Average losses result in a modifier of 1.00.
(Premium remains the same.)
Those with less losses than average earn a modifier of less than 1.00.
$500,000 ÷ 100 = $5,000
$5,000 × 0.15 = $750
$750 × 0.90 X-mod = a final premium of $675
Those with more extensive losses suffer a modifier greater than 1.00.
$500,000 ÷ 100 = $5,000
$5,000 × 0.15 = $750
$750 × 1.1 X-mod = A final premium of $825
As you can see, the X-mod is a multiplier of your premium, affecting the way work comp consultants calculate your rates based on your business’ previous claims history to the advantage/disadvantage of premium costs.
Making the Math Work to Your Advantage
Although you have minimal control over your industry’s loss rating, or those assigned to your classification, you have significant control over your X-mod, with work in the safety arena offering the potential to reduce premiums and lower your modifier.
What Specific Steps Can You Take to Lower Your Modifier?
- Put Safety First
Building a culture of safety both in and out of the workplace, including outside safety evaluations and training, can net a reduction in workplace injuries that can greatly reduce your modifier/premiums.
- Revamp Your Return-to-Work Program
Developing effective return-to-work can greatly reduce the direct and indirect costs of workcomp claims.
- Look to State-Offered Opportunities
Ask your insurer about available state-sponsored safety programs that can help your business reduce injuries/premiums.
- Join a Group
If your business has better-than-average safety, consider joining a group to earn ‘group rated’ discounts.
Flabbergasted by premium inflation? Change the equation with the help of our expert work comp consultants today.
Find your worker’s comp premium staggering? The work comp consultants at Minnesota Comp Advisor want you to understand how your rate is calculated. Not only to put an end to your confusion, but because doing so can shed light on opportunities for future premium savings.
Calculating Your Work Comp Premium
Your annual premium is based on the following formula:
RATE X (PAYROLL/100) X Experience Modifier = PREMIUM
Here, the two most important variables affecting premium are the rate and the experience modifier, also known as the EMR or X-mod.
To better understand how work comp consultants calculate your rate, it pays to fully understand the knowledge behind the numbers. Classification rates reflect occupational risk: The likelihood a worker will be injured on the job. (Think: Clerical personnel versus welders and roofers.) Each industry’s classification is rated by the National Council on Compensation Insurance (NCCI) or state rating agency, with employers in similar industries sharing the same classification.
The Payroll Effect
Payroll is also a major element of your workcomp premium calculation, with your total payroll divided by 100 and multiplied by your EMR as described above. For example, if your total payroll is $500,000, and you have an EMR of $0.15; you would calculate your premium as:
$500,000 ÷ 100 = $5,000
$5,000 × 0.15 = $750
The X-Mod Example
Your X-Mod or EMR is another element essential to your rate. This number is a numeric representation of your business’ actual loss history compared to the average of others in your industry. Like your classification rate, the average industry rate is calculated by the NCCI or your state rating bureau.
Quality of Life, Protected
Efficiently and factually completing the initial phase of the worker's comp insurance claim investigation and treatment results in a shorter recovery and return-to-work timeline by directing medical care. Surgery is performed same-day and the machinist begins recovery.
The specialist understands the emotional/psychological effects of the injury, and is cooperative with a modified-duty, return-to-work program, reducing lost time and wages on the part of the employer and employee. The machinist is discharged from care and returned to full-duty in 8-12 weeks. The injured employee is thrilled with his attentive, empathetic treatment, the competency of his doctor, and his ability to remain at work with full pay (rather than partial disability).
In the interim, the adjuster performs necessary interviews, investigating the injured’s prior medical issues and background which may have impacted the claim, including possible changes to safety procedures with the HSE team.
What Could Have Been
The inclusion of a professional, outside field adjuster mitigated a host of hazards. It avoided a 4-5 hour ER visit and the wait to see a specialist following the required doctor referral. Surgery was not delayed, thwarting the potential for permanent damage, continued pain and therapy. The machinist was not converted to a lawsuit plaintiff, instead continuing a productive lifestyle to the benefit of his family.
Given the pre-established relationship, information was easily shared between the adjuster and treating physician, helping return the employee to work sooner. Cost inflation was controlled, and the company retained a key employee, bringing the process to a fast, felicitous solution.
Wish your worker's comp insurance claims had happier endings? Discover new pathways to success with the help of Minnesota Comp Advisor.
Worker's comp insurance claims are inevitable. Negative outcomes are not. When the proper steps are taken from the onset of the claim through resolution, your team can ensure positive results that support everyone’s best interests.
Not a Hassle
When a worker's comp insurance claim begins, it’s critical not to treat the injured employee as an obstacle. If your head machinist clocks-in, but then suffers injury from a small metal shaving that slices into the fingers of his right hand, how will you respond?
A Human Being
Let’s say you, the supervisor, treat him as a valued colleague and report the accident. Your machinist thinks it’s a scratch, but you consider the potential of serious injury. While he removes his gloves and washes his hand, you call your workplace health and safety (HSE) executive, who dispatches an adjuster to the job site while you bandage the worker.
A Deeper Understanding
The adjuster arrives, discussing the incident with the machinist. The adjuster’s experience compels him to ask the machinist to straighten the fingers affected by the thin, deep cut. When he cannot, the adjuster calls a hand specialist, describing the range-of-motion limitations, and the machinist is transported to the clinic.
A Helping Hand
Along the way, the two have a Q&A on what will commence and why the specialist was called. The drug screening company is called to meet them. The injured employee and adjuster fill out the necessary paperwork, including the medical authorization form from the injured employee.
What does all this personal attention net the employer? Find out in ‘How to Handle a Worker's Comp Insurance Claim Part 2’ from Minnesota Comp Advisor.
In the business world, companies continually deal with the rising costs of goods and services that must be addressed to keep their businesses functioning successfully. Another area companies must deal with is rising workers comp premium rates.
What is Causing Rising Workers Comp Premium Rates?
This is a valid question that may be a concern to you as an employer. The following list includes a few of the reasons workers comp premiums are on the rise in your business.
- As insurance companies make changes to their rates, often it is like a juggling act where one classification code is lowered while another, more popular classification, is increased.
- Businesses that change from one type of service to something different may encounter a higher rate due to the classification codes used for that particular business.
- A change in the number of persons on the payroll triggers an increase in workers comp premiums.
- When a reassignment of an employee's payroll to a classification code with a higher rate, this will increase the premium.
- The cost of medical care and services directly affect increases in workers comp premium rates. The cost for the treatments and procedures administered by a medical facility along with wages paid to the injured employee are factors in increased rates.
Whether your company is experiencing a current or continual rise in rates can be a combination of one or more factors at any given time. These include businesses changing to a different type of business, payroll changes, and classification codes, along with profit margins for the insurance company, lost wages paid, and medical costs.
For help with workers comp issues, contact Minnesota Comp Advisor, today.
Proper lifting techniques are extremely effective at reducing the risk of back injuries and downtime. Are you stressing the importance of good lifting habits on-site? If your employees don’t know safe lifting techniques, they can’t use them.
The Art of Safe Lifting
1. With your feet shoulder-width apart, approach the load, placing one foot slightly in front of the other for balance.
2. Squat down, bending at the knees (not at the waist). Be sure to keep your back as vertical as possible through the process, tucking your chin.
3. Grasp of the object firmly before beginning to lift.
4. Slowly straighten your legs. Lift slowly, and avoid twisting your body. If you must turn, use your feet, not your torso.
5. As you move with the object, keep it as close to your body as possible. (As the load is shifted away from your body, stress in the lumbar region is increased.)
6. Follow these procedures in reverse to put the object back down.
How Can You Further Protect Workers?
• Know Your Worker’s Lifting Habits
Frequency and type of lifting, as well as duration of activities also play a role in lifting-related injuries, as do body size, age, and fitness/health. Carefully selecting and training workers for necessary tasks is key.
• Make Work Easier
Via the incorporation of handles/baskets for stability, adjusted storage heights, and the addition of mechanical aids such as pneumatic lifts and conveyors to reduce lifting-related workplace injury.
Not sure how to incorporate the proper administrative, instructional, and engineering controls necessary to enhance worker safety? Minnesota Comp Advisor can help. Contact us today.
Do your employees know the safest way to do their work? Workers in-the-know on job site hazards and control measures can make your workers comp management path far easier.
Arm Employees with Knowledge
Written safe work practices and procedures are the first step toward job site safety and an integral component of any occupational health and safety program. These include guidelines for helping workers perform their tasks safely, and may not require step-by-step procedural instructions.
Written practices should note necessary safety controls (ventilation, personal protective equipment, etc.), and be used alongside in-person training on these protocols, including how to use equipment. Protocols should be constantly evolving and under continuous review.
When developing a new plan, allowing management and existing employees to review procedures ensures all bases are covered. The plan should outline who needs training, including new workers, returning workers, and those changing jobs, and training time required.
A checklist for each worker can help track training practices and compliance, ensuring their readiness in multiple areas such as first aid, emergency response procedures, personal protective equipment use, lockout/tagout programs, WHIMIS, TDG, etc. Some industries/hazards require more, so ensure all essential training needs are covered.
Special Youth Safety Concerns
Additional training for younger workers is required, as they are at greater risk of workplace accidents. Employers must ensure a plan is in place, and workplace plans and procedures are clearly communicated and well-understood. This includes the supervision of younger employees safely completing tasks before they embark on solo work.
Ready to implement a safety program at your business? The workers comp management experts at Minnesota Comp Advisor can help. Contact us today and learn how.
To reinforce the importance of workers comp management safety strategies, the National Safety Council maintains records of the average costs of fatal and nonfatal unintentional injuries to better illustrate their impact on the economy.
The Costs of Occupational Deaths & Injuries are Mind-Numbingly High
Total costs in 2013, as a measure of dollars spent and income not received subsequent to accidents, injuries, and fatalities, adds-up to a whopping $206.1 billion. They include:
- $91.0 billion –wage and productivity losses
- $57.9 billion –medical costs
- $40.6 billion –medical expenses
- $11.5 billion –employers’ uninsured costs (money value of time lost by workers, cost of time to investigate injuries, file reports, etc.)
- $2.3 billion –damage to motor vehicles involved in work-related injuries
- $2.8 billion –fire losses
A Closer Look
As if these numbers aren’t painful enough, a closer look at expenses revealed an average cost per worker of $1,400, including the value of goods or services each employee must produce to offset the cost of workplace injuries.
When injuries required medical consultation, costs soared, coming in at an average of $42,000 per worker, including wage losses, medical expenses, administrative and employer costs, and a work-related cost per death of $1,450,000.
Unless a motor vehicle was involved, these estimates do not include property damage. In 2012, the latest year data was available, $61.9 billion was paid-out under workers’ comp:
- $31.0 billion –income benefits
- $30.8 billion –medical and hospitalization
- Plus an additional $33.4 billion by private insurance carriers
Setting workers comp management goals to prevent the devastating impact of workplace accidents pays huge dividends. Head costly accidents off at the pass and set yourself up for success with the help of MinnesotaCompAdvisor today.
Based on a confusing combination of factors, many in the construction industry wonder if there’s any straightforward way to bring their ever-climbing experience modification rates (EMRs) down from current astronomical levels. While workers comp insurance consultants understand EMRs are intended to inspire your business to meet tangible safety goals via monetary incentives, we/they also understand it can be difficult to see the direct benefit of specific measures.
Achieving lower rates is more common-sense than you may think
• Common-sense hiring
Opting for well-trained, experienced crewmen with good heads on their shoulders may be the single most effective means of lowering your EMR. These people represent your company. Paying for brains, not just ‘labor,’ will earn you higher morale, better results, fewer accidents, and ultimately greater profits.
• Common-sense safety
The quick replacement of damaged/defective equipment, including out-of-service cards for malfunctioning items, and strict tag-out policies are integral with dangerous equipment. Job Safety Analysis (JSA) programs are likewise essential, as is the institution of ‘the buddy-system’ for safety: Each worker is responsible for himself and one other person, with a manager responsible for all.
• Working programs
Continually evolving health and safety programs are essential, with routine training to ensure a thorough understanding (rather than a gloss-over) of policies/changes. A monthly company lunch where all employees can speak their peace can help you stay in-the-know in all arenas.
• Real incentives
Profit sharing is a no-fail way for workers to see how the proper handling of equipment – and their attitudes – pay high returns.
Not sure where to start? Our workers comp insurance consultants are here to help! Contact Minnesota Comp Advisor today.
The Family and Medical Leave Act (FMLA) helps employees balance the medical needs of family members with workplace demands. The wrong employee management here, however, could put you in violation – and cost you big. Here’s what you need to know…
Only employees who’ve worked for you at least 12-months (1,250+ hours) prior to requesting leave are eligible. Businesses must also be eligible: Typically workplaces holding 50+ employees who work within 75 miles of its location, though this varies by state.
Employees can take up to 12-weeks of unpaid leave during a 12-month period, up to 26-weeks for military spouses. This can be a single 12-week period (or less), leave on an hourly/intermittent basis, or leave in the form of a part-time schedule. You may require your employee to use available paid time such as PTO, vacation or sick time first, but it is important to know that this will count against the 12-week allotment.
Proof of Injury
There are specific documents the employee has to provide to allow an employee to qualify for the FMLA, one being a “Certificate of Health Care Provider”. The employee must provide to the employer as evidence of a qualified disability.
Restoring your employee to their previous position is ideal, but not required. You MUST however, return the employee to an equivalent job, with equivalent pay, benefits, and terms of employment. You do have an obligation to keep your businesses running smoothly, but cannot demote those seeking leave to a subordinate position on-return.
Don’t let employee management mistakes leave you in a difficult position. Minnesota Comp Advisor is here to help. Contact us today.
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