15 Tips for Saving Money on Workers’ Compensation
#1. Start Writing Your Safety Program
If you don’t have a safety program, or have thought about starting one but haven’t been able to find the time, get it done.
Why make it a priority?
Federal and state laws are clear that employers are responsible for providing a safe and healthy workplace, and that employees have a right to work in such an environment.
More specifically, federal and state laws have four basic requirements:
- Employers have to have a written safety program in place that addresses hazard exposure for your workforce.
- Employers have to train for safety on work-specific hazards.
- Employers have the responsibility of identifying and correcting hazards.
- Employers have the responsibility to model correct safety behaviors.
Here’s the strongest reason for getting your safety program written now: a safety program can reduce the likelihood of injuries and illnesses. And when accidents are reduced, workers comp costs become less expensive.
No matter your business, it is important to have a written safety program and standard operating procedures for negotiating hazards, and that employees know about these and have the opportunity to participate in training, or at least have some level of introduction to safety rules.
Writing a safety program may seem like a major undertaking, but it is not as hard as you think.
Here are some suggestions for immediately improving the safety of your workforce:
- Provide personal protective equipment (PPE). That’s the safety gear necessary for preventing injury and illness. Hardhats, gloves, eye and face protection—this equipment can save you a workers’ comp claim down the road and keep workers productive.
- Conduct a walkthrough safety audit of your facility. How? Tap into some free resources by asking your insurance carrier’s ‘loss control’ department about safety auditing availability—many insurers offer these services for free. Independent consultants are also available for this type of work, and bring a fresh pair of eyes with some expertise into work environments. A consultant can also train your employees to conduct these routine audits and build the efficacy of your internal safety teams.
- Make it clear to employees that shortcuts that jeopardize safety are not acceptable practices. Tell your workers not to take risks, even if changes to risky yet common work practices may prolong certain tasks or assignments.
- Offer an ergonomic evaluation. Each year, musculoskeletal disorder (MSD) cases account for around 33% of all worker injury and illness. Poor ergonomics can lead to cumulative traumatic musculoskeletal disorders (MSDs) which can keep people off of the job for life. According to OSHA, industries with the highest musculoskeletal disorders rates include health care, transportation, warehousing, retail, and wholesale trade and construction. Again, consult your insurer for resources, as many loss control departments offer the service at no cost.
#2. Train Your Workforce
Why? Again, it’s the law—federal law requires worker safety training. Depending upon the nature of your business, workers must be trained on safety topics that are applicable for common workplace hazards, such as emergency response, use of fire extinguishers, hazard communication, respiratory protection, and hearing conservation, etc.
A lot of employers look at training as a sunk cost—when employees are training, they’re not productive, not doing the job they were hired to do. But this line of thinking ignores the bigger picture of operational efficiency, how workplace accidents happen, which workers are most susceptible to injuries, and why.
The fact is, newer workers are more likely to be injured on the job, particularly if proper training is not provided.
Labor Department data shows that nationwide, a large number of injuries occur within the first three months of work. This is why it is critical that workers receive proper safety training to match their job and work environment. When workers are properly trained, they are safer and more likely to remain a productive member of your workforce. Proper training reduces the likelihood of accidents, and reduces liability for employers. Also, workforce training is a key factor in controlling workers compensation premiums.
Creating a training program can be simple, but you should let us help you identify your training needs and develop a plan—register for our free Training for Compliance webcast. OSHA also provides resources for employers to strengthen this area of occupational safety. Live training with instructors and on-the-job training by experienced peers are considered effective tools for promoting safety and minimizing the risk of accidents, but that depends on the trainer. Accurate training content is what you want to rely on. Increasingly, companies are turning to online safety training as a means of efficiently achieving compliance, reaching safety objectives, and providing a standardized training experience.
#3. Start a Return-To-Work Program
When a worker is injured on the job, there are usually several direct costs to consider. Depending on how you are insured, injury could increase your annual premium. Or, if self-insured, you may be responsible for covering the full cost of the claim to restore the health of the injured employee, including all associated medical, rehabilitation, pharmaceutical expenses, and administrative costs paid to third party administrators. Then there’s the possibility of lost wage reimbursement if the employee cannot work at all or must work reduced hours.
Indirectly, there may be the cost of hiring and training a new employee to do the same job, or a drop in productivity linked to the effect of a workplace injury on the rest of the laborforce, or perhaps resulting from the inexperience of a replacement hire. Of course, there may be legal costs involved if the injury is significant enough and liability exists.
All of the above are reasons why you need a solid return-to-work plan for injured workers.
You want workers back on the job as quickly as possible for several reasons, but the most important reason is that a solid return to work plan positively impacts the recovery of injured workers. The simple normalcy of showing up to work, getting employees back in the habit of the workday, has been shown to speed recovery from occupational injuries. Another compelling reason is that the length of time off from work, off of the job, partially determines the total dollar amount of insurance benefits received by the worker. It’s a simple formula: the longer a worker is out, the larger the benefit total and the higher the rise of insurance costs for you, the employer.
A basic return-to-work plan has two key features:
- Proactively addresses the hazards and circumstances surrounding accidents that result in time-loss, with corrective actions where applicable.
- Offers injured workers flexibility in returning to work by accounting for scheduling modifications (half-time) and job duties or role changes (light duty).
It is important to communicate actively with injured workers and offer them every opportunity to return to work or contribute to your business in a meaningful way.
#4. Hire For Safety & Test for Drugs
Make safety a priority before any worker reaches day one. Employers can orient the recruitment or HR hiring process to focus on identifying employees who share safety as an organizational value. Doing diligence with references and contacts from past employment can provide information related to the safety attitude of potential new hires. While workers comp claims history is generally not accessible by other employers (for good reason) and it is illegal to ask potential hires if they’ve been injured by past employment, there is nothing wrong with asking candidates in interviews about safety and testing their knowledge of equipment related to the job and accident prevention.
One way to eliminate potential safety risks during the hiring process is to have candidates submit to pre-employment drug testing. At many workplaces, a mandatory drug screening is triggered by each accident. Random drug screening is also prevalent in certain high-risk industries (trucking, utilities, construction, etc.).
A drug testing policy is meant ensure the safety of your workforce and the people it comes into contact with, like clients.
#5. Build Accountability
How? Set safety goals for your workforce.
For example, you might start by finalizing or updating all written safety programs, or ensuring that all safety training required by OSHA is completed, or executing your first internal safety audit to identify and correct hazards. Try setting a target of consecutive days without an injury or accident, or zero days of lost time related to occupational injuries, or injury reduction. It is appropriate to incentivize goals for employees who identify hazards or risks, or those who offer a hazard abatement solution that is implemented.
Accountability for safety must start at the top of the organizational pyramid and level down to workers accordingly.
Whatever the goal, managers, work groups, and line workers need clear expectations. If safety goals are not met, it may be wise to reevaluate goals. For example, worker safety may be made part of employee evaluations and factor into eligibility for promotions.
#6. Develop Injury Response Protocol
You need a clear plan in the event of a worker injury; your workforce needs to know immediate response protocols for the provision of medical care. Whether this involves calling an ambulance, shutting down operations, and sending workers home, depends largely on the nature of the incident.
It is best to let the severity of the situation dictate, but erring on the side of caution and taking the opportunity to connect your workers with prompt medical care is never a bad idea. Having employees trained in the life saving sciences—First Aid, CPR, and use of Automated External Defibrillators—and equipped with the proper tools, is the best way to be prepared for medical emergencies.
What quick access to medical care does is reduce the severity of certain injuries, while increasing the prospects for recovery, and minimizing the amount of time off of the job—it can also save lives.
Bottom-line: If an injury is not treated properly and immediately, it may become more problematic and increase in severity, meaning, that if it’s a reportable injury, it will be a more expensive claim than it should have been. And that may negatively affect your workers comp premiums.
#7. Near-Instant Injury Reporting
Injury response protocols should include a mechanism or threshold for immediate reporting. A 24-hour maximum window, from accident or injury event to reporting, is the widely accepted best practice.
Two helpful rules here:
- When a worker is injured, it must be made clear that employees are to report the injury as soon as possible.
- When a worker informs you of an occupational injury, you need to report it to your workers comp insurance provider immediately. Follow your state laws for workers compensation reporting criteria to avoid penalties.
Why is prompt reporting important? First, early intervention is important for recovery of injured employees. Second, studies show that the faster a claim is reported, the less expensive the claim—it’s that simple. Giving workers comp claim managers early notice allows them to take proactive measures that can shorten the life of a claim, bringing closure to claims that would otherwise remain open for a greater period of time.
The process of resolution for serious workers comp claims is sometimes described as a ‘labyrinth’, a maze of documentation and 3rd party action, from attorneys to medical providers. That’s why it is in the best interest of employers to trigger the process as quickly as possible. The longer a claim stays open, the more it’ll cost you.
Also, some state-run programs will fine employers for failure for to report injuries in a timely manner, and insurance providers may penalize you for the same.
#8. Post-Injury Investigations
In the aftermath of an injury, it is critically important to do two things; (1) stop continued work in the area, on associated equipment, and shut down related work until certain hazards or unsafe work practices have been abated, and (2) find out how the event happened, the cause of the accident. With most injuries, it is common that a series of circumstances align to create the conditions for accidents to occur—there are typically multiple factors to consider.
Think of a slip-fall scenario: wet floor + low light + no signage = workers comp claim.
A thorough incident investigation may include photos of the undisturbed site of the injury, review and/or provision of security footage if available, interviews with the worker and co-worker witnesses, etc. A good rule of thumb is that whatever it takes to gather as much information as possible, is precisely what is necessary.
Incident investigation is important for several reasons. First, you want to make sure that preventable incidents of worker injury are not repeated, so that other employees are protected from future accidents, with a new understanding of safe work practices and how to avoid contributing factors. The best reason to conduct an incident investigation is for the purposes of preventing future occupational injuries in your workplace.
Also, when a claim is reported, employers want the facts to speak, and claim managers are best equipped to actively manage claims and bring them to resolution when supplied with good information. For reasons of liability, and should attorneys become involved in the matter, it is crucial that employers protect themselves through collection of evidence and by being forthcoming with incident investigation materials. If a worker attempts to dispute the claim and keep it open, perhaps hoping for a settlement, or to perpetuate fraud, documentation from well-conducted incident investigations can save employers a lot of grief.
#8. Evaluate Claim History for Patterns
On a regular basis, it is important to take a long, hard look at your claims, or ask your insurance provider for a deeper analysis of your claims history.
Identifying patterns and taking corrective action can reduce workers comp premiums and save employers money.
It is not uncommon to uncover subtle patterns associated with claims, and find that parts of your operation are generating more claims than other areas of the business, or that claims tend to spike during certain times of the year. For example, think of a health care setting, where back injuries are prevalent from lifting and handling patients or residents. Now, say an employer has conducted training on proper lifting technique and provided lift-assist devices, yet injuries persist. A talk with workers might suggest a number of possible causes for the trend in back injuries: the lifting equipment is broken, workers are unclear on how to use lifting equipment, or such equipment is stored too far from point of use, or employees regularly lift weight above recommended limits, etc.
Because workplace injuries are preventable, pattern analysis is an invaluable tool; it uncovers opportunities for injury prevention that may not be readily apparent otherwise. And as we know, preventing occupational injuries is the best strategy for lowering workers comp premiums.
Look to your workers compensation insurer or TPA (Third Party Administrator) to provide you with trend data. Your insurer or TPA can tell you what time of day, day of week, and which department or job type has the most frequent injuries, and which have the most severe. Your insurer or TPA can tell you the average tenure of employees who get injured the most, as well as the types of claims that are costing you. The options are nearly endless, just be sure to ask for data that will help you make real changes to prevent injury. Having this data will also help you push safety initiatives through.
#9. Health Insurance, Healthcare Incentives, Worker Wellness Programs
If employers do not offer health insurance, employees are more likely to seek workers compensation in the event of an injury, and if they do, premiums increase.
Health insurance plans offer workers the opportunity to get the care they need in order to continue participating in the workforce. When workers can turn to health insurance, they are more likely to seek medical attention proactively. Think of flu shots, check-ups, and other types of preventive medical services.
Workplace health incentive programs can also improve the health of your workforce and help keep workers on the job. Examples include offering gym memberships at no charge if workers visit a certain number of times, and challenges to quit smoking, lose weight, and avoid sick days, with prizes to encourage participation.
Wellness programs offer a range of options for workers to take control of their fitness. These programs may include group cycling outings, yoga classes, learning opportunities related to mental health, like classes on managing stress, depression, or bereavement, and collective exercise.
Bottom-line: studies show that when workers are healthy, they show up to work, are focused, productive, and less likely to be involved in accidents. Healthy workers not only avoid accidents, but recover from injuries and illnesses faster.
#10. Classify Employees Correctly
It is critically important that employees are classified correctly for the purposes of workers comp insurance.
Classifications are based on risk. Framers on a residential construction site have a dangerous job and corresponding risk classification ID, whereas, bookkeepers have a relatively lower risk associated with their occupation and less exposure to workplace hazards, and thus classified in a ‘cheaper’ category. Workers comp insurance premiums correspond directly with risk classification. If your organization has a lot of workers with a high risk classification, your business will likely pay higher premiums.
The National Council on Compensation Insurance (NCCI) is the standard for classification codes; NCCI codes are widely used by private workers comp insurance providers.
For state-run plans, classification codes vary.
As your workforce grows or diversifies, it is wise to reevaluate classifications with your workers comp insurance provider, to avoid higher premiums related to misclassification.
#11. Work With the Right Medical Provider
After an occupational injury, access to quality medical care becomes crucial to the resolution of claims. If your injured workers aren’t getting any better, or if the recovery of an injured worker exceeds the normal expectation for return to work, probable causes may include the lack of adequate medical care, trouble with accessibility, or some combination of the two.
We’ve all had the experience of waiting in a doctor’s office to be seen, or have called to schedule a medical appointment only to find out that the next available opening is a month away. In some cases, injured workers have these same experiences on the path to recovery. Injured workers may be misdiagnosed or mistreated—like the rest of us.
That’s why it is important to communicate regularly with injured workers and track the progress of recovery. Private workers comp insurance claims managers should be your liaison with medical providers, and if you suspect an injured worker could be receiving a higher level of care, there may be alternative provider options to explore. Make sure that your injured workers know that they are expected to comply with healthcare directives pertaining to injury or illness, and are aware of the expectation to attend all medical appointments, particularly for follow up care and rehabilitation; those expectations may seem to prolong the resolution of a claim, but they can also prevent a new claim related to re-injury from happening, saving money in the long term.
For high-risk businesses, it may be worthwhile to collect and measure data on claim resolution per medical provider. If possible, it is okay to shop around to find the best medical care for your injured worker.
#12. Aggressive Claim Management
When a claim is filed, quickly establishing contact with your claims manager is the best course of action. Also, set the expectation for regular communication related to claims. Work with your claims manager directly to set goals for return-to-work, and ask them for updates or progress reports.
Claims managers may handle many claims at once and may view them all as equally important, but being the loudest voice in the chorus is wise—they need to know how important claim resolution is to you and your business. Look at this way: would you rather sit back passively and let things play out, or positively influence the course of action to ensure that the best outcome for your company is secured? Examine claims regularly with your claims manager to make sure they are being handled efficiently.
It may be wise to train an employee and delegate the task of handling claims internally, but either way, establishing good working relationships with claims managers can prove invaluable.
#13. Set a Standard for Handling Claims
Each occupational injury may be different, but your internal process for handling claims should be static—it’s about accountability.
From forms to recordkeeping and data management, a standardized claim handling protocol can minimize human error, oversights, and ensure a better outcome when working to resolve claims.
When an injury is reported, a chain of events should be triggered: immediate care for injured worker/referral to medical provider, incident investigation, call to workers comp insurance provider, data entry/recordkeeping, etc.
You want to make it easy on yourself or designated staff, so consider automating as much of the process as you can, by taking forms, recordkeeping, and data collection online, for example.
#14. Stretch Your Premium Dollars
Always be looking for value in the marketplace, or taking advantage of incentive programs offered by state-run plans.
At times, you can renegotiate your premiums or subscribe to offers that may save you money. For example, a well-run, standardized safety training program may qualify you for a credit or lower rate with certain workers comp insurers.
It is always wise to keep current with changes and work to earn credits with providers when opportunities arise. Work with your provider to lower your premiums, ask them if you could be doing more to lower your rates, or about special offers.
Aside from asking for quotes, one great way to expose the difference between insurance providers is to compare cost multipliers, a major factor in how workers comp insurance providers make a profit. To understand cost multipliers and how they work, let’s do some simple math (rates assuming payroll per $100):
$.60 (Base rate) x 1.25 (Cost Multiplier) = $.75 (Premium Rate for Classification)
Taking that example, the question becomes ‘can do I better’? It is okay to have insurers compete for your business, where possible.
Cost multipliers are typically based on an average of standard rates for job classifications, and multipliers may be different depending on job classifications, so you want to compare for classifications that match your workforce.
#15. Regular Workers’ Comp Auditing
Auditing is about developing insights into how well you manage your workers comp insurance. Auditing exposes areas for improvement, from opportunities for lowering costs to injury and fraud prevention.
Depending on your risk and rate of injury, it may be wise to schedule internal workers comp auditing on a quarterly basis, annually, or semi-annually for low risk enterprises.
Quick checklist for internal workers comp audit:
- Gather records
- Review of closed and existing claims
- Aligning payroll projections
- Account for payroll subtractions
- Pattern analysis
- Worker reclassification
- Review contractor Certificates of Insurance
- Examine loss data
- Review medical provider per claim
- Measure comp program effectiveness with worker testimonials
Auditing your workers comp program can help better manage the program and therefore save you money, while thoroughly preparing your business for provider or state auditing events.