Workers’ compensation insurance is a requirement for all Illinois businesses. Chances are every business that has blue collar workers will have to file a worker’s compensation claim at some point. However, not every workers compensation claim is the same. Some even carry a different filing status depending on how your employee reacts to the injury. Understanding the difference between medical only claims and medical and indemnity claims can help save your business money.
For Example
Say you own an automobile service and repair business. One of your auto service repair technicians is injured on the job. He injured his shoulder working on an item above his head. Let’s call him Juan. Juan goes to the doctor for the injury. The doctor says he cannot lift anything above his head for 3 months. What do you do? 1) Juan does not work until he is healed. 2) Adjust Juan’s work and workload until he is 100%.
Choosing option 1 would mean filing a medical and indemnity claim
Medical and indemnity claims involve some element of employee lost time. Lost time refers to an employee being unable to work due to a work-related injury. In a claim that is medical and indemnity, workers compensation steps in to pay the income of the injured employee. The claim’s full amount is recorded for experience modification purposes.
Employees that stay home after an injury see anywhere from 10 to 15 commercials on tv for personal injury lawyers who want to litigate the claim. Lawyer involvement will cause the claim to increase. Those employees who do not return to work after six months are 50% likely to return to work. After one year away from work they are only 25% likely to return to work.
Choosing option 2 would mean filing a medical only workers compensation claim
Medical only claims involve an injury, but they do not involve any lost time in regards to the employee. Medical only worker’s compensation claims are reduced by 70%! This helps a ton with your experience modifier (basically a multiplier to your worker’s compensation policy premiums).
To take advantage of the 70% discount the employee must be at work being paid their full rate. That could be a lot to pay for reduced productivity by the employee. Paying the injured employee a reduced hourly rate triggers indemnity payments which take away the 70% discount. Having them work less hours will also take away the 70% discount. So, things that you must consider if you want to take option 2:
- How long will the employee be out for? 2 weeks or 2 months?
- What restrictions does the employee have?
- Can you pay the employee the full fare for reduced productivity and administrative work?
- Do you have a return to work program?
The companies that can take advantage of this and do it properly enjoyed lower work comp premiums, more employees returning to work, better employee morale, and more control of the claim.
Whether you are planning on filing a medical only claim or medical and indemnity claims, contact us at Konen Insurance to review how the claim might affect your insurance policy and experience modifier.
