that you might have control over the medical care of your injured employees for the first 30 days after the injury?
If, prior to the injury, your employee did not notify you in writing of the name and address of his or her personal physician, you have the right to arrange for the treatment of the employee by a physician of your choice for the first 30 days after the injury. If you do not know of a physician or medical facility, call your carrier for suggestions.
This is important for two reasons, the first of which ensures that your employees have a physician in case something happens. The second reason relates to money. Medical--and possibly legal costs--can skyrocket if treatment is delayed because the employer had to search for an available physician after an accident occurred rather than immediately referring the employee to a physician.
Also, post notices in your offices with the name, address and phone number of your medical provider so your employees know where to go in case of an injury.
If the employee has previously notified you of his or her personal physician, the employee has the right to go to that physician following an incident, unless an emergency requires otherwise. Remember that the first concern after an injury is to get prompt medical attention.
7. Communicate with your employees. Show employees you care about their well-being. If an employee is injured, stay in touch throughout his or her recuperation.
8. Consider an Early Return to Work (ERTW) Program.
Historically, employers and employees have believed that ill or injured employees should wait until they are 100 percent recovered before returning to work. The theory held that it didn't make sense to risk further injury or illness and that the employee probably wouldn't be genuinely productive anyway.
However, there is research showing that an earlier return to work is often good news for employees and cost-effective for employers. In an ERTW program, employees are assigned a transitional job to accommodate their medical condition until they can return to his or her usual duties.
Your costs are reduced and your employee can return to a self-supporting status, so everybody benefits.
You should notify your representative if you can provide a transitional modified alternative job for an injured employee. Carriers have representatives or consultants who can assist you in developing a program.
9. Maintain records. Your personnel files can be of great assistance to your carrier in dealing with some cases. Information about an employee's wages, previous work history, recreational activities, any work problems and any previous injuries are essential in fighting disputed claims.
10. Help your carrier fight fraud. Industry observers, including law enforcement officials, estimate that all types of fraud--including claimant, employer, medical, legal and service provider--siphon hundreds of millions of dollars each year from California's workers' compensation insurance system.
But there are myriad ways you can help in the battle against workers' compensation insurance fraud, including educating your employees about workers' compensation; investigating all injuries immediately; referring (without denying or confirming) any claim you think is suspicious directly to your carrier; using a carrier's materials to educate employees about fraud; and encouraging employees to report suspected fraud.
Workers' compensation can seem complex, but by following some easy guidelines, you can navigate the system, ensure that you get value from your carrier and make workers' compensation work for you and your employees.
Don Butler is underwriting operations manager for San Francisco-based State Compensation Insurance Fund. You can reach him at www.scif.com.
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|Date:||Jan 1, 2003|
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