24 hour Workers Comp Coverage

Author Subject: 24 hour Workers Comp Coverage
Kay Posted At 01:01:18 04/05/2000

Many companies are finding that better management of the losses associated
with workplace injuries can reduce costs and improve their productivity. States
are currently testing several innovative programs designed to simplify the
administration of benefits, reduce fraud, and help return injured employees to
work more quickly:

Integrated benefit programs combine a company's healthcare plan and its
workers' compensation coverage into one plan. The resulting 24-hour coverage
reduces confusion as to what injuries should be covered by which policy,
eliminates duplicate administrative tasks, and allows for closer supervision of
injury cases so employees return to work more rapidly. One immediate benefit
is that the plan eliminates any legal wrangling over where an injury occurred,
which leads to fewer cases being litigated. With lower administrative costs,
many companies find that they can improve the quality of their health benefits

One frustration common among workers' comp subscribers is that a good
safety record does little to reduce the company's premium. Since the system
must provide coverage for participants with higher injury rates, efforts on the
part of safety-conscious companies get absorbed into the unsafe practices of
others. Large companies with sufficient available capital often, therefore, elect
to self-insure, finding that with a good claims administrator the company may
reduce its rates by about 40%. The freedom to self-insure is not available,
however, to all companies or in all states. One new innovation is the
development of workers' compensation pools, whereby smaller businesses,
often from the same industry, band together and hire an administrator to
manage their pooled resources. Members share the risks of the entire pool,
which introduces the incentive among members to police one another's safety

Some states currently allow employers to provide alternative employee injury
benefits in lieu of workers' compensation. These alternatives must satisfy the
state's comp requirements, but may be tailored to suit the needs of the
company and its employees.

One such alternative, known as Select Alternatives for Employees
(SAFE), allows employees to choose an enhanced benefit program in
place of workers' comp coverage. While offering better coverage, these
programs are usually less expensive than state workers' compensation
programs. States have typically been more willing to grant the freedom
to arrange such alternative coverages to companies with good
workplace safety records.

Several states have arranged for alternative coverage plans for small
businesses (usually less than 50 employees) that are exempt from
participation in workers' comp programs. These companies are usually
granted exemption because states recognize that small businesses cannot
afford the high cost of workers' comp coverage. Available coverage for
small businesses is also limited because insurance companies generally
do not find it profitable to write comp plans for small employers. To
offer certain liability protections, many states have designed alternative
benefit programs for small employers.

Nancy Abler Re: 24 hour Workers Comp Coverage (Currently 0 replies)
Posted At 10:55:13 04/14/2000

"The freedom to self-insure is not available to all comp-
anies in all states." What does "freedom to self-insure"
imply? Why do some states allow this freedom and others dis-
allow it?

Kay Re: 24 hour Workers Comp Coverage (Currently 0 replies)
Posted At 14:42:29 04/17/2000

Hello Nancy,

As you know, every state makes it's own laws. Do you know any states that
don't allow their companies to self-insure?

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