Workers’ Compensation insurance is an unavoidable cost for any California employer. In order to control workers’ comp premium costs, employers have to understand and manage something called an experience modification rating, or ExMod. Lowering your ExMod will lower your worker compensation insurance premium amounts, but in order to do so you need to continuously manage safety, education, workers’ comp claims and programs that allow employees to return to work.
What is an ExMod?
The ExMod is a measurement that workers’ compensation insurance providers use as an indication of risk regarding workplace injuries within an organization. Each industry has a different benchmark that contains the expected number of claims/losses that an organization within that industry should have on average. Simply put, if you exceed that benchmark, your ExMod will be higher and if you stay below the benchmark your ExMod will be lower.
However, there are other factors such as payroll, class codes and workplace policies and procedures that can contribute to the ExMod calculation and affect premium amounts. Below are some of the ways that employers can take charge and lower their ExMod.
- Safety Programs
Developing and implementing safety programs for your industry are critical. Every employee must understand what their requirements and responsibilities are regarding workplace safety. Having those requirements and responsibilities in writing is important, because it reduces the chance of misunderstanding and misinterpretation. Safety programs vary by industry and employer, but some common types of written safety programs include:
- Personal Protective Equipment Plans
- Hazard Communication Programs
- Emergency Action Plans
- Electrical Safety
- Fire Prevention
- Education and Training Programs
Continuous education through training programs such as thorough safety orientation for new hires, routine safety meetings and annual training refreshers for all employees can help ensure that your safety programs are being followed properly by every staff member. Documentation of education and training is also important, as it proves the employer has done their due diligence in ensuring staff are properly trained in safety policies and procedures.
- Aggressive Claims Management
Claims costs are also an important factor in lowering your ExMod. If your organization stays below the average number of claims/losses for your industry (or industries) but the costs of those claims are higher than average, it can negatively affect your ExMod. One way to ensure your organization isn’t spending too much money on workers comp claims is through aggressive claims management.
When a workplace injury or illness occurs or is reported, action should be taken immediately. The employee should be sent for medical evaluation and treatment and the proper paperwork should be completed. From there, determination needs to be made regarding whether or not the incident is a valid work injury or illness. Workers’ compensation fraud is a very common occurrence, and paying for false claims can significantly increase your premiums so it’s important to thoroughly and aggressively investigate and manage every single workers’ compensation claim to prevent your organization from overpaying on claims.
- Return to Work Efforts
The length of time an employee spends receiving workers’ comp benefits also contributes to claim costs. The more money the insurance provider has to pay out for a claim the more it negatively impacts your ExMod rating, but this can be managed through innovative return-to-work efforts. Once the worker’s claim is determined to be valid, the employer should look into whether or not the worker can still complete their job duties or if those duties can be modified slightly to reduce the time the employee is on leave. It’s important to note that when modifying work, job duties must be comparable to the employee’s job duties prior to the incident.
Managing your workers’ compensation ExMod rating can be a daunting task for a small business owner, but you don’t have to do it by yourself. Partnering with a PEO that has expertise in workers’ comp and safety and risk management can give you the help you need to improve your ExMod rating and make your worksite a safer place. Emplicity’s PEO services include workers’ compensation and liability protection that provide employers with the tools and support to achieve and maintain a safe and productive working environment.
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Since 1995, Emplicity has provided a smarter, more secure, and integrated platform of employer services to its 300 business clients and their 8,500 employees. As a Professional Employer Organization, or PEO, the California-based HR outsourcing firm simplifies the compliance, administration, and support businesses need in the areas of employee benefits, payroll, and human resources technology.
NOTICE: Emplicity provides HR advice and recommendations. Information provided by Emplicity is not intended as a substitute for employment law counsel. At no time will Emplicity have the authority or right to make decisions on behalf of its clients.