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State Mandated Maximum Benefit Rates – Are They Fair?

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State Mandated Maximum Benefit Rates

The general Workers Compensation formula for weekly benefit rates = Average Weekly Wage (AWW) * .6667. The weekly benefit rates usually have a maximum. I had been told in my career that the maximum benefited the employer two-fold:

  • The high wage earning employee would have an incentive to return to work as they were not being paid the full 2/3 of their AWW.
  • The employer’s E-Mod would not be destroyed with claims from higher wage earners
Picture of hand putting coins in piggy bank Benefit Rates Draw in Board
123RF

I do agree that maximums have their place such as the maximum number of weeks of benefits. This is a typical chart of Workers Comp state maximums:

  • 2008 — $786.00
  • 2009 — $816.00
  • 2010 — $834.00
  • 2011 — $836.00

These are usually calculated from the State Average Weekly Wage. If we use the present State Maximum $836 * 3/2 * 52 = $65,208. That means that anyone making more than $65,208 will lose 2/3 of every dollar above that figure. If the injured employee is the sole breadwinner, the results might be disastrous.

Some companies will supplement the difference between what the high wage earners would have made had they not been on Workers Compensation benefits. This is not necessarily advisable as supplements alter the intentions of Workers Comp. ‘

Some of our recommendations to client companies are:

  • Offer short term and long term disability policies such as AFLAC
  • Review all job descriptions to make sure there are modified jobs the injured employee can perform on a full time or part time basis
  • Allow the employee to use their sick and vacation pay to supplement the shortfall

The maximum rates are in my opinion needed as to not wreck an employer’s E-Mod. The employer, however, needs to have at least a voluntary program to supplement the high-wage earner employees.

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James Moore

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Mgmt Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications

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