How to reduce workers compensation claims? Updated February 2021
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 have chosen to read this article, it is very likely that you are, in some manner of speaking, an employer. If you are an employer, then there are chances that you have a certain number of employees on a payroll. After all, that is the fundamental meaning of being an employer. And as an employer, you are obliged, both morally and legally, to look after your employees and are looking out for ways to reduce workers' compensation claims.
But why am I mentioning these obvious things that are practically common knowledge? If you continue to read, this will eventually make sense. So let’s get back to the talking point for this article and that is Workers’ Compensation Claims and how to reduce them. But before we actually start our discussion on that, it is crucial that we get a decent understanding of some terms relevant to 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?
Let’s say that you are an employee on payroll at a factory and one day due to an accident in the factory, you severely injure yourself and you are unable to work anymore. In this case, you as an employee can file for a Workers’ Compensation Claim.
If this claim is approved then you will get your salary even when you are not coming to work, because you are injured. Depending on the type of injury, the severity of the injury, and the type of Workers’ Compensation Insurance you might also be financially covered for your medical expenses, partially or completely.
So to put it simply, if an employee gets injured or sick at work and he is unable to work anymore then he can still get his wages while not working. To avail of these replacement wages, the employee has to file a Workers’ Compensation Claim to 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 worksman 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 looking at. 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 usually determined at the settlement of the claim. This rating is important because it also plays a role in determining the money that will be paid as Workers’ Compensation.
Higher the rate, the higher the Workers’ Compensation.
How can I lower my Workers’ Compensation Rate?
-The rate can be as high as a hundred percent if the injury is severe but it can also be zero percent if the victim is completely healed.
What's the role of a Workers’ Compensation Claims adjuster?
This is the person that determines if and how much money a claimant will receive as compensation for his misfortunes. He involves the insurers, the employers and the claimants and tries to align their best interests.
What should you not say to a Workers’ Compensation Claims adjuster?
Nothing, besides the facts of the incident, should be discussed with a Workers’ Compensation Claims adjuster.
Can you negotiate a Workers’ Compensation Settlement?
Type of disability, duration of disability, expenses on medical treatment (done, ongoing, and in the future) are some of the points over which negotiation can be carried out.
You must have realized by now that the Workers’ Compensation is basically money that needs to be paid every time a worker is injured at his workplace. And it is the employer who pays it, so naturally, he would want to pay as little as possible and no more than what is absolutely necessary.
Reducing the Workers’ Compensation is a tricky business and not to mention complicated. And if things have come to reduce the Workers’ Compensation in order to save money then it is a sign that you are already very late.
And this is the reason why any sensible employer would prefer to avoid, instead of controlling, a situation where a worker needs to be compensated with Workers Compensation. Controlling here refers to reducing one’s expenses.
The best way to avoid giving away Workers’ Compensation is to prevent a Workers’ 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 the importance of Workers’ Compensation Claims has been established and we know that they can have a big impact on your capital as a businessman, it’s only a good idea that we talked about how to reduce the Workers’ Compensation Claims. Saying that any business-minded employer would want to minimize the Workers’ Compensation Claims by his employers would be an understatement.
There are several ways in which this optimization can be achieved. Some of them are just standard practices that are followed by most employers and the rest are things that you can do by being a little extra careful.
1. MAKING THE WORK ENVIRONMENT SAFER
By far, this is the most obvious point on this list. Just think about it. The only reason that a Workers’ Compensation Claim has been filed is that some worker at your workplace got injured. And one of the primary reasons for that could be a lack of safety in the work environment. It could be a faulty machine, exposed wires, undone ropes, loose parts, unfastened screws and bolts, or anything of that sort.
Visualize an apple tree standing firm on the ground. It has a solid trunk and red apples hanging from its branches. Think of these apples as losses in your capital and think of the branches as the money that has been spent in paying the Workers’ Compensation. The roots of the tree will be the lack of safety in your work environment.
If you are an employer who has employees on his payroll, then your business will always be like an orchard in the shadow of that tree. If you want to make sure that the apples don’t fall in your orchard, then the best practice is to get rid of the apple tree.
And getting rid of the root makes sure that there are no more trees. The takeaway here is that the best way to get rid of a problem is to address the root cause. And the work environment’s lack of safety is the root cause for Workers’ Compensation Claims.
Work environment safety and a number of Workers’ Compensation Claims are both inversely proportional to each other. Safer the work environment, lesser the number of Workers’ Compensation Claims.
2. HAVING A WORKPLACE SAFETY PROGRAM
As inferred before, although most accidents can occur due to lack of safety in the work environment, it is also equally likely that a worker got injured due to his own inexperience, lack of skill, or ignorance.
Therefore, having a workspace safety program can effectively resolve this issue and can prevent any accidents from happening because of a blunder at the workers’ end.
This can include fitness camps, periodic disaster management drills, hiring a person to oversee safety, or a session solely dedicated to increasing the awareness of the employees. Anything, which makes the workers understand the risk of injury and the tasks associated with them.
3. HAVING A POST-ACCIDENT RELIEF PROCEDURE IN PLACE
Although having a safe work environment can reduce the chances of mishaps at the workplace but it is not the ultimate solution and accidents will still happen. If so, then we move on from prevention to containment.
Having a post-accident relief procedure is a way to contain the situation once an accident has occurred and prevented the situation from spiraling out of control. This is done so that the damages are as little as possible.
If your workplace has an emergency response team, a telephone line to connect to that team, first-aid kits at hand, medics or medicine practitioners ready to be deployed and then an accident occurs at your workplace then there are good chances that the injured person can be given immediate treatment which in turn will prevent things from going south.
This can eventually lead to no Workers’ Compensation Claim being filed given that the treatment that the injured person received was effective and he is able to resume his work or do light-work. And that brings us to the next point.
4. AVAILABILITY OF LIGHT DUTY OPTIONS
If the injury or affliction that your workers sustained was not catastrophic for him physically or mentally or assuming that he was severely afflicted but received immediate and effective emergency relief then in that case, if you have the option of light-duty in place then you can easily get away without bringing a Workers’ Compensation Claim upon you.
A Workers’ Compensation Claim is usually filed when the worker is unable to work anymore. But if he shows up to work then that Workers’ Compensation Claim cannot be filed. Assigning the injured employee to a light-duty task will make sure that the employee still shows up to work or is working.
5. HAVING A RETURN-TO-WORK PROGRAM IN PLACE
Let’s suppose that an accident has occurred at the workplace, an employee has been injured and he cannot come to work anymore. Now the Workers’ Compensation Claim is just waiting to get filed.
But the procedure is not that seamless and it takes time, in the order of days, for the claimant to successfully get rewarded with a Workers’ Compensation Claim. And once it gets filed, it keeps costing the employer his money. As long as a Workers’ Compensation Claim stays open, it keeps getting expensive.
The best route to take here is enrolling the injured employee in a return-to-work program, but to do that you need to have one. A return-to-work program is basically a systematic approach to get the afflicted employee back on his feet and back to work as soon as pos