Before you can reduce workers’ compensation costs in your business, you must develop a straightforward formula. A few factors decide your rate:
- The location of your company’s state
- Your business type.
When calculating, you will multiply your rate by your total payroll. After you have this number, you will divide it by 100.
Your rate is mainly dependent upon the class of business you own. For example, a beauty supply store will have a lower rate than a manufacturing plant. Therefore, your business must be classified in the correct category to pay a fair and reasonable rate.
The computation of your cost has a modifier that gets further multiplied. Modifiers can save you some money.
Now, what exactly is a modifier? Your expenses can be reduced or increased based on the modifier. The modifier basis occurs on your loss history. When you possess a record that measurably reduces employee injury risk, you receive a modifier of 1.0 or even lower.
An account with several safety-related incidents would have a modifier higher than 1.0. Earning a modifier of 1.0 or less will decrease your workers’ compensation expenses.
You can decrease your expenses and premiums by reducing your modifier. Here’s how:
1. Save Money on Workers’ Compensation Insurance
When choosing your car or health insurance, you want to investigate the best workers’ compensation insurance policies. If your state has a competitive market, discussing your need for workers’ compensation with several companies would be wise.
In these discussions, you will want to know the monthly rate they are willing to offer you and your company. Intelligent business owners may do this every few years, as different companies will change their prices to attract companies away from their competitors.
2. Ensure You are Tracking Workers’ Compensation Claims Management Best Routines
Arguably, the most significant thing a business can do is ensure the claims adjuster follows the best practices associated with claims management. Therefore, this can reduce the payout by up to 50%.
Businesses with this type of savings are impactful. These ‘best routines’ include simple tasks, such as making in-person contact with the employee and perhaps medical personnel to address any issues that may arise quickly. Making sure that all paperwork is filed promptly, keeping a daily diary of all work completed on the claim, and verifying coverage are just a few ways an adjuster can make the entire process move smoothly and save money.
3. Focus on Safety
One fantastic method to reduce workers’ compensation costs and improve company morale is cultivating a safety culture.
Developing a culture of safety is more manageable than it sounds. You are already presumably doing some of the work involving safety. First, ensure you continuously provide your employees with essential safety knowledge, resources, and best practices.
If you do not have them, institute regular safety checks. Regular safety checks throughout the day are essential as they help keep employees thinking about safety whenever they are in the workspace.
You can schedule more comprehensive safety checks on a weekly and monthly schedule. Focusing on safety will reduce the number of incidents and injuries.
Therefore, this will also show your employees you care about them and their safety.
4. What is your Injury Procedure?
It is critical to address any injuries fast and effectively before they worsen. Part of the safety culture has a proper plan in case of an onsite work injury. This plan would include immediate actions by supervisors, other workers, and the claims adjuster.
Everyone involved in an incident team should be assigned a specific role. Therefore the process can run smoothly. In addition, having a plan empowers your employees to make decisions to reduce the severity of workplace injuries.
The plan also reassures the employees at the company and their co-workers will know what to do should they ever be injured.
5. Incentive Program
New hires often profit from incentive programs. These programs reward them for learning the safety protocol. Older employees can also be motivated to assist the more recent engagements in learning about the safety culture through group incentives.
6. Implement a Return-to-Work Program
Research has shown that companies are in contact with injured employees. Employees are more likely to have lower costs associated with workers’ compensation claims during their time away from work.
Implementing a return to work program is wise to encourage employees to return from work as soon as their injuries permit. The business will spend less the quicker an injured worker is in the workplace earning a paycheck. In this scenario, everyone wins.
7. Check your State’s Rate
While it is true that each state will have different rates for your classification of business, it’s also true you might be able to receive a state discount.
You should observe if your state provides employer workers’ compensation discounts if a company implements a safety program. For instance, some states offer employers discounts when they support a drug-free workplace.
8. Review your Employee Classifications
A suggestion you might overlook is your employee’s classifications. We already went over how each business type has its overall rate. The same is true of the kind of employee you employ. There are different rates associated with their classification.
For example, a bookkeeper will have a different standard than your sheet metal worker. A bookkeeper is rarely on the manufacturing floor and has less injury risk. Ensure each employee classification is correct in their current position within your policy.
If you overlooked the classifications, it could save you quite a bit of money.
9. Safety Rewards
After implementing some of these concepts, you may notice a reduction in workplace incidents. Review with your insurance provider to see if they will provide you credit for having had a year of enhanced safety.
The payment of these protection rewards usually occurs after a policy has expired and after one year with fewer claims. However, these rewards are not guaranteed, so it is wise to check with your provider to see if safety rewards are obtainable.
The Bottom Line
The ability to reduce workers’ compensation costs is a necessity for all legitimate businesses. But it doesn’t have to be a total financial obligation to support your employees’ safety. There are numerous ways to promote safety routines and programs.
Ultimately you want to help your employees to keep their well-being. The health of your employees will also impact your workers’ compensation expenses. When proper claims management utilizes the best practices, your employees can return to work as soon as medically permitted.
Employees returning from injury will not only return production to normal, but it will reduce your workers’ compensation fees. Therefore, properly managing these programs can go a long way to finding savings opportunities for your business.
AkkenCloud offers the most comprehensive front-office, middle-office, and back-office staffing software with AkkuPay payroll for staffing agencies and recruiting agencies looking to increase efficiency, streamline operations, and grow revenue.