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Conquering the Cost of Workers’ Compensation

by Pat Collopy on Apr 15, 2016 1:09:46 PM

In most states, Workers’ Compensation is a necessary evil. A federally mandated program that translates into an extra expense your company is forced to carry. Only a few territories give you the option of electing out of this coverage in exchange for loss of limited liability.

For most of us however, this option is non-existent and the compulsory product is often associated with excessive annual premiums that increase year over year. And, depending on the type of industry you’re in, this cost could severely impact your bottom line.

While Workers’ Comp can be cost prohibitive, there are ways you can cut costs and save money when you implement a company-wide benefits plan.


190W_CPS_300x250_050216Prevent Workplace Injuries

Standard coverage is calculated by payroll, but recorded workplace incidents will increase this premium. By reducing occurrences, you can keep costs low. Education, training, and safety programs can help prevent workplace injuries. Holding ongoing safety seminars, delegating managers to oversee the welfare of staff, and even creating an incentive program to keep employees vigilant of safety measures could reduce the number of Workers’ Compensation claims recorded each year.


Monitor Workers’ Comp Formulas

All too often the formulations used to estimate a company’s Workers’ Compensation premium is either inflated or miscalculated. It’s up to you to keep track of these numbers and data in order to ensure that the costs are indeed accurate. For example, closed claims may not be recorded and will be tallied as though they were ongoing, increasing your annual costs. Unless you have partnered with a company that has been diligent in knowing and understanding your business, and staying apprised of all updates, the onus is on your company for ensuring the formulations are precise.


Easy Way to Control Costs

Some payroll providers do offer services that allow for more accurate budgeting. By integrating a Pay-As-You-Go program with payroll, companies can make Workers’ Compensation payments based upon actual payroll volume where premium calculations are directly integrated with actual wages per job, on a per pay period basis. It’s a great way to save time and money, especially for companies with fluctuating payrolls. Still other providers also have in-house insurance agents that can find the best rates and coverages available. Taking advantage of a single-service program that does it all not only allows for more accurate budgeting, but also reduces the initial outlay of cash and avoids inconvenient year-end audits and high finance charges. But beware of additional service fees, some providers will help you budget better by tracking information, but they may be adding service fees that can negate your overall savings.


So if your Workers’ Compensation policy is due to renew, look to partner with service organizations and agents who can help you track information easier, shop for the best rates in your industry, and reduce your overall Workers’ Comp headaches.

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