Workers Comp Small Deductible Programs Reduce Costs More In Certain States
Most Workers Comp small deductible programs result in premium savings. However, in certain states, the savings can be much larger.
I decided to write a few corrections this week. In 2009 – yes, that far back in time, I wrote that small deductible programs may not be worth the effort. That is now a debatable point. My concerns can be found in the 2009 article.
The difference between a small and large deductible program kicks in at $100,000 in most states. Any workers comp policy that has deductible of less than $100,000 is a small deductible program.
While attending the very informative NCCI Workers Comp Data Conference last week, I was reminded that not all states are the same when it comes to having a small deductible program. Regardless of the state, your company should check to see if your carrier offers such a program.
Almost all insurance carriers do offer some type of workers comp small deductible.
Two types of small deductible programs exist presently – Net and Gross.
If your company operates in Net Deductible States, the premium savings may be more fruitful.
Those states are:
Gross deductible states do not subtract the deductibles when calculating the Experience Modification Factor (E-Mod or X-Mod). Net deductible states do subtract the deductibles.
I have to be very careful in making such a blanket statement on workers comp small deductible programs as each one of the states listed above have very different rules. For instance, some states say only the medical part of the claim can have a deductible while others allow both the indemnity and medical payouts to have deductibles.
For reference, the gross deductible states (not subtracted from E-Mod calculation) are:
Notice that Florida appears in both lists. Florida is both a Net and Gross Deductible state. Yes, that was not a typo.
To complicate matters even more, certain states allow deductibles only on the voluntary markets while others allow small deductibles on voluntary market policies and residual market (usually assigned risk) policies.
Earlier in this article, I pointed out that small deductible policies are those with less than a $100,000 deductible. However, each state has an upper limit on the small deductibles – usually $5,000 or $10,000.
The main point is to inquire whether your current carrier or competing carriers at renewal offer small deductibles. They can be a great Risk Management tool to reduce your premiums. All your company has to do is ask – do you have a small deductible program available?
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