Keeping Workers’ Comp Costs Under Control
If you think managing the cost of workers’ compensation has been a struggle for your organization, just wait and see what this year is expected to bring. There have been some important updates that your business needs to know about, changes that may increase your costs for workers’ compensation claims and insurance premiums.
Workers’ Compensation Claims Expected to Rise in 2014 and 2015
According to the National Council on Compensation Insurance (NCCI), which is the rating bureau determining the overall rules for workers’ compensation, starting in 2013 there was a major change in the way the experience mod calculations are being made. Across 36 states, including New England and the Southeast, these experience mods, which split work-related injuries into two main categories including primary loss and excess loss, are currently around $13,500 per incident.
In 2015, split mods are predicted to go up to as much as $15,000 per each approved workers’ compensation claim filed. To put this into perspective, just 20 years ago, experience mods were somewhere in the range of $5,000 per workers’ compensation event. This is an outrageous 300% increase in the costs of keeping employees safe.
The Impact of Workers’ Compensation Premium Penalties
Keep in mind that the primary loss in workers’ compensation claims is counted 100% towards the mod calculation. This means that everything above this is considered to be excess loss and counts against your business’s future workers’ compensation premium rates. Dependent upon the size of your business and the amount of claims that come through, your business could be negatively impacted in terms of the costs of maintaining workers’ compensation insurance.
For example, if your business has a single claim of $500,000, it could affect your workers’ compensation insurance rates less than if you suffer ten $5,000 claims. In a sense, this penalizes the very organizations that are trying to maintain a strong workforce amid the also rising costs of health care and wellness awareness in the workplace. This also doesn’t even scratch the surface of each company’s human resource impact or the time and effort it takes to prevent and manage injuries at work.
Keeping Costs Down with PEO Outsourcing
Outside of educating employees of safe work practices and boosting environmental safety programs, one way that companies are effectively maintaining the costs of workers’ compensation administration is by outsourcing to professional employer organizations (PEO). Many companies today use payroll processing services that are essentially partners with human resource administrators. However, many do not realize that payroll management companies have resources to help manage workers’ compensation claims in a much more efficient manner.
PEOs essentially handle the multiple time-consuming aspects of workers’ compensation events once the initial claim has been submitted. From investigating and verifying injury claims to making sure that employee medical bills are reviewed and paid, PEOs are able to handle the background administrative tasks to free up human resource departments.
In the long term, a PEO outsourcing model can help any organization control costs by acting as an objective third-party administrator. PEOs often have direct access to more affordable workers’ compensation insurance options and they leverage industry connections and affiliations to support the budgets of the companies they work with. When a business is faced with a complex workers’ compensation event, the professional employer organization can help navigate this process from start to finish – leaving the human resource team to focus on other aspects of managing a busy organization.
When your company is concerned with the rising costs and administration of workers’ compensation, enjoying the benefits of working with a professional employer organization is probably in your future. SourceOne Partners has the ability to match your business with the right PEO to meet your needs and give you the resources to learn how to reduce workers’ compensation costs. Call us today at 561-674-0748 or contact us online and we’ll find a solution perfect for you.