Workers Comp
Workers Compensation coverage is required by law to protect employees against Work Related Injuries and Disease.
Workers Compensation will cover lost wages and medical costs for the injured employee.
If you have employees and do not carry Workers Compensation, you can be charged with a felony and will be held liable for the injured employee's medical bills and lost wages.
In the Home Care industry, it's essential to partner with an insurance agent who is well versed in Workers Compensation, one who is qualified to advise you regarding risk management in this area. It is not as simple as just buying the insurance.
We know your business
To develop appropriate coverage for a Home Care firm, it's essential to appreciate the practices, demands and risks of this industry. Buying the insurance is only the first step. More important is educating the home care agency on what loss prevention and safety policies are needed to control workers' compensation costs.
In the Home Care industry, Workers Compensation insurance is your second or third highest cost after payroll and/or royalties That means that your profitability is directly linked to your Workers Compensation Insurance Cost.
Rate Per $100 of Payroll
The rate is the first part of the cost in Workers Compensation Insurance. The manual premium is determined by multiplying your ESTIMATED ANNUAL PAYROLL by the Workers Compensation Insurance Company's RATE.
Example
1,000,000 × 5.00 / 100 = $50,000 — Manual Premium
Experience Modification Factor
After 2 to 3 years of being in business you will be given an Experience Modification Factor based on your claims. A factor of 1.00 is a break even. 1.20 factors is a debit of 20% – .80 is a credit factor of 20%.
Modified Premium
- $50,000 × 1.00 = $50,000
- $50,000 × 1.20 = $60,000
- $50,000 × 0.80 = $40,000
Payroll & Cost Control
Advice and practical assistance from an experienced agent who understands the challenges of home care delivery and management can help you to control these costs.
Payroll – Workers Compensation policies start with an estimated payroll, based on a projection of business volumes and staffing levels. Because every Workers Compensation policy is subject to audit, it's important to keep track of changes in payroll. Failure to monitor payroll and corresponding payments throughout the policy period may result in costly reconciliations upon audit.
This is where a lot of Home Care agencies get in to trouble.
We prevent this for our clients by having billing plans that provide monthly reporting of payroll so your Workers Compensation insurance cost tracks along with your payroll and prevents significant discrepancies when the policy is audited.
This billing method works both ways – if you have fixed installments, then in many cases you can be overpaying or underpaying your Workers Compensation insurance policy. Monthly reporting eliminates that. Here is an example:
January your payroll is up by 20% and then your Workers Compensation Payment will reflect that. So you are prepaying your potential Audit. Then in February your payroll is down 20% so you get to take this credit on your Workers Compensation payment in that same month. This all points to cash flow in your Home Care agency, which helps the firm minimize costs and maximize profitability.
Common Home Care Injuries
Chamberlin & Reinheimer understands that the prevention of Home Care employee injuries is an important part of controlling your Workers Compensation cost.
For example, assisting patients and clients with their Activities of Daily Living (ADL) can involve a wide variety of tasks, including some (transfers, lifts, positioning) that are frequent causes of injury. Home Care patients/consumers may have limited strength, mobility, balance, and may be severely de-conditioned or obese. Consequently, caregivers are vulnerable to strains, sprains, bumps and bruises, and fall-related injuries. While not uncommon, such injuries can prove costly. Chamberlin & Reinheimer provides its Home Care clients with free access to Transfer & Lifting training, and will assist firms in implementing related policies to help control injury risks.
Employee Driving can also be a source of Workers Comp claims. A caregiver, aide or nurse in covered by Workers Comp as they drive to and from their work assignments. Motor vehicle accidents can result in very costly claims. Chamberlin & Reinheimer provides clients with free access to Safe Driving training for employees, and help employers to control driving related exposure.
Risks of Having Your Workers Compensation through a Payroll Company
Payroll companies charge more
Bundled services hide a higher Workers Compensation rate. When your Workers Comp is bundled with payroll services, you often cannot see the actual rate you are paying. A dedicated insurance provider gives you transparency and typically a more competitive rate.
Claims Services
Payroll companies lack the expertise in claims negotiations that a specialized insurance agency provides. Chamberlin & Reinheimer provides Loss Control Policies & Procedures to strengthen your position in settlements and help reduce the cost of claims.
Loss Runs & Claims Explanations
Showing safety policies and loss prevention measures to underwriters helps limit renewal increases and saves you money. Payroll companies typically do not provide this level of advocacy on your behalf.
Experience Mod Factor
This is based on your claims history and follows you for 3 years. It directly impacts your premium costs. Payroll companies often don't explain this critical factor. Chamberlin & Reinheimer educates you on how to manage and improve your Experience Mod.
If you are being solicited by your payroll company to change your Workers Compensation Insurance to them, call us and we can go into even more detail.
Workers Compensation Audit Checklist
All Workers Compensation Policies are Audited:
- Listing of officers (Owners) and employees and their job duties – this is important because the rate for caregivers is much higher than the rate for office staff.
- Quarterly State 941's tax forms for quarters that cover the policy period.
- UC2 reports for the same quarters.
Note: Insurance companies outsource audits to third-party firms. The person contacting you may not use your insurance company's name — this is normal.
1099 Independent Contractors: Any 1099 contractors must show proof of their own Workers Compensation insurance (a Certificate of Insurance) to be excluded from your audit. If they cannot provide this, their payroll will be included in your audit calculation.
Payment of Audit
If you pay your Workers Compensation premium via EFT (Electronic Funds Transfer), be aware that the audit balance will not be automatically deducted. You must pay the audit amount separately. Chamberlin & Reinheimer can help arrange installment payments if needed.
If You Do Not Comply with the Audit
Estimated Audit
The insurance company will estimate your audit, typically resulting in a 40% increase to your premium.
Collections
The estimated audit amount will be sent to collections for non-payment.
Policy Cancellation
The insurance company may cancel your current Workers Compensation policy.