Workers compensation insurance rates are determined by the industry type, the number of claims filed, and the dollar amounts of employer claims. Anything an employer can do to reduce the number and severity of claims can lower their premiums and result in more affordable quotes at renewal time.
A simple low-cost way to reduce claims is to ensure employees are adequately covered for off the job accidents and illnesses.
When workers with inadequate insurance coverage get hurt or sick off-the-job they may face devastating financial consequences. If the employee has medical coverage with large deductibles and co payments he may not be able to afford appropriate care. In addition many workers have no disability coverage. The unaffordable medical bill arrives when no income is coming in. The one-two combination can ruin a worker's finances for years.
Disparity in Coverage Drives Workers Comp Claims
At the same time an on-the-job accident provides far more security. Workers compensation insurance will provide payments for medical care, and a level of income replacement.
This huge disparity in insurance protection can be tempting to otherwise honest workers in difficult circumstances. "Monday morning workers compensation claims" - on the job accident claims filed for off the job accidents needlessly increase an employer's claims history and translate into higher premium rates. Repetitive injuries are especially hard to ferret out.
Reduce Workers Compensation Rates at No Cost
Employers can close the on/off job accident insurance gap by offering voluntary employee benefit programs to its workers. Flexible spending accounts reduce the out of pocket costs for unreimbursed medical expenses.
Supplemental health insurance pays cash benefits directly to employees for off the job accidents and illnesses, and short term disability insurance provides similar income protection.
There is no direct cost to employers to engage this strategy to lower workers compensation insurance premiums. The benefits are paid for by the employees by payroll deduction.