Workmans comp costs can rise at an alarming pace. Please note these different things that can affect the workman’s comp premiums you pay.
10 Guaranteed Ways To Drive Workers’ Comp Costs Up
You have implemented a corporate return-to-work program but your projected workers’ compensation savings haven’t yet materialized. Supervisors are telling you they can’t get employees back to work. It may be time to examine the impact of collateral resources, often resulting in employees out on workers’ compensation receiving more income and benefits than they would have if they were working.
Many companies fail to look closely enough at their internal wage and benefits structure before embarking on programs to reduce workers’ compensation costs. There are numerous collateral income benefits and sources providing built-in disincentives to remaining injury-free or returning to work as soon as possible.
For example, a major newspaper was considering an expensive incentive program to motivate employees to return to work, but a careful examination of the company’s situation revealed the reason employees were not returning to work was because they earned the equivalent of 115 percent of their pre-injury earningswhen the stayed out of work.
In another case, an injured construction company employee received long-term disability (LTD) payments after 26 weeks of disability, in addition to workers’ compensation benefits. The total of these benefits exceeded his pre-injury earnings.
The employee also had purchased credit disability insurance, thereby eliminating his house and car payments while unable to work. His child care and commuting expenses also were greatly reduced while he was home. As such, he refused his employer’s offer of a transitional duty job at full salary because his LTD and credit disability policies would have terminated the benefits.
In a large company, the directors of human resources, industrial relations, workers’ comp and employee benefits and compensation must all be involved in designing, administering and maintaining policies. Incentives to remain at and return to work must be built into the management systems. Disincentives must be removed from all direct and indirect sources. Substantial savings can be achieved when a company coordinates its salary, benefits and compensation programs so employees don’t earn more by staying out of work.
If not properly coordinated, a company’s employee
benefit and compensation programs may inadvertently
serve to extend workers’ compensation absences.
Reasons Employees Fail to Return to Work
(Make sure your corporate legal counsel reviews state and federal laws that apply to your situation.)
1.Salary and Wage Continuation. Some companies pay 100 percent of salary in lieu of having an employee collect workers’ compensation for injuries of short duration.
2.Occupational Injury Pay Supplements Many firms pay supplemental benefits to make up the difference between workers’ compensation benefits and regular earnings.
3.Open-Ended Job Return: Instead of holding jobs open indefinitely, employers should hold jobs open for a specific time period, such as six or nine months.
4.Vacation and Sick Time: Companies frequently allow vacation and sick time to accrue for employees on workers’ compensation. Some even allow employees to ‘borrow’ more sick time if they need to stay out of work longer.
5.Short-Term Disability: In some companies, disabled employees receive STD benefits in lieu of salary after six weeks. But the standard definition for disability may differ from workers’ comp, allowing an employee to collect both.
6.Perk Continuation: Employers often maintain ancillary benefits and privileges such as car allowances, club and professional dues, company store privileges and periodical subscriptions for employees on disability.
7.Loan Protection Policies: Individual insurance policies are available to pay mortgages and consumer loans such as car loans and credit card debts in the case of a disability.
8.Unemployment Compensation: In a few states, an employee receiving workers’ comp also can qualify for state unemployment benefits.
9.Pension and Retirement Plans: If these plans do not allow for offset of workers’ comp benefits, an employee can receive workers’ compensation benefits and a full pension.
10.Product Liability Actions: An employee can file an action against the manufacturer of a product that injured him to collect damages. The employer should seek reimbursement for workers’ comp payment from any such settlement.
2008 Amaxx Risk Solutions, Inc., All rights reserved under International Copyright Law
Robert Elliott is a senior vice president with Amaxx Risks Solutions, Inc. Over the past 20 years, he has worked successfully with many industries reducing Workers’ Compensation costs, such as airlines, health care, manufacturing, printing/publishing, pharmaceuticals, retail, hospitality and many other industries and organizations. Contact him at Robert_Elliott@ReduceYourWorkersComp.com
By: Robert Elliott
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