Workers Comp Self Insured Resolutions – Updated for 2014
Five 2013 Workers Comp self insured resolutions have been updated for 2014.
When talking about Workers Comp premiums, self insureds are often left out in the cold. Self insureds do not pay premiums for Workers Comp.
This actually exposes the self insured employer to many more risks besides not budgeting enough funds to cover WC costs. Updates for 2014 are in italics.
Self insured employers may want to adopt these resolutions for 2013 2014.
Self insured employers must:
- Not think they are outside the regular WC system. Update – Operate its self insurance program very similar to a company that pays WC premiums. If a self insured employer is experiencing thin profit margins due to the current economy, there is just no wiggle-room left for adding funds to their WC budget late in the year. They may not have a Mod, but a Loss Development Factor should be calculated every year. The LDF is very similar to a Mod. The premium-paying companies are not that much different from a large deductible or a self insured program in this area.
Realize there is a closer fiduciary relationship with their TPA than with an insurance carrier. There is no “buffer” that a Mod and premium supply. The TPA is spending directly out of one of your budgeted accounts. Reading over your TPA contract may produce some surprises. Update – as in most WC policies, the TPA will usually have a clause that says – “We can opt to settle or pay a claim at any time if we feel it is necessary” or something similar. See #6 on how to solve that conundrum.
- Understand their TPA expenses. Many self insureds pay attention to only the yearly cost to handle theclaims – usually paid per claim. Has your company considered the bill review, PPO network, rehabilitation nurse, and other TPA costs? If not, you may want to obtain an analysis of those charges. Update- with the economy as it is today, TPA expenses can be a budget-buster. Do you know how much your TPA spent on, for instance, private investigation services over each of the last three years? If not, you need to monitor all expenses very carefully.
- Not think they are adjusting the claim. Many of the self insured employers usually have a Risk Management Department. Managing risk and adjusting a WC claim are very different. The TPA was hired for their claims expertise. Monitoring the claim is excellent. Calling every shot on a claim can be a very costly Update – especially if there is a time lag between the adjuster asking for authority to do some task and not receiving it for weeks. This can be very costly at the time of settlement.
- Perform a scheduled reviewed each year Periodically review their TPA’s performance on a random selection of claims. This function goes beyond emailing questions to the adjuster. Medical Only claims should be included in the selection. Festering Medical Only claims are usually the ones that appear out of nowhere.
- Bonus – Have a prescribed level of reserves, settlements, bill payments, that must be approved by the employer. This is usually in your TPA contract. If not, you should add it at renewal/bid time. Update – an easy way to handcuff the claims staff is setting the levels too low. This can cost an employer dearly if the adjuster is spending time asking for authority to do everything on a file rather than adjusting and settling the files. Monitoring is much better than trying to adjust the claim from afar – see #4.
- Update – Bonus #2 – Use email to contact your TPA claims staff. This is an easy way to document any communication by the TPA or employer. If you do not know your claims staff email addresses, you are running far behind the curve.
There are many more workers comp self insured resolutions than just these seven.
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