Frequently Asked Questions

What is workers’ compensation?

Workers’ compensation insurance is business insurance that provides benefits to employees that suffer a work-related injury or illness. Primarily, this coverage provides wage replacement and medical benefits to the injured employee while protecting the employer from legal action and damages. Workers’ compensation also helps employers stay in compliance with state workers’ compensation regulations

What does workers’ compensation cover?

Workers’ compensation covers:

• Medical costs associated with a work-related injury or illness
  
• Wages from lost work time
  
• Disability payments and death benefits

Are you also curious what is not covered under workers’ compensation?

Injuries or illnesses must be determined to be in the scope and course of the employee’s employment.
Examples of injuries:

• Most workers’ compensation plans do not cover include an employee sustains due to being intoxicated in the workplace
• Self-inflicted injuries or death and injuries from an employee getting into a fight

What factors impact the cost of workers’ compensation insurance?

Factors that generally impact the cost of workers’ compensation include:

• Frequency and severity of claims
• States where operations are located
• Type of work and payroll size

Workers’ compensation is regulated on a state level and because of that, costs can vary based on several factors. In simple terms, the more employees and the more potential risk that the work presents, the more workers’ compensation will cost.

What actions can you take to help reduce your workers’ compensation costs?

All businesses can take measures to reduce their workers’ compensation costs and improve their bottom-line.

Some key actions include:

• Understand your company’s experience modification factor (e-MOD as you might hear it referred to) and the impact it has on your premium
• Make workplace safety a priority that is constantly reinforced
• Report injuries to your insurance carrier promptly
• Embrace a return-to-work program
• Make sure your employees are appropriately classified
• Utilize effective employee screening and hiring practices

What is a return-to-work program and how do I establish a program for my company?

A return-to-work program enables an injured or disabled employee to return to their job duties as soon as they are able (as determined by their doctor). The employee’s original job duties may be modified through light duty or accommodations or even a temporary position elsewhere in the company.

Getting injured employees back in the workplace, even in a reduced role or capacity, will reduce the cost of the claim. Which will ultimately reduce the cost of your workers’ compensation insurance.

There are a few important steps to establishing an effective return-to-work program.

• To get started, foster a receptive culture across your leadership and employee ranks that support the need for a return-to-work program. 
• Plan to work with your worker’s compensation carrier to establish relationships with medical providers who will take the time to understand your business and will support your need for a return-to-work program.
• Take time to update job descriptions to accurately reflect the physical requirements of each job and work with your medical provider to pre-determine light or modified duties that an injured employee can perform.
• Create plans for temporary assignments an injured employee can perform that are outside their normal duties.

Remember the goal is get them back in the workplace as soon as possible. It is recommended you review the program to make sure it is in support of state and federal laws including OSHA, ADA and FMLA.

How do I prepare for a work comp payroll audit?

The premium for a workers’ compensation policy is established primarily on an estimate of a business’s total payroll at the time the policy goes into effect and by the various types of work the employees perform.  At the end of the policy period, the insurance carrier will review actual payrolls and scope of work performed and compare that information to the estimates made at the beginning of the policy term.  Based on changes in scope of work or payroll, the premium can go up or go down. The primary function of a workers’ compensation audit is to ensure that premium paid by employers is accurate for the risk that was contemplated.  

Here are some recommendations to consider when preparing for a Workers Compensation audit:

• Identify a primary contact person for the auditor. This should be someone familiar with all business operations and payroll records.
  
• Review your company website. Is there any outdated information that could be mis-leading to the auditor.
  
• At the time you are contacted to schedule the audit, ask the auditor to clarify what specific information they will need during the audit review process.
  
• Gather that ahead of time and have that information well organized.
  
• Pull together employee records. This would include number of employees, hours, days and weeks worked and details on each job duty/classification.
  
• Gather certificates of insurance from independent contractors and/or subcontractors for all work they performed. Without these valid certificates, that payroll could be added to your business payroll.
  
• Review your original policy to make sure you understand how your initial premiums were calculated based on estimated payroll by type of work classification.
  
• Ask for and review the auditor’s worksheets for payroll and work classification accuracy.
  
• Being well organized and prepared for a workers’ compensation audit is the best way to help reduce any surprises and make sure the premium calculations are in line with your payroll records and scope of operations