Workers compensation basics for your business

• Top management demonstrates its commitment to continuous improvement in safety and health, communicates that commitment to workers, and sets program expectations and responsibilities.
• Managers at all levels make safety and health a core organizational value, establish safety and health goals/objectives, provide adequate resources and support for the program, and set a good example.

• Workers and their representatives are involved in all aspects of the program including setting goals, identifying and reporting hazards, investigating incidents, and tracking progress.
• All workers, including contractors and temporary workers, understand their roles and responsibilities under the program and what they need to do to effectively carry them out.
• Workers are encouraged and have a means to communicate openly with management and to report safety and health concerns without fear of retaliation.
• Any potential barriers or obstacles to worker participation in the program (for example, language, lack of information, or disincentives) are removed or addressed.

• Procedures are put in place to continually identify workplace hazards and evaluate risks.
• An initial assessment of existing hazards and control measures is followed by periodic inspections and reassessments to identify new hazards.

• Employers and workers cooperate to identify and select options for eliminating, preventing, or controlling workplace hazards.
• A plan is developed that ensures controls are implemented, interim protection is provided, progress is tracked, and the effectiveness of controls is verified.

• All workers are trained to understand how the program works and how to carry out the responsibilities assigned to them under the program.
• All workers are trained to recognize workplace hazards and to understand the control measures that have been implemented.

• Control measures are periodically evaluated for effectiveness.
• Processes are established to monitor program performance, verify program implementation, identify program deficiencies and opportunities for improvement, and take actions necessary to improve the program and overall safety and health performance.

• The host employer and all contract employers coordinate on work planning and scheduling to identify and resolve any conflicts that could impact safety or health.
• Workers from both the host and contract employer are informed about the hazards present at the worksite and the hazards that work of the contract employer may create on site.

Reducing the frequency and severity of claims is the best way you can contain your total cost of workers compensation. Written safety programs that address the hazards your employees are exposed to, along with top management support and effective employee training, not only reduce direct claims expense, but eliminate the indirect or “hidden” costs of workers compensation claims. These programs can produce substantial savings for your organization over time, since related expenses such as loss of services, cost of training a new worker, temporary help, and administrative expense are often multiples of the direct claims costs incurred.

Your supervisors and managers will play a key role in preventing claims and must understand the importance of thoroughly investigating the causes of injuries and taking appropriate corrective action to eliminate unsafe conditions and practices that produce claims. It is frequently your supervisors who play a pivotal role in the opportunity for, and success of, return-to-work programs including modified duty and transitional work programs.

Actions taken by your supervisors immediately after an injury occurs can have a major impact on the ultimate disposition of your claims. These individuals are critical since they are frequently the first to know of claims and have the initial opportunity to investigate, direct, and manage events.

Prompt reporting of insurance claims should be encouraged and is considered a best practice in workers compensation. There are significant benefits for promptly reporting all of your employee injuries. This includes:

• Most states have reporting requirements for insureds to report claims on a timely basis and may impose monetary fines as a penalty for failing to report claims.
• Prompt reporting allows the claim adjuster to complete a timely investigation of the loss to determine compensability and to determine an appropriate plan of action for resolving the claim.
• “Red flag indicators” of fraud are able to be detected and this allows the carrier to determine whether a case should be referred for surveillance or if there is an opportunity to pursue subrogation against a negligent third party.
• The prompt reporting of injuries allows medical treatment to occur within specialized occupational medical clinics familiar with treating workers compensation injuries with a focus on facilitating an early return-to-work to promote quicker healing.
• In some states, workers compensation benefits may be reduced (or altogether denied) if there is confirmed evidence of alcohol or a prohibited drug on a post incident drug test.

Proper selection of workers compensation medical providers, combined with effective referral procedures and ongoing provider communication programs, can significantly reduce your claims expense. Medical providers must understand your organization operations and human resources philosophies, should specialize in occupational medicine, and be willing to work closely with your insurer.

It is well established that returning injured employees to the workforce in a timely manner substantially decreases both direct and indirect costs. Programs that focus on managing temporary disability, permanent disability, and early return-to-work will have the greatest impact on reducing claims expense and increasing employee satisfaction and productivity.

There are many approaches to establishing return-to-work programs based on your organization’s culture and individual needs. They range from simple “modified duty” plans to fully integrated “total absence management” programs seeking to use the same practices and protocols to manage all time off work – both occupational and non-occupational injury and illness. In addition to reducing workers compensation expense, these programs can decrease your exposure under the Americans with Disabilities Act (ADA) and other similar federal and state laws.

An experience rating or modification provides a financial incentive to reduce workplace accidents. The rating does not apply to all employers. Most small employers are not eligible. Visit with your insurance agent to determine if or when you may qualify for an experience modification.

An experience modification compares your organization’s loss or claims history to all other companies in the same industry that are similar in size. A modification of less than 1.00 reflects better than average losses while over 1.00 reflects worse than average losses. The modification increases or decreases the cost of your organization’s workers compensation insurance premium. It must be applied to your policy regardless of the insurer.