Managing Your Workers' Comp Costs
Don't let this insurance necessity break your bank account.
Talking about increasing healthcare costs is a favorite topic for the press. Much less is written about increasing workers compensation costs, though, which can be as troubling for many small businesses.
Although workers compensation is regulated by the state, you do have some control over the actual premiums you pay. Here are steps you can take to manage your workers compensation costs more effectively:
First, avoid injury claims. The fewer comp claims your employees submit, the better your premiums will ultimately be. This requires management commitment to creating a safe environment and to promoting safe working habits. Steps you can take to make these goals more concrete include having written policies, regular safety training and site inspections.
Setting safety objectives that are constantly tracked can also be a visible way of monitoring the effectiveness of your efforts. Incentives for achieving goals should be carefully considered before implementing, though. While it may seem like a good idea, it may prevent workers from reporting or paying attention to injuries that could blossom into more serious injuries.
Another way to reduce your costs is to bring injured workers back to work sooner. One way to do is by setting up a return to work plan that allows them to work on activities that they are still able to conduct. If it is possible, establish relationships with health care providers that you can refer injured workers to consult. Providers who specialize in handling work-related injuries can be better able to oversee the employee's recovery and encourage a safe, but faster return to work.
Even if your company has not submitted a single claim, your premiums may still increase the next year. Many small businesses cannot receive workers comp coverage on their own. As a result, they are assigned to a risk pool that consists of other small businesses as well as employers that have high-risk employees. Premiums can rise because of the overall pools' claim activity. To guard against premium increases, see if you can join another pool that has a more favorable claims history.
Taking the time to check if you are being billed correctly can result in some savings, too. Workers compensation premiums are based upon your company's employee classification, payroll, and experience rating. See if employee classifications can be tweaked to be more favorable for your company. Conduct a payroll audit to ensure that the base from which premiums are calculated are up-to-date. And, where applicable, check that your company's experience rating accurately reflects how well your company has managed its claims.
If your yearly workers comp bill totals in the tens of thousands of dollars, you may want to have your premiums reviewed by an outside expert. Companies will check your bills against your actual internal data, look for areas where you are overcharged, and then apply for refunds.
Just because the press does not talk about controlling workers comp costs does not mean you shouldn't either. A little focus on some basic measures can net some big savings.