Work Comp Deductibles – Are they right for your company?

Should your business, have a deductible on your worker’s compensation policy?

The general rule of thumb for most business is no. Due to changes made in the last few years, the need for a business to have a worker’s compensation deductible has pretty much gone away unless yoru company is paying well into six figures for workers compensation or is having a lot of minor claims.

Why don’t deductibles make sense for most businesses?

Here is an example of a case study we did with a client to demonstrate the loss they would have seen if they had a deductible for their worker’s compensation policy.

In reviewing the last three years of claims for one client to prove this point, we found some significant differences that made more sense for the client to refrain from having a deductible for their worker’s compensation claims. Here’s what we did in our claim review.

• We subtracted a $500 deductible from Medical-only claims.
• They had 7 claims that would have cost the business $3,800 if they would have reimbursed the insurance company.
• In this model, there was a 1-point impact on their experience mod.
• With a deductible, they would have spent nearly $4,000 in deductible reimbursement to save $1800 in premium, losing $2,000 to insurance claims.

How a lack of deductible helps your business

When there is no deductible, turning in small claims to your worker’s compensation carrier is more feasible. Turning in all claims, even small ones, helps to keep your business safe from lawsuits and protects your employees. Don’t take the risk of skipping out on submitting a claim and paying for care out of your own pocket. You will only cause further harm to both yourself and your company.

How can you determine if having a deductible is right for your business?

With ThinkWorkComp, we have software that can help determine if a deductible is right for you. To find out on your own what your best option is for a worker’s compensation policy, follow these steps. The amount of deductibles for plans can vary greatly, so make sure you are looking at all of your options and know the details of your plan when keying in these numbers.

• Look at your historical claims.
• Study the claims your business has on a year-to-year basis.
• Model these numbers on your premium size to see if it makes sense.

Cases where it makes sense to have a deductible

While having a deductible does not make sense for the majority of businesses, there are some rare instances where it does make sense. We will gladly assist in figuring out if that is the case for your business. If either of these scenarios applies to your company, it is likely that having a deductible is the right type of plan for your worker’s compensation policy.

• If you are a very large corporation – large corporations tend to benefit more from having a deductible, but this is not the case in every situation.
• Over a quarter-million dollars for premium – depending on the sizable amount of your premium, considering the option of having a deductible may be right for your business.

If you have questions on whether your business should have a workers compensation deductible send us an email at [email protected]