Workers Comp Self Insurance Concerns
Below are Five Workers Comp Self Insurance concerns when reviewing your policies and audits.
Earlier this week I posted on what companies should consider before pursuing self insurance as a means to reduce Workers Comp costs. We had a large enough response to the article that I thought I would add five more concerns.
- Your Experience Modification Factor (E-Mod) will not be a 1.0 if you ever leave self insurance. NCCI and all of the other state rating bureaus all have added in rules if your company tries to jump in and out of self insurance as a way to keep your E-Mod low. This simply will not work any longer.
- Self Insurance and a large deductible program are two totally different insurance programs. One of the most glaring differences is that with a large deductible program your E-Mod is still reported to NCCI and/or the applicable rating bureaus.
- Will your company use your TPA’s services such as bill review, medical and vocational case management, pharmacy, or providers’ network? The TPA’s services may make self insurance not as economical as one might think. I have to be careful here as I received a letter recently threatening a lawsuit for revealing how much a TPA was charging extra for their services.
- Have you explored PEO’s, self insurance pools, carve out programs or other types of Workers Comp insurance?
Have you thoroughly examined your company’s internal processes in handling Workers Comp claims? We have seen where an employer or governmental entity will become self insured to get away from or change their problem areas with the insurance carrier. Actually, the problems may still be there internally and be even more costly under self insurance.
- Bonus – Is the management of your company going to buy into the self insurance processes? If not, a change to self insurance may not be the best approach.