Expense Reserves vs. Medical Reserves
The third and final reserve figures are the Expense Reserves. These reserves have caused quite a large amount of confusion ever since I started my career in Workers Compensation. The confusion always centered on what should be included in the Expense Reserves vs. Medical Reserves.
The definition is the funds set aside for the cost of adjusting the Workers Comp file. The following fees are sometimes coded as Expense:
- Defense Attorney
- Independent Medical Exam (?)
- Rehabilitation Nurse (?)
- Bill Review (?)
- Adjuster Time and Expense (T&E) (?)
- Medicare Set Aside Services (?)
I inserted the ?’s as these are the areas that confuse all the claims departments as to where these expenses are included. Quite often, even inside each claims department these expenses are included in different reserves.
The best way to think about this category of funds is what the claims staff decides to directly pay to help adjust or process the claim – not medical or indemnity such as a weekly workers comp TTD check or a medical bill for a physician office visit. The adjuster has more control over the provider than any other type of payout.
There is no need for concern if you are not self-insured. The reserves are still charged to your Workers Comp premiums as one total (Compensation + Medical + Expenses). There are some other areas of concern that I will post next.
There is one expense that SHOULD NEVER be included as any type of reserve in the above list. Which one do you think it is?
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