Workers’ compensation (WC) is an insurance system that pays monetary benefits to workers who become injured during their employment. Specifically, it pays medical expenses, lost wages, and ongoing care costs for injured workers.

Workers’ compensation (WC) laws are based on a balance between the needs of both employers and employees. The system is meant to be no-fault and non-adversarial. Employees give up the right to sue their employers for employment-related injuries in return for specific medical and wage-replacement benefits. State agencies will prescribe recordkeeping, posting, and reporting requirements.

Most private employers are covered by state WC laws. All WC laws follow the same basic premise, but there is a lot of variety in the details. Private employers should check with their state WC office for requirements and other details. Benefits generally include 100% of medical coverage and varying amounts of income benefits. Most employers are required to carry WC insurance. Some states do not require coverage, often if the employer has fewer than a certain number of employees (such as fewer than five).

Insurance

• There are many factors that determine how much an employer will pay for workers’ compensation insurance.
• After selecting a workers’ compensation provider, companies must continue to monitor their choice to ensure the amount of money spent aligns with the value of the services provided.
• Premium costs are not the only expenses affected by injury claims. Employee morale, productivity, time, and other work-related costs are affected as well.

Workers’ compensation (WC) is a pre-funded insurance system. Insurers try to predict how much funding they will need by following the old adage that the past is the best predictor of the future. Several calculations and comparisons are used to customize each employer’s insurance premium. These ensure employers in low hazard industries pay smaller premiums than employers in high hazard industries. They also ensure employers with few claims and good safety records pay less than employers with many claims and undesirable safety records.

Many factors go into determining the cost of WC insurance. Some factors employers have control over, and others they don’t. Understanding how premiums are determined can help employers plan for the future and lower their premiums.

Evaluate the insurer

Companies will often do a thorough job investigating and choosing their workers’ compensation (WC) insurance provider but then fail to periodically review their choice. WC is a large, bottom-line expense and must be consistently monitored to make sure the company is getting the best service for its money.

The following are some questions to ask when choosing and reviewing an insurer.

Is the experience modification rate (EMR) reviewed and adjusted annually?

If a company had a high EMR but lowered its accident rates for at least two years, the EMR should come down, which will bring the premium down.

Are the premium charges in line with what others are charging?

Regular price quotes from competitors will help determine if an insurer is taking advantage of a long-term relationship. However, just because a company gives a lower bid does not necessarily mean it is the better buy. That is just one factor to consider.

What other services does the insurer provide?

Many insurers offer workplace safety services and publications to help employers lower their accident rates.

How quickly are claims processed?

By law, claims need to be adjusted within a specific time frame. If a company or its insurer is not gathering information within 24 to 48 hours of a claim, a company may be fined or sued. Procedures need to be evaluated and changed to ensure all regulatory requirements are being met.

How many claims are denied?

A high denial rate is not necessarily unreasonable. Some industries have higher rates than others. If the number of denied claims suddenly varies substantially though, it is important to determine the cause. Is there a new claims adjuster? Is the adjuster too lenient or too strict?

How often are claims that were initially denied overturned?

If claim denials are frequently overturned during appeal, the claims adjuster may not be making good decisions in the first place. Another possibility is that the company has poor legal representation.

Additional claim costs

Premiums are not the only cost affected by a high number of workers’ compensation (WC) claims. Employers also need to consider the following:

• Temporary labor and/or overtime pay to replace an injured employee.
• Lowered morale of coworkers due to concern for the injured employee and stress due to increased workloads.
• Time required to find a new employee, investigate the incident, fill out accident forms, and keep in touch with the injured worker.
• Time needed to train replacement workers if the employee was in a position requiring specialized knowledge.
• Lowered productivity while new work arrangements are made and new employees learn the job.
• Litigation expenses, including attorneys and investigators, if an employee decides to pursue legal action.
• Accommodations to allow a disabled employee to return to work (RTW).
• Property damaged during an accident.
• Negative impact on a company’s image when there are severe or multiple injuries.
• Negative effect on the ability to secure contracts by a high experience modification rate (EMR).

• Most workers are eligible for workers’ compensation, but all states exclude some workers.
• Though employees are covered by workers’ compensation, the employer cannot be sued for negligence; however, there are instances where both the employee and employer have been penalized following an injury or illness.

Most workers are eligible for workers’ compensation (WC) coverage, but every state excludes some workers. Exclusions often include business owners, independent contractors, domestic employees in private homes, and farm workers.

In theory, employees are covered by WC whether or not they were following company policy at the time they were injured on the job. At the same time, even if an injury or illness is due to employer negligence, the employer cannot be sued. However, in practice:

• Some states reduce compensation if an employee was on drugs or alcohol at the time of an accident or was not following established safety rules,
• Some employers are successfully sued for negligence deemed to be willful, and
• Third-party manufacturers can still be sued by workers injured due to the use of faulty products.

In essence, employees relinquish the right to sue for work-related injuries in return for a statutorily imposed system of medical and disability benefits. Before WC laws, a worker suffering a serious injury might be permanently disabled and not receive any compensation. If the injury was due to employer negligence, the worker could sue, but that would take time and money.

Although workers can seek only statutory compensation for work-related injuries, they can still sue third parties, like product manufacturers. Employees can also pursue certain penalty claims through the WC system. They can also seek compensation through Equal Employment Opportunity Commission (EEOC) or state agencies responsible for enforcing anti-discrimination laws.

• There are many factors that determine how much an employer will pay for workers’ compensation insurance.
• After selecting a workers’ compensation provider, companies must continue to monitor their choice to ensure the amount of money spent aligns with the value of the services provided.
• Premium costs are not the only expenses affected by injury claims. Employee morale, productivity, time, and other work-related costs are affected as well.

Workers’ compensation (WC) is a pre-funded insurance system. Insurers try to predict how much funding they will need by following the old adage that the past is the best predictor of the future. Several calculations and comparisons are used to customize each employer’s insurance premium. These ensure employers in low hazard industries pay smaller premiums than employers in high hazard industries. They also ensure employers with few claims and good safety records pay less than employers with many claims and undesirable safety records.

Many factors go into determining the cost of WC insurance. Some factors employers have control over, and others they don’t. Understanding how premiums are determined can help employers plan for the future and lower their premiums.

Evaluate the insurer

Companies will often do a thorough job investigating and choosing their workers’ compensation (WC) insurance provider but then fail to periodically review their choice. WC is a large, bottom-line expense and must be consistently monitored to make sure the company is getting the best service for its money.

The following are some questions to ask when choosing and reviewing an insurer.

Is the experience modification rate (EMR) reviewed and adjusted annually?

If a company had a high EMR but lowered its accident rates for at least two years, the EMR should come down, which will bring the premium down.

Are the premium charges in line with what others are charging?

Regular price quotes from competitors will help determine if an insurer is taking advantage of a long-term relationship. However, just because a company gives a lower bid does not necessarily mean it is the better buy. That is just one factor to consider.

What other services does the insurer provide?

Many insurers offer workplace safety services and publications to help employers lower their accident rates.

How quickly are claims processed?

By law, claims need to be adjusted within a specific time frame. If a company or its insurer is not gathering information within 24 to 48 hours of a claim, a company may be fined or sued. Procedures need to be evaluated and changed to ensure all regulatory requirements are being met.

How many claims are denied?

A high denial rate is not necessarily unreasonable. Some industries have higher rates than others. If the number of denied claims suddenly varies substantially though, it is important to determine the cause. Is there a new claims adjuster? Is the adjuster too lenient or too strict?

How often are claims that were initially denied overturned?

If claim denials are frequently overturned during appeal, the claims adjuster may not be making good decisions in the first place. Another possibility is that the company has poor legal representation.

Additional claim costs

Premiums are not the only cost affected by a high number of workers’ compensation (WC) claims. Employers also need to consider the following:

• Temporary labor and/or overtime pay to replace an injured employee.
• Lowered morale of coworkers due to concern for the injured employee and stress due to increased workloads.
• Time required to find a new employee, investigate the incident, fill out accident forms, and keep in touch with the injured worker.
• Time needed to train replacement workers if the employee was in a position requiring specialized knowledge.
• Lowered productivity while new work arrangements are made and new employees learn the job.
• Litigation expenses, including attorneys and investigators, if an employee decides to pursue legal action.
• Accommodations to allow a disabled employee to return to work (RTW).
• Property damaged during an accident.
• Negative impact on a company’s image when there are severe or multiple injuries.
• Negative effect on the ability to secure contracts by a high experience modification rate (EMR).

• To begin the claims process, employers must complete and turn in the first report of injury form within a specified time frame.
• There are several documents included in the workers compensation claims process, and employers should keep all related documents for at least 10 years.

All claims start with the first report of injury form. Each state’s form is a little different, but they all ask for a description of the incident and the claimant’s information. The first report must be turned in to the insurance carrier or state agency within a legally specified time period that varies from state to state. Best practice is to turn it in within 24 hours of an incident.

Turning in a claim does not indicate acceptance. That is not the employer’s call. Claim denial or acceptance should be left up to the insurer; however, the employer should fully investigate all accidents and let the claims adjuster know of any misgivings they may have about a claim.

Other documents used in the workers’ compensation (WC) process include:

• Additional state forms,
• Accident investigation report,
• Witness statements,
• Medical reports,
• Job descriptions, and
• Light duty options list.

An employer can get copies of state-required insurance forms by contacting their insurance agency or the state’s WC division.

Experts recommend keeping all claim-related documents for at least 10 years after a claim has been closed. There is always the possibility that the claim could be reopened or a lawsuit filed.

• After injury, employees sometimes delay returning to work for various reasons.
• Employers should provide employees with the proper guidance and resources regarding work-related injuries and workers’ compensation.
• If an employee is injured, an employer should provide the necessary support to ensure the employee receives appropriate care.

Employees who extend the amount of time they miss from work due to a work-related injury or illness often have more than one reason. These employees may feel:

• Anger at the company or supervisor for not caring about their injuries.
• Undervalued or not wanted back.
• Embarrassed about their injuries and reluctant to face supervisors and coworkers.
• Confused or uninformed about how or when to come back to work.

Employee education

An employee education packet should be given to all employees who sustain a work-related injury. The employee should be told which company representative will be following their medical case to ensure the best possible care. The employee should be asked to assist in the safety investigation to provide accurate information to the insurance carrier and help prevent future accidents.

Employees with a work-related injury or illness should be told how workers’ compensation (WC) works in their state and how the law regulates the claims process and benefits. They should have access to all the names and numbers to call if they have any questions related to benefits, scheduling, or human resources.

Employees should be given a thorough explanation of the company’s early return to work (RTW) program, if any, and the employee’s responsibility to provide timely RTW information from the doctor. The employee needs to know who the WC carrier is, and that the carrier may contact the employee. The employer should check back with the employee regularly to see if there are any questions about the system.

Many employees have the sense of being out of control and at the mercy of the system; however, providing education and establishing responsibilities for RTW issues can put them back in control. Providing this information in a caring way can help their self-esteem and give them confidence that they are an important part of the team.

The employer contacting the injured worker should focus on the employee’s well-being so that they are not perceived as pushy or nosy. They should act as a resource and a liaison and allay fears that the employee will lose benefits for asking questions.

Support for the injured/ill worker

As part of the company policy, a management representative or the immediate supervisor should be on hand immediately after the injury. When the employee needs emergency medical treatment, someone should accompany the employee to the hospital/physician’s office, even if the employee is taken by ambulance, to ensure the injured worker receives proper care.

There may be urgent questions regarding the employee’s work environment or exposure that the company nurse/supervisor can provide. The supervisor can inform the medical provider that work restrictions will be accommodated if possible.

While an employee is off work, the supervisor should maintain regular contact with the injured employee on at least a weekly basis. This ensures the employee is receiving appropriate, quality, timely, and effective therapy. In addition, it assists the worker with any problems regarding care or compensation. Finally, this contact facilitates communication between the company and medical provider, allowing for a smooth transition back to work.

• Supervisors must understand their role as it relates to employee injuries and provide the necessary support upon the employee’s return to work.
• Supervisors should treat employees in a manner that ensures the employee feels valued and supported upon returning to work.

Management and supervisory personnel must understand all the components of work injuries, and they need to appreciate their role in the management of an injury. At some companies, it may mean that they accompany injured workers to the doctor, or that they supervise the restricted duty.

Supervisors should be trained on company policy for work-related injuries and illnesses and what their roles are within the company. In general, the supervisory staff should be taught how to stay in weekly contact with the employee and to offer support upon return.

The supervisor should participate in:

• Finding the facts surrounding the incident by being involved in the investigation.
• Learning about the nature of the injury and how long any resulting disability or restricted duty is likely to last.
• Reviewing the return to work (RTW) restrictions by consulting with others if necessary — nurse, treating physician, human resources, or safety personnel.
• Identifying appropriate restricted duty, consistent with the physician’s recommendations. The job or task should be meaningful and necessary but need not be necessarily desirable in the employee’s mind.
• Ensuring that the injured worker assigned to a restricted duty job understands restrictions.
• Maintaining regular and personal contact with the injured worker.
• Determining the source of any problems the employee experiences in the performance of the assigned, restricted duties; the supervisor should determine the source of these problems and deal with them accordingly.

Sometimes, a supervisor might blame the employee for the injury or be ineffective or overbearing in their dealings with an injured employee. Most injured employees want to feel valued at their workplace. Supervisors must be trained on how to handle the paperwork for a claim, but also how to handle the person behind the claim.

When supervisors treat injured employees with dignity and respect at the time of injury and throughout the recovery process, the duration of lost work time shrinks. The right behavior by the supervisor can prevent the relationship with the employee from turning adversarial.

The right behavior can also have a positive impact on the treating physician. Doctors are more inclined to support an employee’s RTW when they know that the workplace environment is supportive.

• Health care providers need the necessary information regarding an injured worker’s daily life, work duties, and access to employee assistance programs so they can fully assess a workers’ compensation case.
• Some laws and regulations require medical information to be kept confidential.
• Employers must consider their obligations under both workers’ compensation and the Family and Medical Leave Act because each program provides different benefits for injured workers. Additionally, employers should implement a proactive safety program, which places an emphasis on accident prevention.

Unless they are trained in occupational medicine, health care providers (HCPs) do not:

• Learn how to complete workers’ compensation (WC) forms in medical school,
• Read the WC regulations, or
• Receive guidance on how to determine whether an injury or illness is work-related.

Medical definitions of terms can be different from the definitions in WC regulations. The word “disability” has specific legal ramifications in WC that a HCP may not be aware of. Physicians generally rate impairment based upon the level of impact of the condition on activities of daily living rather than on performance of work-related tasks.

Employers must make sure the HCP knows the job functions the injured worker will need to perform and that the employer needs an impairment rating based on the workers ability to perform those tasks. Employers should also let HCPs know about the availability of:

• Light duty,
• Reasonable accommodations, and
• Access to employee assistance programs.

All of these might affect a physician’s willingness to release patients back to work.

HCPs do not like to feel that they are being manipulated, but they need effective, even-handed information to know how to properly assess a WC case. Many will appreciate the employer providing this information.

Privacy regulations

Best practices and some laws require all medical information be kept confidential. Supervisors and others with access to information about an employee’s medical status should be instructed to maintain strict confidentiality. Details about a worker’s health should not be shared with other employees.

The Health Insurance Portability and Accountability Act (HIPAA) privacy regulations do apply to the health care providers (HCPs) who treat employees receiving workers’ compensation (WC) benefits. However, HIPAA recognizes the legitimate need for insurers and other entities involved in the WC systems to have access to individuals’ health information. Employers need medical information to determine the legitimacy of a claim, pay medical benefits, and adhere to restricted duty limitations. Even though it is not required by law, many providers will ask for a medical authorization before they provide any information.

Injured workers should be asked to sign an authorization form at the time an injury is reported. The employer can then provide copies to the employee and all medical providers.

When an employee is injured, the employer should send an authorization for medical treatment to the medical provider. This will ensure that the employee receives prompt medical care without obligating the employer for further and/or unrelated charges.

Workers’ compensation and FMLA

Under the Family and Medical Leave Act (FMLA), a serious health condition may be occupational or not. Therefore, if an employee suffers a workplace injury or illness, you also need to consider your obligations under the FMLA. Workers’ compensation (WC) and FMLA provide for very different benefits and protections. While WC provides for income replacement and the cost of medical treatment, the FMLA provides for job-protected unpaid time off. The two often run concurrently.

Proactive safety program

The least expensive claim is the one that never occurs. A proactive safety program means taking action to prevent accidents. The proactive process first identifies a hazard and anticipates the possible injury. The hazard is analyzed, recommendations proposed, and corrective actions and system improvements are implemented.

By emphasizing accident prevention, management sends a caring message to all employees. The company’s safety professional identifies and analyzes hazardous conditions and unsafe behaviors in order to predict future accidents. Proactive strategies are always less expensive than reactive strategies. Here are some examples of proactive safety and health programs:

• Accident analysis program to determine system weaknesses
• Hazard investigation/inspection program
• Wellness program
• Recognition program
• Safety committee/team
• Education and training
• Job hazard analysis
• Hazard communication program
• Accountability program

• The Office of Workers’ Compensation Programs administers four disability compensation programs that assists workers who experience work-related injury or illness.
• The Office of Workers’ Compensation Programs has identified five goal areas that focus on key aspects of the business.

The Office of Workers’ Compensation Programs (OWCP) administers four major disability compensation programs which provide wage replacement benefits, medical treatment, vocational rehabilitation, and other benefits to certain workers or their dependents who experience work-related injury or occupational disease. The mission of the OWCP is to protect the interests of workers who are injured or become ill on the job; their families; and their employers by making timely, appropriate, and accurate decisions on claims, providing prompt payment of benefits and helping injured workers return to gainful work as early as possible.

Goals

The Office of Workers’ Compensation Programs (OWCP) has identified five goal areas, each of which highlights a key aspect of OWCP’s business. For each goal area, OWCP has assembled a team of managers, led by senior leaders, to establish strategies and monitor progress in the relevant area. OWCP’s five goals are:

1. Improve claims review, adjudication, issue resolution, and payment: Provide timely and high-quality review and adjudication of claims, early resolution of claims issues, and timely and accurate payment of benefits.
2. Enhance recovery, rehabilitation, and employment services: Assist workers in obtaining early post-injury nurse intervention and return to work (RTW) services, vocational rehabilitation, and job placement assistance as soon as they are able.
3. Promote collaboration and outreach with stakeholders and customer groups: Foster understanding and awareness of OWCP priorities, initiatives, and results through effective external outreach and data sharing.
4. Create and sustain a high-performing workforce: Create and foster the highest quality work environment for all employees through leadership, communication and collaboration, recruitment, development, recognition, engagement, and retention.
5. Improve agency-wide operations, governance, and infrastructure: Support the activities of OWCP’s programs, managers, and staff by improving the administrative management, information technology, financial, and physical infrastructure of OWCP.