Table of Contents
1. Workers’ Compensation
2. Workers’ Compensation Insurance
3. Workers’ Compensation Premium
4. Workers’ Compensation Claim
5. Significance of Workers’ Compensation Claim
– Rating of severity of the injury
6. Workers’ Compensation Claims adjuster
7. How to reduce Workers’ Compensation Claims
If you’re reading this article, chances are you’re an employer with a certain number of employees on your payroll. Being an employer inherently means taking responsibility for the well-being of your employees, both morally and legally. As an employer, you’re likely seeking ways to reduce workers’ compensation claims.
But why am I stating the obvious? If you keep reading, it’ll become clear. So, let’s refocus on the main topic of this article: Workers’ Compensation Claims and how to reduce them. However, before delving into our discussion, it’s crucial to grasp some relevant terms associated with Workers’ Compensation Claims.
What is Workers’ Compensation?
As the name itself suggests, there is compensation for workers. But depending on the context, both the terms compensation and workers can mean a lot of things and it is better to understand them in the context of employment.
So the term workers here means employees employed at a workplace of a commercial business, a business that could be privately owned or governed. Compensation here means the replacement wages that the said employee will receive.
Replacement for what?
If an employee gets injured, sick or sustains an affliction that keeps him from working anymore, at his workplace, or during the period when he is on duty then that employee will still get his wages as compensation for his misfortunes while working.
What is Workers’ Compensation Insurance?
Workers’ Compensation Insurance is the insurance that needs to be purchased for your workers when you own or run a business where you have employees on payroll and there is a risk of injury that can keep your workers from working anymore.
Although it is not strictly mandatory but depending on the state in which you run your business and the nature of work that is required to be done by your employees, you may be legally required to purchase a Workers’ Compensation Insurance.
What does Workers’ Compensation Premium mean?
The capital amount that is required to purchase a Workers’ Compensation Insurance is called Workers’ Compensation Premium. Again, there are many factors that determine your Workers’ Compensation Premium like the nature of work, risk of injury, safety of the workplace environment, number of employees on your payroll, type of employees on your payroll and, but not limited to, the state in which your business is being operated.
Workers’ Compensation Premiums are usually moderately to extremely expensive and If you, as an employer, are not careful then you can end up paying a large amount of money for this premium.
In fact, there is a well-structured mathematical formula to calculate the Workers’ Compensation Premium. The product of rate and your total payroll, when divided by 100 gives the value of Workers’ Compensation Premium.
One needs to be very careful in making sure that his business is classified into the right category. Because the category of one’s business will determine the rate and this rate largely determines the value that the formula gives.
What is a Workers’ Compensation Claim?
Consider yourself as an employee working in a factory. Imagine one day, due to an accident in the factory, you sustain severe injuries, rendering you unable to continue working. As an employee, you can file for a Workers’ Compensation Claim in such a situation.
If your claim is approved, you will receive your salary even while being absent from work due to your injury. Depending on the nature and severity of the injury, as well as the type of Workers’ Compensation Insurance, you may also receive financial coverage for your medical expenses, either partially or in full.
To simplify, if an employee becomes injured or falls ill at work, resulting in an inability to continue working, they can still receive their wages during their absence. To access these replacement wages, the employee needs to file a Workers’ Compensation Claim with the insurers.
Significance of Workers’ Compensation Claim
Now there is a cash value associated with every Workers’ Compensation Claim. This is the value that the injured worker will get. As an employer, one would want to pay as little as possible.
How to reduce the cash value of Workers’ Compensation Claims?
Well, a lot of it depends on the severity of the injury, the medical diagnosis, the medical treatment received, and the future impact of the injury on the worker’s career. But all of it will eventually boil down to the estimated monetary losses that the injured worker is facing. If an injury has occurred, then the recovery of the injured worker will eventually determine the cash value.
Rating of the severity of the injury
Also known as Workers’ Compensation Rating, this is typically determined upon the settlement of the claim. This rating is significant because it influences the amount paid as Workers’ Compensation. The higher the rate, the higher the Workers’ Compensation.
How can I lower my Workers’ Compensation Rate?
-The rate can be as high as one hundred percent for severe injuries but can also be zero percent if the victim fully recovers.
What’s the role of a Workers’ Compensation Claims adjuster?
The person responsible for determining whether and how much compensation a claimant will receive for their misfortunes is the Workers’ Compensation Claims adjuster. They work with insurers, employers, and claimants to align their best interests.
What should you not say to a Workers’ Compensation Claims adjuster?
You should only discuss the facts of the incident and nothing else with a Workers’ Compensation Claims adjuster.
Can you negotiate a Workers’ Compensation Settlement?
Negotiation can involve points such as type of disability, duration of disability, and medical treatment expenses (past, ongoing, and future).
You must have realized by now that Workers’ Compensation essentially involves payments made each time a worker is injured at their workplace. The employer is responsible for these payments and naturally seeks to minimize them, paying only what is absolutely necessary.
Reducing Workers’ Compensation is a complex and challenging task, suggesting that intervention might already be overdue.
A wise employer would prefer to avoid, rather than just control, situations where Workers’ Compensation is necessary. In this context, ‘control’ means reducing expenses.
The best strategy to evade Workers’ Compensation payouts is to prevent workplace injuries altogether.Compensation Claim from being filed. And that brings us to the agenda for this article.
6 ways to how to reduce Workers’ Compensation claims
MAKING THE WORK ENVIRONMENT SAFER
HAVING A WORKPLACE SAFETY PROGRAM
HAVING A POST-ACCIDENT RELIEF PROCEDURE IN PLACE
AVAILABILITY OF LIGHT DUTY OPTIONS
HAVING A RETURN-TO-WORK PROGRAM IN PLACE
LOOK OUT FOR WORKERS’ COMPENSATION FRAUDS
Now that we’ve established the significance of Workers’ Compensation Claims and their potential impact on your business’s finances, it’s prudent to discuss methods to reduce these claims. To say that any astute employer aims to minimize Workers’ Compensation Claims from their employees would be an understatement.
There are several ways to achieve this optimization. Some methods are standard practices followed by most employers, while others involve a more cautious approach.
1. MAKING THE WORK ENVIRONMENT SAFER
Undoubtedly, this is the most obvious point on this list. Consider this: a Workers’ Compensation Claim is filed because a worker in your workplace got injured. One of the primary causes could be an unsafe work environment—faulty machinery, exposed wires, untied ropes, loose parts, or unsecured screws and bolts.
Imagine an apple tree firmly rooted in the ground, bearing red apples hanging from its branches. Think of these apples as losses in your capital, and the branches as the money spent on Workers’ Compensation. The roots of the tree symbolize the lack of safety in your work environment.
For any employer with employees on their payroll, their business will always be like an orchard in the shade of that tree. To prevent these ‘apples’ from falling in your orchard, the best practice is to eliminate the apple tree, which in this case is the lack of safety.
Eliminating the root ensures there are no more trees. The essence here is that addressing the root cause is the best approach to solving a problem. In the case of Workers’ Compensation Claims, the root cause is the lack of safety in the work environment.
Work environment safety and the number of Workers’ Compensation Claims share an inverse relationship. The safer the work environment, the fewer Workers’ Compensation Claims.
2. HAVING A WORKPLACE SAFETY PROGRAM
As mentioned earlier, while many accidents stem from an unsafe work environment, it’s equally plausible that a worker got injured due to their inexperience, lack of skill, or ignorance.
Implementing a comprehensive workspace safety program can effectively address this issue and prevent accidents caused by worker-related errors. Such a program may encompass fitness camps, regular disaster management drills, hiring a safety overseer, or dedicated sessions focused on raising employee awareness. The goal is to enhance workers’ understanding of injury risks associated with tasks they perform.
3. HAVING A POST-ACCIDENT RELIEF PROCEDURE IN PLACE
While maintaining a safe work environment can significantly reduce workplace accidents, it doesn’t eliminate the possibility of mishaps entirely. In such cases, transitioning from prevention to containment becomes crucial.
Establishing a post-accident relief procedure is vital to managing the situation once an accident occurs, aiming to prevent the situation from escalating further and minimizing damages.
A workplace equipped with an emergency response team, a dedicated hotline to reach them, easily accessible first-aid kits, on-site medical practitioners, or medics ready to provide immediate assistance can effectively respond to accidents. Prompt treatment can prevent situations from worsening.
If an injured individual receives swift and effective treatment, they may avoid the necessity of filing a Workers’ Compensation Claim, especially if they can resume work or perform lighter duties. This leads us to the next point in the discussion.
4. AVAILABILITY OF LIGHT DUTY OPTIONS
If the injury or ailment suffered by your workers didn’t cause severe physical or mental harm, or if immediate and efficient emergency relief was provided, implementing a light-duty option can help you avoid a Workers’ Compensation Claim.
Typically, a Workers’ Compensation Claim is filed when the worker is unable to continue working. However, if the injured worker is able to perform light-duty tasks, filing a Workers’ Compensation Claim may not be necessary. Assigning such employees to lighter tasks ensures their presence and continued work, minimizing the likelihood of a compensation claim.
5. HAVING A RETURN-TO-WORK PROGRAM IN PLACE
Imagine an accident has occurred at the workplace, resulting in an employee’s injury, rendering them unable to return to work. The pending Workers’ Compensation Claim awaits filing, but the process isn’t swift; it may take days before the claimant receives compensation. However, every day that the claim remains open, it incurs costs for the employer. The longer the claim remains open, the higher the expenses.
Implementing a return-to-work program is the most viable strategy in such scenarios. This program follows a systematic approach aimed at assisting the injured employee in returning to work promptly. The longer the recovery, the more it costs; the quicker the return to work, the lower the expenses.
Notably, beyond the financial aspect, facilitating an early return to work prevents the employee from feeling disconnected from the workplace after an injury. It also signifies to the employee that their contributions are valued. This aspect is crucial in the context of Workers’ Compensation Claims, leading us to the subsequent point.
6. LOOK OUT FOR WORKERS’ COMPENSATION FRAUDS
Unethical and dishonest, the fraudulent practice of making false Workers’ Compensation Claims is unfortunately widespread. Workers’ Compensation Fraud involves deceit or misrepresentation concerning an injury at the workplace, aimed at defrauding insurers and obtaining undeserved Workers’ Compensation funds.
Instances of employees, employers, and service providers like hospitals and medical practitioners attempting to deceive insurers and exploit the system have been documented extensively.
In response to workplace injuries or filed Workers’ Compensation Claims, it’s crucial to promptly conduct a thorough investigation. Considering past incidents, there’s a possibility that some Workers’ Compensation Claims may not be legitimate. Analyzing the profiles of injured workers and obtaining a comprehensive report from the accident site are essential initial steps.
When collectively employed, these six steps on reducing Workers’ Compensation Claims can make a substantial long-term difference. Ultimately, this reduction in spurious claims can lead to significant cost savings in the aftermath.
Also Read: 19 Ways to Reduce workers compensation costs
Also Read: 15 Ways to identify and deal with a false workers compensation claim