Taking Advantage of Workers’ Comp Credit Programs to Reduce Premiums
The number of states with programs that allow workers’ compensation insureds to reduce their premiums by engaging in programs and classes is growing, though many employers still miss this opportunity, More than half of all states, and the District of Columbia, allow employers to apply for credits for participation in loss avoidance and cost savings programs which generally cover drug-free workplaces, managed care programs, construction classifications and safety committee programs. Check out http://praxiom-rm.com/2012/05/workers-compensation-premium-discounts-credits/ for more information on specifics by state. In some circumstances these credits can be applied onto other premium credits offered by the insurer. Many states have programs that are not discretionary; so long as you can show you have met the requirements, you can obtain the credit.
It’s best to look into your specific state’s guidelines for credit requirements. In general terms, insureds need to create policies detailing their programs, complete related paperwork for the state and conduct employee training for each program.
Specifics for the Drug and Alcohol Free programs also include: establishing a drug testing policy with key timelines. Those timelines include testing at the pre-employment, post-accident and on reasonable suspicion, in addition to random or routine testing and follow up. Drug and Alcohol Free programs also require than an employer create or provide access to an Employee Assistance Program, a confidential hotline where employees can obtain counseling on a variety of matters. While most of the states that allow a credit for drug and alcohol free programs permit a 5% discount, some, like New York, vary into the 10% range.
Specifics for the Managed Care program are a little trickier. Fewer states allow a managed care credit. Those that do provide a credit for programs that manage workers’ compensation injury claims through a claims process that can reduce costs in the long run through proper claim adjustment and negotiated fees with medical providers.
Unlike credit programs based on reducing costs of care or administration, the construction classification credit programs are focused on payroll. Because premiums are based on payroll, construction companies with higher paid employees may have premiums that are higher than their contemporaries. Almost half the states have a program to avoid penalizing employees for higher paid employees.
Each state differs on the application of this credit though, so make sure to check requirements for the percentage of employees on payroll with a construction-related class code. Other elements to check include the minimum and maximum hourly rates and credits. Credits are based on how much an employer, on average, pays employees above a certain rate.
Finally, safety committee credits are available in a smaller number of states and some only apply to insureds in an assigned risk program (see earlier posted blog here about assigned risk pools and programs). Other states have a requirement, but no incentive of premium credits, to create a safety committee. These committees are required to perform post-accident analysis and investigation. To qualify, an insured has to hold regular meetings of the safety committee, and make sure to retain copies of the agenda and attendance records, in addition to the other elements noted.
Health care companies in some states can receive an additional credit in relation to safety committees. For those health care companies that maintain patient safety programs, additional premium credits may be available. States including New York, allow the hospitals, residential facilities, ambulatory care centers, and certain mental health facilities to use the credit. To qualify, a health care company must include a safe patient handling policy, risk assessments, employee training, including incident review and root cause analysis, physical plant considerations and annual performance evaluations, among other items.
More information on specific states and premium credits can be found here: “The Insurance Professional’s Practical Guide to Workers’ Compensation: From History through Audit.”