Workers' compensation is not a hands-off process! As an employer, your involvement in your workers' compensation claims is crucial. From the point an injury occurs and you send your injured worker for medical treatment, through investigating the accident, certifying or rejecting the claim, and choosing which methods of cost control you may implement, the decisions must be made by you. Part of Compensation Consultants Inc.'s (CCI) service includes guiding you through this decision making process so that you can make choices that will be the most cost effective for you. Because your liability may not end upon your injured workers' return to work as each claim affects you for five years after the date of injury, you must continue to follow through until your claim is either settled, closed, or out of your experience. CCI will be with you every step of the way.

Every business aspires to achieve stability, growth and prosperity. The future success of your business depends on your ability to control your business finances, including your workers' compensation costs. To that end, your goal may be to reduce the number of workers' compensation claims by implementing a safety program. However, you should also plan to utilize other cost control methods such as wage continuation and transitional duty work. These processes can help you meet annual eligibility criteria for a group rating program, and help reduce your overall premiums so you have more money to apply to other business needs.

Avoiding a Penalty Rating

Every claim payment charged against your company can have a negative impact on your premiums and your individual discount or modification rate (TM). Unfortunately, with the high cost of medical treatment today, this is particularly true for a small employer who may have a low expected loss amount. The Bureau of Workers' Compensation (BWC) establishes an expected loss amount for each employer based on the payroll of a four year period you report to the BWC and the classifications you report it under. The higher your payroll, the higher your expected loss amount will be. All claim payments are added together and applied to the expected loss amount. In general, if your actual losses over the same four year period exceed the expected loss amount established for your company, you will become penalty rated and pay above the base rate for each classification you report your payroll under. There are also other factors that can impact your expected loss amount and affect your TM, such as BWC rate changes.

Importance of Group Rating

In addition to increased premiums, a penalty rating can also keep you from meeting eligibility requirements for a group rating program. For state funded companies, group rating programs provide the single largest avenue of savings for Ohio employers. Group ratings save Ohio employers billions of dollars every year! Many employers utilize CCI's services strictly for the savings they are able to achieve through group rating. Because your premium liability for a claim lasts for five years after the date of injury, one significant claim can result in a penalty rating that can also impact you for an extended period of time. CCI endeavors to provide the cost control services to enable you to qualify for enrollment in a group program and to ensure your continued eligibility for group rating by helping you identify and implement cost control strategies that will work for your company.

In addition to group rating programs, cost control options available to you include: wage continuation, transitional duty work, lump sum settlement, and handicap reimbursement.

Wage Continuation

Wage continuation can offer significant benefits to your company. If your employee is receiving wages, they are not eligible for compensation benefits. If the BWC does not pay compensation, they also do not set reserves, which are typically one of the highest charges to the employer in a workers' compensation claim. Not having these additional charges contributes to a lower overall premium for your company and it can also improve the likelihood of group eligibility for your company, which brings even more premium savings.

Although CCI believes wage continuation to be a very effective cost control option, some employers feel there are drawbacks. First and foremost, the wage continuation process requires an immediate decision from the employer. Because the BWC is deciding claim allowance issues much faster these days, they are also able to make compensation payments much faster. In order for wage continuation to benefit you, you must determine whether or not you will continue wages and notify the BWC immediately. Another concern may be that wage continuation is an immediate out of pocket expense for the employers to pay for an employee who isn't producing.

Because of the significant potential for cost savings on an individual premium basis and continued group eligibility, we encourage you to request a Wage Continuation Analysis from CCI.

Sample Analysis

4 Year Impact

CCI can help you with this decision process by calculating the projected premium increase if you allow the BWC to pay compensation, in comparison to what you would pay out of pocket by continuing wages. In many cases, wage continuation can reduce claim costs. Remember that the costs of all claims charged against you are totaled and compared to your expected loss amount to determine your modification rate. Reduced costs in any given claim could reduce your overall experience costs, helping you to either become eligible for a group rating program or to maintain your current group eligibility.

Transitional Duty Work

Transitional duty work is another way of reducing your individual claim costs, which can contribute to an overall experience cost reduction. If your employee is working and receiving wages, they are not eligible for compensation benefits. If the BWC does not pay compensation, they also do not set reserves, which are typically, one of the highest charges to the employer in workers' compensation claim.

Not having these additional charges contributes to a lower overall premium for your company and can also improve the likelihood of achieving or maintaining group eligibility for your company, which brings even more premium savings. In addition to the claim cost savings, you may see other benefits to returning an injured worker to a Transitional Duty position. These benefits may include a reduction in lost productivity or lost work time; lower costs of hiring and training a replacement employee; and a quicker recovery period for the injured worker with better potential to return to full duty quicker than if they remained off work completely. Your injured worker benefits from this as well.

In order to receive the highest benefit from Transitional Duty Work, we recommend that you continue to pay your employee at the same rate of pay they were making at the time of injury. Any reduction in pay could make your employee eligible for another form of compensation, Working Wage Loss, which would limit the cost benefits to you. CCI can provide you with a cost analysis so you can see the financial benefit of bringing an employee back to work quickly and avoiding the BWC compensation and reserve charges to your company. Please see the Transitional Duty Sample Case Study.

Transitional Duty jobs should always be offered in writing in addition to your verbal offer. CCI can help you draft the offer. Please keep in mind that there are many different tasks that can be performed individually or compiled to provide Transitional Duty work while at the same time supporting your needs to get the job done. If you need any help determining a specific Transitional Duty job, CCI will be happy to make suggestions.