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Home » Archives for April 2017

Archives for April 2017

Unique Workers Comp Coverage By Former Homebuilder

April 26, 2017 By JL Risk Management Consultants

Jim Walter Homes’ Workers Comp Coverage Plan 

Workers comp coverage for a home builder that covers all employees including subcontractors can be an expensive option.   One of the best workers comp policies adjusted by me was the workers comp coverage by Jim Walter Homes.  

Jim Walter Homes ruled the market for all-in-one home construction including financing.  The company ceased operations in 2009.    They built their first home in 1946.

The homebuilding company eliminated all concerns over:

  • Multiple layers of subcontractors  
  • Proper certificates of insurance 
  • Expensive individual contractor policies 
  • Claims control including choice of  medical providers 
Picture of workers comp coverage construction

Wikimedia Commons – Lance Cpl. Cory D. Polom

Jim Walter Homes had a multistate high retention large deductible policy.   Every contract with the various subcontractors included a percentage of contract fee for Workers Comp coverage.    (I will not disclose the percentage even though they no longer build homes.) 

The main contractors and subcontractors concerned themselves with building homes.  The contractors knew coverage was being provided by the subcontract itself.  

The plan was genius.  The master policy operated like a PEO (Professional Employment Organization) of sorts.   All workers relied on one master policy.   One carrier handled all the claims.   Medical and overall claims cost control increased as the subcontractors became familiar with  First Reports and initial medical treatment. 

All states accepted the coverage structure.  Having multijurisdictional claims generated no problems.    Jim Walter Homes lost no money on the arrangement.   A win-win-win situation was created for all the contractors and the company. 

The timespan when I adjusted many of their claims spanned the early 1990’s.  I am not sure if they kept the same type large deductible policy for all the contractors and subcontractors after that time.  

©J&L Risk Management Inc Copyright Notice

 

Filed Under: workers comp coverage Tagged With: jim walter homes, master policy, multijurisdictional, timespan

Risk Management Mistakes – Silent Top Five In Workers Comp

April 24, 2017 By JL Risk Management Consultants

Silent Risk Management Mistakes Stay Under The Radar 

These five silent Risk Management mistakes in Workers Comp never show up on a graph, chart, or in a report.    After all the RIMS buzz this week, I decided to cover the mistakes I have seen in my 27 years in the insurance business from a Risk Management standpoint.   

These mistakes are from live files and projects I have reviewed or worked on in the last few years.  

  1. picture risk management mistakes under the radar dish

    Wikimedia Commons – same or compatible license

     A cheaper deal will usually cost more in the long run.  This is especially true in the vendor choice area.   A vendor that performs a job at 40% less may cost more on the claims in the long run.   One can still see the lowest bidder win a large project they should have never attempted whatsoever 

  2. Having adjusters check with the Risk Manager on everything means 80% obtaining permission, and 20% of the time working on the file.   I call this situation the “Permission Death Spiral.”  Let the experts be the experts and do their job.  Set reasonable authority levels for contact.  You will sleep better at night.  
  3. Bundled services are on their way out.  Unbundling services creates nightmares at first.  In the long run, your organization saves working capital or budget. This suggestion causes many debates between myself and risk managers
  4. Ignore the Six Keys To Saving on Workers Comp Costs and prepare to get out the proverbial checkbook.   I wrote those keys over the last 27 years.  They have not changed in that time.   I added the last two recently.  
  5. Man Risk Management Mistakes With Heads In Hands At Desk

    (c) stockunlimited

     Risk Management mistakes do happen.  I have made and seen other Risk Managers make mistakes – even major ones.   All the predictive modeling and number wizardry never results in a 100% perfect choice.   Accept that you have made a mistake and move on.    A few Risk Managers have harmed their careers trying to prove an unprovable point.  

  6. Bonus – For Self Insured Risk Managers– not knowing your LDF (Loss Development Factor) or Egads! – not having one prepared or at least a SynthMod.   How can your Risk Management program go anywhere without knowing where you are now?  

This list should not be considered comprehensive.   These six are recent trends in Workers Comp Risk Management mistakes. 

©J&L Risk Management Inc Copyright Notice

Filed Under: Risk Management, workers comp costs Tagged With: graph, RIMS buzz, SynthMod, wizardry

Medical Only Claims – Ignore Them At Your Own Risk

April 13, 2017 By JL Risk Management Consultants

Medical Only Claims – A Short List of Concerns

Medical only claims turn out to be the worst Lost Time claims if not monitored properly.  How can a few $250 claims cause such havoc?

Sign Medical Only Claims At Your Own Risk

Wikimedia – MOTOI Kenkichi

The old saying concerning “Big things come in small packages” applies very well to this situation.   The least monitored claims can blow up very quickly. Why?  

I coined the the term claims festering approximately 10 years ago.  Yes, the term came from what happens to an ignored sore.  The ignored claims sometimes:

  • Stays reserved with the automatic amount ($250  or $500) too long
  • Increased just to pay a bill
  • Not reviewed due to small dollar amount – one cannot expect an adjuster to examine a $450 claim.
  • Keeps being handled and reserved for a low dollar amount for months
  • No supervision = no control of the medical
  • Festered medical only claims usually turn into large claims headed down the wrong path – think snowball from hell

How does a claims department and/or employer avoid this mess?  The question begs to be answered in this manner.  Technology – not claims analytics may be the best answer. 

Nurse Medical Only Claims With Patient In Corridor

StockUnlimited

A very talented medical only adjuster knocks the claims monitoring out of the park.  I have experienced this often with medical only claims adjusters who worked with or for me in my claims career. 

Getting the file transferred to a lost time status is a critical step.  A good experienced medical only claims adjuster generates this transfer most of the time.  Asking an overloaded claims supervisor spells trouble for a festering claim. 

The main concern coming from a festered claim is the lack of supervision over a very acute claim.   A laughable situation occurs when a lost time investigation commences six months too late.  Technology sounds great as the solution.  It does not suffice in this instance. 

Picking out a festering claim from a list of what can be thousands of medical only claims will be a monumental if not impossible task. 

Why did I write this article?  I just reviewed a loss run with 125 medical only claims.  Five of those were deemed festering claims.  Five of `125 claims may not seem that large of a percentage.   These claims were tracked by a spiffy claims analytics software package.   

Some types of software track the festering better than others.   An IT person would input the level where a warning would be given if a claim festers too long, not an adjuster. 

Oh, my, human intervention wins again even with the small medical only claims.

©J&L Risk Management Inc Copyright Notice

Filed Under: Medical Only Claims, Medical Only Festering Tagged With: festered claim, havoc, IT person, monumental, spiffy

US Workers Comp System Compared to Other Countries

April 13, 2017 By JL Risk Management Consultants

US Workers Comp System – A World Leader?

The US Workers Comp System has come under attack very often recently.   I agree that isolated cases do occur – not a trend.   What is the greatest way to find out what is going on internationally.   Flying overseas always  gives me a great idea of what is going on in certain countries. 

Business People US Workers Comp System Staring At Leader

StockUnlimited

I have spoken with Russian, Philippine, Chinese, and other pan Asian countries concerning Workers Comp.  Most countries do not even have a system that keeps an injured worker’s family going while one or the only major breadwinner is unable to work due to an on the job injury.

My simple poll of fellow plane passengers provided great information such as:

  • Russia – you are out of luck.  The injured workers usually keeps working even though they have sustained what would be considered a major injury.
  • Philippines – once again, you are out of luck on the wage replacement benefits.  The Philippines provides PhilHealth.  PhilHealth is basically the same as Medicaid.  
  • China – the system allows a worker to file a claim.  The medical system is very corrupt between the large companies and their influence over physicians.
  • Thailand – out of luck again – nothing really provided for an injured worker.  There is some type of nationalized health insurance.  The system is not as good when compared to PhilHealth. 
Aircraft US Workers Comp System On Airport

StockUnlimited

These examples were generated from conversations with plane passengers.   As we look to compete on a global basis, we must look at other countries’ Workers Compensation systems before we blast away at our own.  

Somewhere in the world probably exists a better system.  However, until someone points it out the US Workers Comp System leads the world in providing proper benefits to injured workers.

If someone know of a better system, please comment below.   I would love to have to stand corrected.   I doubt I hear that the US Workers Comp system takes a backseat to another country.

©J&L Risk Management Inc Copyright Notice

 

 

Filed Under: without comp, Workers Compensation Forgotten Tagged With: injured workers, Philhealth

Work Comp Tax Question – Do I Have to Report or Pay Tax on Benefits?

April 11, 2017 By JL Risk Management Consultants

Work Comp Tax Question We Receive Every Year

The annual work comp tax question becomes very popular this time of year.  Do I have to pay tax on workers compensation and do I have to report it.   The overall answer is that you do not have to pay taxes on Workers Comp benefits.  However, one may want to watch their tax situation if you are drawing Social Security benefits. 

Businessmen Work Comp Tax Question Working In Office

StockUnlimited

I decided to attempt a Google search to find out if any states tax the benefits. 

After an extensive search,  we found no states tax the benefits.   An IRS search was conducted.   Publication 525 offers the exceptions to the non-taxable workers comp benefits.

The text from Publication 525 is below:

Workers’ Compensation
 
Amounts you receive as workers’ compensation for an occupational sickness or injury are fully exempt from tax if they are paid under a work­
ers’ compensation act or a statute in the nature of a workers’ compensation act.
 
The exemption also applies to your survivors. The exemption,however, doesn’t apply to retirement plan bene­fits you receive based on your age, length of service, or prior contributions to the plan, even if you retired because of an occupational sick­ness or injury.
 
Businessman Assisting Couple Work Comp Tax Question At Home

StockUnlimited

If part of your workers’ compensation reduces your social security or equivalent railroad retirement benefits received, that part is considered social security (or equivalent railroad retirement) benefits and may be taxable. See Pub. 554 for more information.

 
Return to work
 
If you return to work after qualifying for workers’ compensation, salary payments you receive for performing light duties are taxable as wages.   The workers compensation benefits that replaces your pay reduction is not taxable. 
 
You should download Publication 554 if you are drawing Social Security benefits.  SSDI and Workers Comp can be a little tricky. 
 
Most tax professionals and software handle the Work  Comp Annual Tax Question without any problems. 
 
©J&L Risk Management Inc Copyright Notice
 

Filed Under: IRS, tax Tagged With: IRS Publication 525, IRS Publication 554, SSDI

Safety Program Evaluation Secret – Takes 5 Minutes Maximum

April 6, 2017 By JL Risk Management Consultants

Internal Safety Program Evaluation From A Non-safety Professional

Computer Safety Program Evaluation Hand Gesture

StockUnlimited

My safety program evaluation starts with a very simple process.   This secret method has been used by myself and a few other non-safety professionals to examine a company’s safety program.   Please remember this is from a premium audit, claims handling, and claim reserve expert.    

I did receive a lifetime achievement award by the North Carolina Industrial Commission Safety Department.  That was for my volunteer work to a local Safety Council, not my safety expertise. 

The method is one that I give away only to Risk and Safety Managers when I do presentations on the subject.   I stop first at the safety manager’s desk (can be on the phone or by email also).  I ask the safety manager – What is your E-Mod or LDF (Experience Modification Factor or Loss Development Factor).   The Loss  Development Factors are calculated for Self Insureds.   If you are self insured and do not have one, consult with an expert (such as J&L) to stop operating in the dark.  

The responses  I receive are from very bad to excellent are:

  1. That is not my area – very bad – operating in the dark
  2. I do not know – bad, but not as serious as #1
  3. The LDF or E-Mod is X but I am not sure how it was calculated – well, at least they knew the number
  4. I have the E-Mod Sheets or LDF calculation right here, but I do not know how they calculated the number – at least they asked for the report. 
  5. Man Safety Program Evaluation Whispering

    StockUnlimited

    #3 or #4 above and the Safety Manager asks me if I know how it was calculated – cares about the number

  6. The Safety Manager knows the number and how it was calculated, and what accidents caused the number to be where it is at the present. – Wow, impressive

The #6 Risk or Safety Manager situation rarely occurs.  In my five minute Safety Program evaluation, I  become concerned with response #1 or #2 from the above list – why? 

The E-Mod or LDF represents that company’s safety program.  These two factors produce hellish results often for Safety and Risk Managers.   As with a personal credit report score, your company has one number that represents your efforts to provide a safe workplace. 

Is it often unfair  –  of course, but so is your personal credit score.  Running a safety program without knowing the how and why of that score is like trying to apply for a mortgage and not knowing your credit score.    You may end up with a tragic surprise.  

Woman Safety Program Evaluation Moving Boxes

StockUnlimited

Over the past twenty years, companies have terminated Safety and Risk Managers even though their current great efforts reduced the E-Mod or LDF but not in the current timeframe. 

Safety/Risk Managers – listen up -you are judged on  what happened four to 10 years ago when you were not even in charge of safety or Risk Management  Once again, you are likely being judged on data that you are not responsible for overall.  

 

Look back at #1 and #2 – those forecast a company operating in the dark.  Schedule Rating Factors come into play.   You can look that one up in the articles – use the Search Box above on the right or follow the link.  Schedule Rating Factors operate in the present.  E-Mods X-Mods or LDF’s operate in the past.  

If a company or organization Senior Level Management asks me to evaluate their Safety or Risk Management Program on a brief basis –  I ask – what is your LDF or E-Mod / X-Mod?   The nature of the beast appears without a full evaluation of the current loss situation such as our Synth-Mods(c). 

People chuckle at my Safety Program Evaluation sometimes, but not for long.

©J&L Risk Management Inc Copyright Notice

Filed Under: Safety Tagged With: Safety Manager, Synth-Mod

North Carolina Rate Bureau NCCI Part Ways Last Month

April 6, 2017 By JL Risk Management Consultants

The North Carolina Rate Bureau Has No Records At NCCI Now

The North Carolina Rate Bureau changed their relationship with NCCI.  I received a call in the early part of March from NCCI.  NCCI said they owed me a refund.  I asked why?  NCCI informed me that nothing can now be looked up on NCCI for the State of North Carolina.   I even questioned the caller from NCCI about the old records.   She told me ALL records. 

Woman Handling Record North Carolina Rate Bureau And Other Woman Signing

StockUnlimited

Please remember as you read this article that NCCI and the NCRB both helped me a great deal with research and answered my probably annoying questions since the 1990’s.   The two  Rate Bureaus treated me with respect in every transaction. 

I was shocked.   Searching the NCCI databases for NCRB information made it a convenient task.   One wonders why the abrupt split occurred between the rating bureaus. 

The North Carolina Rate Bureau (NCRB) changed a large number of rules last month.   The incoming new North Carolina Insurance Commissioner made the NCRB reform one of his top priorities.   This must be part of that reform.

Woman North Carolina Rate Bureau Getting Files In Record Cabinet

Wikipedia – Jason T. Poplin

I am still researching the Classification Code changes that were instituted by the NCRB.  At one time earlier this year, the class codes differed  greatly.  The research on class code differences takes a long time now that they are in two different places. 

California’s rating bureau, the WCIRB became more like the NCCI over the last few years.   However, the WCIRB retained their independence.  The recent changes to the X-Mod formula by the WCIRB copied nothing from NCCI.   

The E-Mod formula for NCCI changed very little this year.  The NCRB formula mirrors the NCCI for the most part.   I will update this article or write a new one when the North Carolina Rate Bureau institutes further changes. 

©J&L Risk Management Inc Copyright Notice

Filed Under: NCCI, North Carolina Rate Bureau Tagged With: abrupt split, NCRB, transaction

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James J Moore
Raleigh, NC, United States

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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