Tuesday, January 13, 2015

The ABCs of Workers Compensation

This may seem esoteric and dry to a lot of readers, but if you are an employer you are well aware the Idaho Workers Compensation system can have a big effect on your bottom line.

Ben Page
I'll put it to you straight. For an employer, workers comp is always going to be better than the alternative — ending up in court battling it out every time an employee is hurt.

Let’s dive into a few things you should know:

1. The Idaho State Insurance Fund is not your only option.
While we’ve placed many of our clients with the Idaho State Insurance Fund because it makes sense for them, more often than not one of the other leading workers comp providers can offer a better deal. Each company has its pros and cons, and none of them are the best for everyone and every type of business. You might be surprised to know that in 2010, of the $345,569,621 dollars spent on workers comp, only about 44.5 percent of that went to the Idaho State Insurance Fund.

2. The state does not control pricing.  
Each company can offer different bottom line rates. Terms like experience mod, standard deviation, premium credits and dividends can make it hard to see what you’re really paying. A qualified agent can simplify all of this and tell what your bottom line cost is so you can accurately compare proposals from different companies.

3. Chances are you unknowingly have paid what they call a deposit.
The Idaho State Fund requires a 25 to 50 percent deposit. If you are insured with the Idaho State Fund you’ve paid a deposit on top of the premiums, even if you’re unaware of this.

4. Not all companies require a deposit.
In weighing the pros and cons of each company, make sure to factor in how big a deal it is to you to have additional money tied up in a deposit.

5. You can get cash back.  
When you switch from a company that required a deposit to one that doesn’t, you free up your deposit. Timing of the switch is important so it isn’t eaten up in early termination fees. I’ve never had anyone complain about getting a check for a few thousand dollars after switching.

6. Easier installment plans.
There are lots of different options provided by different companies. Some of the most popular include those that just bill on your actual payroll and not on estimated payroll. This helps your cash flow and eliminates a lot of the hassle.  Also, you might be able to package this with your other policies to simplify everything, including the billing.

7. Automated payroll reporting saves you time and money.
This has become very popular. It is a system where a program like QuickBooks can essentially automatically report the payroll and eliminate all the hassle. Couple this with EFT payments and you’ve just saved up to eight hours a year in time and eliminated a lot of the costly errors that can come from manually filling out these reports.

8. Online Payroll Reporting.  
Even if you don’t want to automate everything completely, maybe you’d like to get rid of old school papers and fax hassles that can suck up time. How about just reporting your payroll with an easy and quick online system?

9. Loss Prevention Resources.
Your losses can affect your rates. Some companies have incredible loss prevention resources you can use for free. This can include do-it-yourself resources or having professionals help you for free. Still, not all companies provide the same services in this area.  This is definitely something any business looking to reduce claims might want to investigate. Depending on a number of factors, a few insurance carriers offer dividend programs to certain clients that can result in a big check at the end of the year if all goes right for you and the company.

10.  Extras With Some Companies.  
Some companies offer special benefits for targeted industries. This can be something as simple as lower rates, or it can be something outside of rates. For example, there is a very competitive program for medical offices that will pay for the testing of patients in the event of a sharps incident.

Every insurance company has an “appetite” for certain types of businesses in certain types of industries. No one company is the best for everyone.  There are dozens of competitive companies in Idaho, all with their own pros and cons.

Ben Page is a commercial insurance agent with Page Insurance in Idaho Falls and a member of the Square One business development network.