Workers Compensation. Nationwide Insurance Agribusiness Division Risk Management Services

Transcription

1 Workers Compensation Nationwide Insurance Agribusiness Division Risk Management Services 1

2 Disclaimer The information included in this presentation and accompanying materials was obtained from sources believed to be reliable, Nationwide Mutual Insurance Company and its employees make no guarantee of results and assume no liability in connection with any training, materials, suggestions or information provided. It is the user s responsibility to confirm compliance with any applicable local, state or federal regulations. Information obtained from or via Nationwide Mutual Insurance Company should not be used as the basis for legal advice or other advice, but should be confirmed with alternative sources.

3 Vickie Kilgore, RN, MSN, COHN-S/CM Nationwide Agribusiness Des Moines, IA Sr. Risk Management Consultant Workers Compensation, Safety & Health Specialist Certified Occupational Health Nurse-Specialist Enterprise Risk Management ISO Maytag Corp Nationwide Agribusiness, Claims Mgr Present Nationwide Agribusiness, Risk Management

4 What is Workers Compensation? Laws designed to provide a means of providing medical and disability benefits to employees who suffer occupational injuries or diseases

5 What is Workers Compensation Workers Compensation is a no fault system Injured workers received medical care and disability income irrespective of fault Employer gives up any type of defense of fault Employers in turn receive Exclusive Remedy

6 Vermont Workers Compensation Who must carry Workers Compensation Insurance? Vermont law requires worker s compensation coverage if you hire one or more employees on a full or part time basis. You must post a notice of compliance in a conspicuous place advising your employees that you have secured worker s compensation protection for them.

7 Notice Posting

8 Workers Compensation Premium How is premium calculated? National Council on Compensation Insurance NCCI Based in Boca Raton, FL Manages the nation s largest database of Workers compensation insurance information Prepares workers compensation insurance rate recommendations to states The state of Vermont sets the rates Calculate experience mods in many states

9 Workers Compensation Premium What data is used to calculate you premium? WC primary rating factors: Classification Code Manual Rate Payroll Experience Modification Rating

10 Classification Code Business are classified according to their operation Serves to distribute premium and reflect differences in expected losses for different businesses Are identified by four-digit code

11 Classification Examples 2014 Grain Milling 7380 Drivers/chauffeurs/helpers Gas and Oil dealer and driver 8810 Clerical office employees

12 Manual Rate Rate is established for each classification Higher hazard classifications have higher rates Set by rating bureaus and states NCCI Theoretically, should produce an objective rating system

13 Manual Rate Example 2014 Grain Milling NE 8.42 KS 6.94 VT Drivers/chauffeurs/helpers NE 7.36 KS 4.88 VT Gas and Oil dealer and driver NE 6.66 KS 6.59 VT Clerical office employees NE.35 KS.32 VT.23

14 Payroll Includes gross wages Includes cash from commissions Includes bonuses Other forms of compensation

15 WC-Rating (Oversimplified) Manual rate x payroll = Manual Premium 100 Example 6.59 X 500,000 = $32, Manual premium x Experience Mod = Actual premium

16 Experience Modification Ratio of actual WC losses compared to expected losses for the type of business Directly related to the actual experience of an employer Includes an employers classification and payroll in the calculation

17 Example of how loss data is used to calculate premium Policy effective date to Data from 2016 Not used Data from 2015 Data from 2014 Data from 2013 So would only use three years data excluding most recent year

18 Experience Modification Actual dollars of losses Expected dollars of losses Mod of no impact on Premium Mod below reduction in Premium Mod over increase in Premium Experience Rating in Mandatory

19 Experience Modification-Example Mod of.85 $100,000 (Manual Premium) X.85 (Mod) = $85,000 end premium Mod of 1.20 $100,000 (Manual Premium X 1.20 (Mod) = $120,000 end premium

20 Workers Compensation Premium WC primary rating factors which ones can you control? Classification Code Manual Rate Payroll Experience Modification Factor

21 Experience Modification-Facts Gives employers influence over their final premium Provides an incentive to implement loss prevention programs Provides incentive for cost containment

22 Experience Mod Calculation Actual losses Expected losses Expected losses is a calculation To change actual losses Contain costs Prevent losses

23 Cost containment strategies 23

24 Types of WC Benefits To understand what costs we can contain we need to understand what benefits are available Payments for lost wages; Payments for medical services; Rehabilitation services; and, Death benefits. No Policy Limits

25 Hiring Practices 25

26 Hiring Practices The most important decision a company makes is who to hire

27 The cost of Hiring Mistakes Salary and benefits 3 6 months Longer Training costs Selection costs Separation costs Vacancy costs Work Comp Costs

28 The cost of Hiring Mistakes Other hard dollar costs Poor work quality Errors that need correcting Dissatisfied customers Additional management time Poor team morale

29 Importance of Hiring Practices Good employee selection: Key to reducing the risk of work related injuries Reducing Workers Compensation Claims Promote safety Improves customer relations Protects your most valuable assets

30 Importance of Hiring Practices The correct hiring procedures can make an employer aware of whether an applicant can safely perform the required job-related tasks Talk with your consultant/human resources professional, to find out what steps you may legally take to screen applicants in your state

31 Importance of Hiring Practices The ultimate goal is to: hire best-qualified applicants for each position applicants that meet the physical demands Good hiring practices can: Protect company from costly claims Protect employees from injuries

32 Recommended Hiring Procedures Prepare a written Job Description Require a written application Ask only job related questions in the interview Incorporate skills testing

33 Recommended Hiring Procedures Clarify for applicant your company s policies on background checks drug testing credit checks physical exams physical capacity testing hearing tests explain your standards for each and conduct them consistently

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35 Recommended Hiring Procedures Verify work history Verify educational background Check references Ask questions about prior job responsibilities Present a written offer of employment, with any contingencies noted.

36 Recommended Hiring Procedures When doing post-offer physical be sure: Job Description goes with employee Establish relationship with the doctor doing your physicals Consider having doctor tour your work site Doctor understands what is required of them

37 Once you have hired the employee The most important training you will do with employees is new hire orientation/training

38 Planning to reduce losses Proper training of employees should include: Training on equipment and use of it Use of any personal protective equipment (PPE) Remind employees of any policies that enforce safety policies Supervisor/manager attention to detail concerning new employees

39 Return to Work Programs 39

40 Experience Rating Adjustment If the state has adopted the Experience Rating Adjustment (ERA) program medical only claims will be reduced by 70% in this formula

41 Return To Work Programs Return to work programs - provide work for employees that can not immediately return to their regular jobs Return to work programs help keep the cost of claim down and provide employees with income Promotes increased communication with employee

42 How return to work programs assist cost containment Studies have shown that: if an employee is out of work with an injury for six months or more, they have a 5O/50 chance of ever returning to work. If an employee is out of work for a year, your chances of them ever returning to work are 10%. If an employee is out of work for two years, the chances of them ever holding another job are less than 2%.

43 Return to Work Programs Return to work programs keep more claims at the medical treatment only level, the advantages: Decreased costs On average employee s return to pre-injury jobs faster Decreases hidden workers compensation costs

44 RTW Cost Benefit vs. Consequences Scenario: Employee slipped and fell from dock while loading pallets, landing on his back. Employee's weekly TTD rate is $ Number of weeks since injury: 16

45 RTW Cost Benefit vs. Consequences Restrictions imposed by physician: No lifting over 10# Anticipated date of unrestricted duty: Unknown - still treating Treating conservatively with physical therapy. Had MRI-no herniated disc.

46 RTW Cost Benefit vs. Consequences Total medical paid to date: $2, Total indemnity paid to date: $0 Total indemnity paid if not returned to work: $7,466.72

47 Why a Return to Work Program Menninger Foundation Topeka, KS Research study 60 day window Disability Dependence A mindset of being sick

48 Why a Return to Work Program A quick return to work Recover more quickly Less likely to get out of shape Maintains wage stability Stays connected to workplace

49 Accident Investigations 49

50 Reporting Requirements Employee reporting to Employer Immediately Employer to Carrier Within 24 hours of Notice

51 Claims Reporting procedures Good internal claims reporting procedures can affect the cost of claims Our data shows that if a claim is reported later than 24 hours, the cost of the claim goes up significantly: Delay Increase 1 2 weeks 8% 2 4 weeks 15% Over 2 months 22%

52 Vermont Workers Compensation First Report of Injury within 72 hours of receiving notice or knowledge of a claimed work-related injury that either a. causes an absence of one day or more from work b. necessitates medical attention c. You must also deliver a copy to the injured worker First-aid only injuries you have 5 days

53 Key elements for cost reductions A safety program A partnership with a physician of the employers choosing Prompt reporting of claims Early R-T-W programs

54 Safety programs Effective safety programs should: Have the support of all areas of management Be communicated to all employees Have some kind of tracking mechanism Results should be communicated not only with upper management but with employees

55 Safety Programs Cont. Develop an accident report specific for your company s needs this report should require an employee to explain in detail exactly: How the accident/injury happened When it happened; where it happened Any equipment involved Other contributing factors such as wet floors or ice on sidewalk A list of witnesses names and phone numbers in the area that witnessed the injury Name, address, and phone number of property owner if injury occurred off premise Name of anyone the employee may have previously reported the injury to List of doctors who treated or will treat injured worker Signature of injured worker.

56 Questions?

57 Claims Reporting procedures Good internal claims reporting procedures can affect the cost of claims Our data shows that if a claim is reported later than 24 hours, the cost of the claim goes up significantly: Delay Increase 1 2 weeks 8% 2 4 weeks 15% Over 2 months 22%

58 How can I reduce my Workers Compensation Enforcement Management Hiring Practices Return to Work Workers Compensation System Training Policies and Procedures Safety Orientation

59 Injury Costs Indirect Reduced productivity Administrative costs Accident investigation Supervisor time for follow-up Cost of hiring replacement worker Costs of training replacement worker Overtime Equipment repair/replacement Benefits paid to employee while off work Health insurance Time for OSHA investigation OSHA Penalties/Contesting Negative publicity Damage to customer relations Cost of Employee Turnover

60 Direct Vs Indirect Costs of Accidents Medical (doctor visits, physical therapy, medicine, etc.) Compensation Indemnity payments Reduced productivity Administrative costs Accident investigation Supervisor time for follow-up Cost of hiring replacement worker Costs of training replacement worker Overtime Equipment repair/replacement Benefits paid to employee while off work Health insurance Time for OSHA investigation OSHA Penalties/Contesting Negative publicity Damage to customer relations Cost of Employee Turnover