Workers compensation insurance is required in all states. It pays medical expenses and lost wages that result from job-related injury or illness, which is typically the largest component of employees’ risk management programs. Workers Compensation Insurance is not health insurance and is designed specifically for injuries sustained on the job. No matter how small your business is, and whether or not Workers Comp is required, coverage is good for you, your employees and your business.
How to Reduce Your Workers Compensation Costs
If you own a small business and have at least one employee besides yourself, by law you have to carry workers compensation insurance. The going average cost in the private sector right now is around $2.30 for every hour worked, times the number of employees. In today’s tough business environment, saving every penny and avoiding unnecessary costs can determine whether or not the doors stay open.
When you purchase Workers Comp you pay premiums to an insurance provider or, in some cases, a state-run insurance program. Only four states – Wyoming, Ohio and North Dakota – have completely state-run programs. Many states will provide Workers Comp insurance but also allow private insurance companies to insure employers and employees.
Here are 8 ways small businesses can save money on workers compensation insurance.
1. Get group rating
Just as with healthcare insurance, group rates on workers comp can mean huge discounts for your business. Even if you don’t have a large number of employees you may still be able to take advantage by belonging to an industry or trade association that has at least 300 members and two or more businesses with risks substantially similar to yours.
2. Ask your insurance carrier for help
Invite your agent or a company representative to visit your workplace and identify potential hazards. Then document that you’ve remedied the problems. Welcome annual reviews.
3. Have a documented safety training program
Some states including California require that you have a written safety program. Even if your state doesn’t, it’s still a smart idea since studies have shown that for every dollar invested in preventing workplace injuries can result in a $2 to $6 ROI. A solid safety program also demonstrates to insurance carriers that you take this stuff seriously. Insurers will be more impressed if you give your program more than lip service by documenting regular on-the-job-safety training/updates for staff. You should also require that employees sign off that they’ve read and received your program material.
4. Have a return-to-work program
Accidents will happen even in the safest work in environment. When they do, a return-to-work program can help you contain costs. The longer a claim stays open, the more it costs your insurance company–costs that are ultimately passed on to you. The goal is to close any workers comp claim as quickly as possible by getting the injured work back on the job, even if it’s part-time or reduced duties approved by the employee’s medical provider.
5. Support a substance-free workplace
Employees who use drugs or alcohol on the job cause injuries to themselves and others. They also cost their employers about twice as much in workers comp and medical claims as non-abusers, according to data from the Substance Abuse and Mental Health Services Administration. At bare minimum, make hiring contingent on passing a pre-employment drug test. You may also want to consider random testing for all employees.
6. Make sure you have the proper job classifications
Write complete, accurate job descriptions for each employee and make sure nobody steps outside his or her responsibilities. A receptionist who injures herself lifting heavy boxes could hurt you when she files a claim. Also know that workers may be classified as independent contractors for tax purposes but still be considered employees by your state’s regulators.
7. Educate your employees about the difference between minor injuries and reportable incidents
Avoid unnecessary reporting that can create adverse loss ratios on your workers comp record. Small injuries likes minor cuts or scrapes that can be treated with on-the-job first aid, an office visit and a follow-up for observation should not be reported.
8. Save money by shopping around for better monthly rates
Get the best possible workers compensation package by comparing policies. Simply enter your zip code and fill out the information below to shop for the best rates you can get.
What to Do When Your Employee Is Injured at Work?
1. File promptly.
To avoid penalties be sure to report a work-related injury to your state Workers Compensation Board (WCB) within 24 hours. For Office of Workers’ Compensation Programs (OWCP) coverage, reports must be filed within three days. (OWCP programs are: the Energy Employees Occupational Illness Compensation Program, Longshore and Harbor Workers’ Compensation and Coal Mine Workers’ Compensation Program.)
2. Pay attention to the doctors’ restrictions.
The injured employee’s doctor will specify work restrictions. As the employer, you must make sure they are followed.
3. Provide opportunity for lighter-duty work.
If you can, allow the injured employee to work again but in a temporarily reduced role, you can lower your associated costs.
4. Show your concern.
Check in with the injured employee to stay abreast with progress and the estimated return to work date. This will also help the employee feel valued and build loyalty.
If you need workers compensation insurance quotes, remember to compare multiple quotes from top rated insurance carriers using EINSURANCE.com before you make your final decisions.