Workers Comp Term Of The Day - Second Injury Fund

Administered by the individual state, the Second Injury Fund reimburses an employer for a portion of claims caused by an on the job injury to an employee with a pre-existing permanent partial disability.

This reimbursement program encourages employers to hire employees with disabilities.

An added benefit to employers is the possibility of a lower E-mod because reimbursement ultimately reduces claims cost. A lower E-mod can easily result in reduced premiums.

Workers Comp Term Of the Day - Ombudsman

An impartial individual who is responsible for investigating complaints in order to mediate a fair and equitable settlement between aggravated parties. Ombudsman is originally a Swedish term. In some parts of the world it is a government official appointed to investigate complaints against the government made by citizens.

Suggestions on Workers Comp Posts Welcomed For This Blog

We are fast approaching 600 posts since the inception of this blog. I have tried to vary the posts to cover all bases. I do realize that I have probably not posted enough blogs on Self Insurance. There may be other areas that I have not covered enough times.

I have covered the Workers Comp bill received situation many times. One reason I have done that is we receive so many requests for our company's help. There must be a large amount of interest as the traffic to this blog has grown exponentially over the last few months. We send the blog links out in a newsletter weekly. Feel free to sign up. We now have over 10,000 readers viewing the newsletter emails per month.

Please notice there is NO advertising on this blog or anywhere on the website. To quote out of the book "Wikinomics", no one gives a ^%$* what you are selling. I have carried that to the extreme with the posts.

I recently started the Workers Comp Term of The Day. Yes, they may be simple in nature, but I hope to cover one, two, or a few that you may not know.

Where does most of my ideas for posting originate? They come from your emails and phone calls. They come from our customers. They come from the questions I receive at speaking engagements.

If you have any suggestions, please feel free to email me at jmoore@cutcompcosts.com or call me at (919) 495-1917. Bottom line - it is your blog, so let us know what you wish to have in it.

Workers Comp Term Of the Day - Informal Retention

This type of Risk Financing Plan requires little planning. Since there are no records kept, cost is reduced. As the losses happen, they are paid directly out of the organizations current assets or cash flow. These payments are treated as a normal business expense.

Workers Comp Term Of The Day - No Release Settlement

In the case of a minor claim or complaint, an immediate payment is made to the claimant. This payment is made to the claimant without requiring a signed release. Since it is very informal, a No Release Settlement maintains good will between the insurer and the insured. This type of settlement can also be used to stave off a law suit.

Workers Comp and Expansion Into Other States 10 Things to Remember

After talking with a few premium auditors, adjusters, and from conversations with employers and our employer-clients, we have found a trend that needs to be pointed out to avoid a disaster. We have also recently been contacted by more than one employer that received an unexpected hefty premium audit bill to cover employees in a more expensive state.

Even though the economy is ailing, some companies are expanding into to other states to obtain business. There are a few considerations on Workers Comp when expanding into other states:

1. You do not have automatic coverage for a binding period such as an auto policy. The first day that an employee works in another state than is on your policy could lead to a denial if you do not have coverage in that state.
2. Even though your company may have coverage in certain states, an employee may file a claim in a totally different state than expected. We have seen this happen often with trucking companies.
3. It is critical that you alert your agent immediately (in writing) and inform the premium auditor during your yearly audit that you have employees that operate in other states than what is on your current Workers Comp policy. This will avoid a denial of coverage by your carrier.
4. We do see All Other States coverage on some policies. They are becoming rarer over time.
5. You could actually be owed a premium refund or credit if the state you are expanding into has lower rates with your current carrier.
6. Your Workers Comp situation can become very messy if your current carrier does not write coverage in the expansion state.
7. The situation can be even messier if you are expanding into a monopolistic state such as OH. Those employees have to be covered by a policy provided by the state and not your insurance carrier.
8. Employers are being forced to pay some claims out-of-pocket. If that happens, you lose the right to fee schedule the medical bills and other rights. Your company may end up paying the full bill that is charged by each medical provider.
9. Your company could be heavily fined for not covering your employees in a certain state.
10. The bottom line is that you do not want the Workers Comp adjuster to be the one to inform you that your employee is not covered in a state.

Workers Comp Term Of the Day - Group Insurance Plan

A plan of insurance that is procured for the benefit of more than one individual. This plan may pertain to an employer covering a number of individual employees, several employers banded together, organizations or unions. Group insurance plans are a means to keep cost as low as possible while insuring a number of individuals.

All 50 States Workers Compensation Information - Quick Tip

One of the best websites that I have seen for Workers Comp information is a very quiet provider of a very good service. In the North Carolina Industrial Commission's website, there is a list of current links on every state's Workers Comp system. The webmaster has added Canada to the list. You can find it here

Robert McDowell is the webmaster and does a great job of keeping it updated very regularly. It is a quick way to get to Workers Comp forms, etc. I have it as a bookmark in my Explorer and Chrome browsers.

Workers Comp Term Of The Day - Scopes Manual

A publication by the NCCI, the Scopes Manual is a guide to proper classification of employees. This manual details each employee classification code with a definition and a list of employees who fall under that specific code. The Scopes Manual includes NOC definitions as well as classification codes that are state specific.

Workers Comp Term Of The Day - Exacerbation

The definition of the word is a worsening. Medically, exacerbation is the increase in severity or worsening of an illness or injury. Exacerbation can apply to the signs or symptoms of a condition as well as the injury or illness itself.

Your Workers Comp Dec Page - Know It Or Pay More Premiums

In my last post, I summarized the Workers Comp Declarations (Dec) Page. At a bare minimum you should have the page memorized if not more of the policy. As the old saying goes "Just give me the facts." The Dec Page is the facts about your company's Workers Comp policy. In fact, ALL of your insurance policy Dec Pages should be at your fingertips.

A quick examination of your Workers Compensation policy Dec Page will lead you to ask these questions:

• Estimated payrolls - Do the figures look plausible? If they look high, you are giving your insurance carrier a free loan. If they are too low, then you are going to have severe sticker shock at the time of the premium audit.
• Classifications - Are these the jobs the employees are performing?
• Discounts - Is this similar to your last policy? If not, why were there changes?
• Rates - Are these similar to your policy from last year?
• Credits - Similar to last year, any credits that were eliminated?
• Deposit premium for the policy period - Can you pay a smaller deposit premium and make monthly payments?

The first section of the page will be listed or shown as Item 1 and will show information about the named insured such as their name, address and entity type. Make sure that this matches your company's info EXACTLY. I have seen major problems when the company covered has a slightly different name or address.

The next section may show as Item 3 and will be detail information concerning the policy itself and will include:

• Section A, Workers Compensation Insurance, this section will show the specific state in which the workers compensation applies - If your company is operating in a state that is not listed, your company could end up paying a Workers Comp claim out of pocket.
• Section C, Other States Insurance, lists each state in which other states coverage applies. This goes hand in hand with Section A. We have seen Workers Comp carriers deny coverage if a claim is filed in a state that is not listed in these sections.
  

Found within Item 4 will be the premium calculation statement - does this look right to you? Does it look similar to last year's policy?

Also included on the Workers Comp Dec Page you will find:

• The audit term, usually set as annual but may be another length of time, if it is set for quarterly or semi-annually the Workers Comp premium auditor will be auditing your company more than once a year. Does your company want to have that interruption more than once a year?
• The policyholder's federal ID number and its experience risk ID number as issued by the governing rate making authority for the resident state. This should match your company's information exactly. The worst time to figure out that this information is incorrect when a major claim has been filed against your policy.

Workers Comp Term Of The Day - Prospective Plan

A plan of insurance that outlines how projected future losses will be satisfied. There are many factors to consider.

A good prospective plan should cover at least two years in the future. It should include a detailed budget. Sspecific goals and how these goals are to be achieved is all important to a good plan.

Workers Comp Declarations Dec Page - Not That Important?

I have often been asked by our clients what to look at in a Workers Compensation policy. In other words, they receive a huge stack of documents known as their Workers Comp policy. The policy will usually be scanned and emailed to save paper.

I wanted to cover a few areas that should always be looked over in ALL policies, not just Workers Compensation. The Declaration Page - Dec Page is a quick summary of your policy. If you have access to your company's or any example of a Workers Comp Dec Page, please refer to it now. It is the very first part of your Workers Comp policy.

It is the section that describes your

• Estimated payrolls
• Classifications
• Discounts
• Rates
• Credits
• Deposit premium for the policy period.

The insurance declaration page will generally be broken down into sections. The first section of the page will be listed or shown as Item 1 and will show information about the named insured such as their name, address and entity type.

The next section may show as Item 3 and will be detail information concerning the policy itself and will include;

• Section A, Workers Compensation Insurance, this section will show the specific state in which the workers compensation applies;
• Section B, Employers Liability Insurance, part two shows how this section is applied to work in each state listed in Item 3 and also shows the employers liability limits as chosen by the policyholder;
• Section C, Other States Insurance, lists each state in which other states coverage applies.

Found within Item 4 on the workers compensation declaration sheet will be the premium calculation statement by the company including:

• Classifications
• Descriptions
• Estimated payroll
• Rates
• Estimated annual premium

Also included on the Workers Comp Dec Page you will find the audit term, usually set as annual but may be another length of time, the policyholders federal ID number and its experience risk ID number as issued by the governing rate making authority for the resident state. The declaration will also show the minimum premium for the policy and all attached endorsements and policy forms.

I know, it is not exciting info, but this is YOUR UPFRONT OUT OF POCKET MONEY for your Workers Comp Insurance policy.

There is more than meets the eye that you need to check on for your company. Check out my next post - it is $$$.

Workers Comp Term Of The Day - Independent Medical Exam (IME)

The term used when an insurer requests an examination of a claimant by a doctor other than the attending physician.

Often IMEs are a tool used by the defense in a claim dispute. In this case, the purpose is to diminish the severity of a medical claim. .IMEs can also be used to defeat medical claims.

Workers Comp Term Of The Day - Popcorn Lung

Popcorn Lung is a very rare disease that affects some workers in popcorn factories. Diacetyl is the chemical that produces popcorn's buttery smell. Exposure to diacetyl may result in permanent destruction of the air sacs in the lungs of these factory workers.

Workers Comp Premiums Might Be Next? - Feds Give $46 Million To The States To Police Health Insurance Rates

I usually do not add in governmental press releases verbatim to the blog. This should be of concern to all in the Workers Comp arena. Substitute in Workers Compensation wherever you see the word health.

I have written quite a few posts and have spoken at conferences on the Federalization of Workers Compensation.

Some of the reactions are of disbelief bordering on ridicule. Copy this post to a word processor. Substitute in Workers Comp for health. It is chilling. Please remember the Feds are already heavily involved in Workers Comp due to the policing of Medicaid Medicare Set-asides (MSA's).

$46 Million in Grants to Help States Crack Down on Unreasonable Health Insurance Premium Hikes

45 States and the District of Columbia to Receive $1 Million Each to Make Health Insurance Markets More Consumer-Friendly and Transparent

HHS Secretary Kathleen Sebelius today announced grant awards of $46 million to 45 States and the District of Columbia. These Affordable Care Act grants will be used to help improve the oversight of proposed health insurance premium increases, take action against insurers seeking unreasonable rate hikes, and ensure consumers receive value for their premium dollars.

For too long, insurance companies in many States have increased health insurance premiums with little oversight, transparency, or public accountability. Health insurance premiums have doubled on average during the last 10 years, much faster than wages and inflation, putting health coverage out of reach for millions of Americans and business owners. Today, just 26 States and the District of Columbia have the authority to reject a proposed increase that is excessive, lacks justification or otherwise exceeds State standards. Many States that have the authority lack resources to exercise it meaningfully. This lack of authority and resources for States has unfortunately contributed to unjustified premium increases in some States.

“The Affordable Care Act puts in place critical market reforms to improve quality and reduce the cost of health care for employers and individuals. Increased competition, lower insurance overhead, and better risk pooling in health insurance Exchanges in 2014 are expected to reduce premiums in the individual market by anywhere from 14-20 percent according to the Congressional Budget Office,” said Secretary Sebelius. “Between now and then, we will continue to work with States to ensure consumers are receiving value for their premium dollars and to avoid the kind of double digit premium increases seen recently. The State proposals approved today demonstrate the need and desire for new resources and tools to help them protect against unjustifiable premium increases.”

The Affordable Care Act provides States with $250 million in Health Insurance Premium Review Grants over five years to help create a more level playing field by improving how States review proposed health insurance premium increases and holding insurance companies accountable for unjustified premiums increases. Applications for the first round of Health Insurance Premium Review Grants were made available on June 7.

The grants build on the Obama Administration’s work with States to implement the Affordable Care Act. Earlier this year, Secretary Sebelius called on certain insurance companies to justify large premium increases and encouraged State and local officials to obtain stronger health insurance premium review authorities under State laws. This increased scrutiny by the Administration and by several States has led to the withdrawal or reduction of several proposed health insurance premium increases that in some cases turned out to be based on faulty assumptions and data.

States have proposed to use this funding in a variety of ways.

• Additional Legislative Authority: 15 States and the District of Columbia will pursue additional legislative authority to create a more robust program for reviewing or requiring advanced approval of proposed health insurance premium increases to ensure that they are reasonable;
• Expand the Scope of Health Insurance Premium Review: 21 States and the District of Columbia will expand the scope of their current health insurance review, for example by reviewing and requiring pre-approval of rate increases for additional health insurance products in their State.
• Improve the Health Insurance Premium Review Process: All 46 State grantees will require insurance companies to report more extensive information through a new, standardized process to better evaluate proposed premium increases and increase transparency across the marketplace;
• Make More Information Publicly Available: 42 States and the District of Columbia will increase the transparency of the health insurance premium review process and provide easy-to-understand, consumer friendly information to the public about changes to their premiums; and
• Develop and Upgrade Technology: All State grantees will develop and upgrade existing technology to streamline data sharing and put information in the hands of consumers more quickly.

“States will use these grant dollars in the way that makes the most sense for their insurance consumers,” said Jay Angoff, Director of the Office of Consumer Information and Insurance Oversight. “As we continue to implement the new health insurance reform law, we will continue to work with States to ensure they have the tools they need to ensure the stability of the marketplace, keep costs low and provide consumers with increased transparency, choice and quality they need to make the best health care decisions for their businesses and families.”

A chart summarizing how each State will use the new resources can be found athttp://www.healthcare.gov/news/factsheets/rateschart.html.

The Health Insurance Premium Review Grants are one element of a broad effort under the Affordable Care Act to reduce the unreasonable premium increases proposed by some insurers today. Additional resources from this $250 million program will be available in subsequent years to further strengthen State health insurance premium review procedures. Other statutory provisions designed to improve affordability include:

• In 2011, the Affordable Care Act allows the Secretary of the U.S. Department of Health and Human Services toreview justifications for unreasonable increases in premiums and make them public;
• In 2011, insurers will generally be required to spend at least 80 percent of premium dollars on medical care services and quality-improvement activities and limit their spending on overhead, marketing, CEO salaries, and profits; and
• In 2014, the Affordable Care Act empowers States to exclude health plans that show a pattern of excessive or unjustified premium increases from the new health insurance Exchanges.

The Affordable Care Act includes a wide variety of provisions designed to promote a high-quality, high-value, health care system for all Americans and to make the health insurance market more consumer-friendly and transparent. Some of the provisions that take effect by the end of next year, or are already in effect, include prohibitions on pre-existing condition exclusions for children; prohibition on lifetime dollar limits in all health plans; extended access to insurance for many young adults; and an unprecedented level of transparency about health insurance through www.HealthCare.gov

Workers Comp Term Of The Day - Loss Reserves

The dollar amount set aside or reserved to completely cover the expected cost of a claim or claims under the workers comp policy issued by the insurance company.

This determined amount is set aside as of the annual statement date.Loss reserves become a factor in computation of premium.

These loss reserves should be monitored to ensure no over reserving or under reserving has been done.

Workers Comp Term Of The Day - Reinsurance

When one insurer's claims become too large to cover financially, they procure additional insurance from other insurers to help cover losses. Insurers will buy insurance from as many insurers as necessary to ensure financial stability. This additional insurance is renamed reinsurance.

Disabled Worker Awarded $30 Million in Popcorn Lung Lawsuit

After reading several recent Workers Compensation publications, it has become apparent that Popcorn Lung is a real concern to factory workers.

The connection between diacetyl and this lung condition was not discovered until 2003-2004. Since then several lawsuits have been filed on behalf of the injured workers. Some more recent ones have been very successful in earning huge awards for the factory worker. The most recent reported was $30 million to a factory worker in Illinois. Other awards have been from $2.7 million to $15 million.

Bronchiolitis Obliterans or Popcorn Lung's only real cure is a lung transplant. The disease causes inflammation of the airways and scarring which can lead to diminished air flow. The disease seems to progressively worsen leading to the need for the transplant. Workers in Popcorn Factories seem to be at a high risk due to their exposure to diacetyl.

Workers Comp Premium Audit Bills - We Receive Calls and Emails Daily

We are always glad to hear from former and potential clients for our Workers Comp services. The most popular post and the #1 subject on the calls and emails is when an employer receives a sizable Workers Compensation premium bill they were not expecting.

I have posted on this often. I will still post on the subject as long as we receive inquiries on this controversial subject. Here is your game plan on how to deal with the bills.

• Do not panic as bringing emotions into a business situation will end up costing your company in the long run.
• Do not just send a check if you do not feel you owe it. Once you pay a Workers Comp premium bill, you are going to lose 90% of your leverage.
• Do not ignore the premium bill. That may cause your current Workers Comp policy to be cancelled.
• There will usually be an explanation of the premium audit bill sent with the bill or just before it arrives. Look this information over carefully.
• You can call the auditor to discuss the bill. Make sure you have your "ducks in a row" before making the call. Winging it may cost your company even more $.
• Always make sure that you put everything in writing. Insurance carriers usually have huge offices and you need a paper trail to show that you complied with the rules
• Do not call or write a dispute just to delay the bill. That never works and can ruin the business relationship that your company, agent, and carrier have in place.
• Make sure you have valid points to dispute. The premium audit bill being too much is not a valid point.
• If your business grew quickly, then your company may owe more Workers Comp premium due to an increase in payroll. Never assume this is the reason for the increased premium.
• Never threaten to take all of this to the Insurance Commissioner as a complaint unless you have exhausted all other means.
• If you are in over your head, then consult with an expert company on Worker Comp premiums and reserves -yes, that would be J&L.

The bottom line is your gut reaction to the bill. We have found that the best indicator of possible premium overcharges is that if you feel that something is amiss.

Workers Comp Term Of The Day - Basic Manual

Basic Manual is compiled by NCCI, then approved by state insurance regulators. This manual includes the guidelines for premium calculation. To Those insurers who are providing coverage to an NCCI member state, these rules and guidelines are binding.

Workers Comp Term Of The Day - Advisory Organization

A new term by the National Association of Insurance Commissioners. It replaces the old "rating bureau" designation. Advisory Organizations (like NCCI) compile rating data and file the forms to be used by their insurer members.

Alaska Body Slams High Priced Brand Name Drugs

My hat is off to Alaska's Workers Compensation system. A bill was recently pass that REQUIRES generic drugs in all Workers Compensation cases. This very smart political move will save the employers in AK millions every year.

According to the NCCI (National Council on Compensation Insurance), Alaska saw a sharp increase in how much of Workers Comp claims were due to medical costs. In 1988, medical costs were 48% of claims. That figure has increased to 58% by 2008. Of course, who bears the brunt of these increases - the employers paying in Workers Compensation premiums.

One of the interesting parts of the rule is the employee can still have the name brand drug. The insurance carrier or TPA will have to reimburse the employee or pharmacy for the generic version. The employee will be required to make up the difference.

There has been a debate on whether generic drugs actually are as effective as brand name medications. The following is from Ask The Pharmacist at drugstore.com.

When scientists develop a new drug, they give it a generic name reflecting its chemical makeup. Once the Food and Drug Administration (FDA) approves the drug, the manufacturer markets it with a brand or trade name, which is usually shorter and easier to remember. A drug company can hold exclusive patent rights to make a drug for 20 years after its discovery. After that, other companies can start making generic versions of the drug.

Are generic drugs safe?
In almost all cases, generics work as well as their brand-name siblings, and often cost considerably less. This is possible not because of lower quality, but because research and advertising costs are much less for generics. Many insurance plans encourage you to accept the generic version of a drug whenever it's medically safe. Most states let pharmacists substitute a generic when appropriate and when your doctor approves it. Our pharmacy is located in New Jersey, so we only substitute generic drugs approved under New Jersey law.

When shouldn't generics be substituted for brand-name drugs?
Very few drugs have a "narrow therapeutic index," meaning that a small variation in dose can cause problems, such as too little effectiveness or too many side effects. With some drugs, including phenytoin (brand name Dilantin), carbamazepine (Tegretol), valproic acid (Depakene), divalproex sodium (Depakote), digoxin (Lanoxin), warfarin (Coumadin), lithium (Lithobid, Eskalith), levothyroxine (Synthroid, Levoxyl), and theophylline (Theo-Dur), you shouldn't switch from brand to generic—or vice versa—without your doctor's approval and close supervision. Always talk to your doctor, pharmacist, or both before asking for a substitute.

The above passages may be a great thing to print out and give to any employee that is insisting on brand name medications. The Google search can be found at http://www.google.com/search?hl=en&safe=off&q=generic+versus+brand+name+drugs&aq=0&aqi=g8&aql=&oq=generic+versus+&gs_rfai=

Workers Comp Term Of The Day - Assigned Risk Plan

Sometimes called the Assigned Risk Pool . Theplan is designed for employers who cannot procure coverage from an insurer in the voluntary market. Normally, the rates are higher for those who are forced to obtain coverage under the Assigned Risk Plan.

Workers Comp Term Of The Day - Permanent Partial Disability

Partial or total loss, or loss of use of a part of the body. It is also used in the case of occupational disease. It denotes the date the employee becomes unable to complete the same tasks at the same wage as before the disability began.

Governator Says NO To WCIRB 30% Increase On Workers Comp Rates

I was surprised to see this one. I understand that Governor Schwarzenegger has always been as pro-business as possible. I cannot remember when he has offered any input into a recommended increase. Was it political in nature?

Now that California Insurance Commissioner Poizner has no immediate political aspirations, is the Governor worried that the increase will be approved in full? Could the Governor want to seem even more pro-business before an election?

I am full of questions. The one thing that I would worry about is akin to charging on a credit card all the time, but only making the minimum payments. An increase has to come along at some time. California's Workers Comp medical rates are skyrocketing. Will this type of outlook cause a return to the 1994 insurance crisis where the State Fund ended up with most of the insureds in the state?

As promised, I am going to graph the recommended Workers Comp insurance increases by the WCIRB and the approved rates by the Commissioner over a number of years. I think everyone will be surprised.

California's WCIRB Recommends 30% Rate Increase

California's Workers Compensation Insurance Rating Bureau (WCIRB) has recommended a 30% increase in Workers Comp pure premium rates. I was interviewed by The Insurance Journal on my opinion of the heavy increase and the possible effects.

My response was that the 30% increase could have easily been 50%. Why? The WCIRB Actuarial Committee has recommended numerous increases over the last few years These have all been turned away by Insurance Commissioner Poizner.

One has to wonder if the denials of all the increases as a precursor to his gubernatorial aspirations. I am not sure if that was the Insurance Commissioner's motivation.

The WCIRB could not have been wrong that often. Is the 30% a recommendation due to a cumulative affect or is this a one shot recommendation to pull the pure premium rates back in line with their old forecasts and recommendations?

The spiraling costs of medical treatment is very likely the main driver variable behind the recommended sharp increases. If the 30% increase is approved, will the WCIRB be back at the table recommending even more increases the next time?

In my next post, I will graph the true pure premium rate recommendations versus what was actually approved each time over the last few years.

Workers Comp Term Of The Day - Date Of Injury (DOI)

A term found on first reports of injury and loss runs. It is the actual date of an employees injury. If the claim is a result of an occupational disease, it designates the date the employee became incapable of working due to the disease.

Response To A Comment - SC Workers Comp Consultant

We had a few emails sent to us and one comment was left on what happened to the South Carolina Workers Comp consultant's client in this post. In other words, if the consultant was convicted, did the client know and did he share in the responsibility?

Company head Roy Knight pleaded guilty to his role in the fraud and testified for the government against the Workers Compensation consultant. To date, the company owner has not been sentenced.

Whenever Knight or Kohn is sentenced, it will hit the Workers Comp airwaves quickly. I will let you know the outcomes.