Deductible Plan – Workers Comp Term
A Deductible Plan for Workers Comp comes in two basic sizes. The insurer retains all the claims handling responsibilities regardless of the size of the plan. There are two main categories in Workers Compensation:
- Small deductible – the employer retains a small amount of each claim paid, for example $250. I have not seen small deductibles that were successful in reducing premiums for employers.
- Large deductible – the employer will be directly responsible for claims payments up to a certain amount – usually $250,000. The carrier will then be responsible for any amounts over $250,000. The minimum large deductible amount is $100,000 by NCCI definition.
Over the next few years, employers will increase the use of deductibles as a way to retain a small to medium amount of risk. The deductibles consist of gross and net depending upon the state jurisdiction.
I have not seen a small deductible plan that actually reduced any type of insurance premiums for an employer. Large deductibles reduce premiums for part of our employer clients. A well structured deductible plan generates savings in most cases.
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