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 highest cost after payroll. That means that your profitability is directly linked to your Workers Compensation Insurance Cost.
1. What affects the Cost of your Workers Compensation Policy?
RATE YOU PAY PER 100 DOLLARS 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 X 5.00 / 100 = $50,000 – Manual Premium
2. 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 break even. 1.20 factors is a debit of 20% -.80 is a credit factor of 20% – Examples to show effects of this:
Modified Premium
- 1,000,000 X 5.00 / 100 = $50,000 X 1.00 = 50,000
- 1,000,000 X 5.00 / 100 = $50,000 X 1.20 = 60,000
- 1,000,000 X 5.00 / 100 = $50,000 X .80 = 40,000
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 the credit on your Workers Compensation payment in that same month. This all protects cash flow in your Home Care agency, which helps the firm minimize costs and maximize profitability.
What Kinds of Injuries happen in Home Care Industry?
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 very 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 is 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.
