By far the most expensive part of many workers’ compensation claims is the indemnity benefit paid to the injured worker for lost wages. Most states pay a percentage of the injured employee’s weekly wages for the time that he is unable to work. In Texas for example, an injured worker taken off duty by his treating doctor begins to receive an indemnity benefit equal to 70% of his average weekly wage – tax free! There is a cap on the amount of benefit paid of around $550.00 (+/-) per week. In some cases because of the tax-free part of the benefit, the injured worker actually realizes more “take home” money weekly than he would get by working a regular week.
How much difference is there between the cost of a medical claim versus the cost of a lost-time (indemnity) claim? One company we reviewed examined the claims cost for both categories over several years. The average cost of a medical-only claim was around $800.00. The average cost of a lost-time claim – with the indemnity benefit paid was a whopping $41,000.00!
Where does this money come from? The quick and dirty answer is that it comes from the work comp insurance carrier. HOWEVER, if your policy has a deductible amount per claim built-in, at least the first portion of the benefit comes from your bottom line. Even if your policy has no deductible, the added indemnity benefit drives the cost per claim dramatically upward – which directly affects your experience modifier and loss ratio. This means you will likely pay more for coverage at renewal.
One great way to combat the high cost of workers’ comp claims is to establish a Return-to-Work policy for your company
Return-to-Work is called by several names – “light duty” or “modified duty” to name a couple.
If the injured worker is released to modified duty by his treating physician and you put the injured worker back on some type of duty that meets the restrictions placed on his activity by the treating physician, the indemnity benefit is eliminated – provided the employee is earning his pre-injury wage. Even if you put an injured worker back on duty at a job that pays less than his normal job, the indemnity benefit is reduced by the amount of wage the employee earns while on modified duty. Of course different states have different rules regarding modified duty. Basically most states operate as described above.
The benefits of using modified duty where allowed by the treating doctor are many – both for the company AND the injured worker. It has been proven that injured workers who return to work on modified duty until they are released from treatment and returned to full duty tend to heal 30% faster than those injured workers who sit at home until released. Returning to work keeps the employee in the loop with co-workers. He must get up each morning and report to work just like he did prior to the injury. He is part of the team, not left out because of his injury.
The company gains the experience and expertise of a valued worker. Even if the injured worker cannot perform some of his normal duties, the productivity gained by the part of his job that he CAN do benefits the bottom line. Add in the fact that the indemnity benefit is reduced or eliminated altogether and the company wins again.
Here are the steps to success adapted from Business and Legal Reports:
1. Develop a written return-to-work policy that states all employees who are released to modified duty by their treating physician will have modified duty available to them for the length of time they are not able to work their normal job. The policy should be distributed to all employees and must be consistently applied in all cases.
2. Establish a central point of contact for the injured worker. This is the “go-to” person in your company to whom the injured worker can address any concerns regarding the modified duty. The contact can be the safety director, HR manager, or a designated return-to-work coordinator.
3. Provide the treating physician with a good job description and list of normal duties that the injured worker performed prior to his injury. More often than not, the treating physician can pick several duties from the list you provide that the injured worker may be able to perform. The physician may place restrictions on some of the injured workers’ physical activity. These restrictions must be adhered to while the injured worker is on modified duty. For example, if the employee is restricted from standing for more than four hours at a time, the modified duty would allow the employee to take short rest breaks where he can sit say once per hour.
4. Be creative in your approach to modified duty. As long as the work provided to an injured worker does not run afoul of the treating physician’s restrictions on physical activity, the worker can do any job that needs doing. Often, tasks that are neglected because there is no one available to do them can become an excellent source of modified duty. In one company, an injured steel worker was placed in the office to answer the phone. He had an excellent telephone voice and the skill set to handle incoming calls. Normally, the phone was answered by whoever got to it first.
5. Establish a timetable for modified duty. Usually, the doctor will place an injured worker on modified duty for a finite length of time. The worker must report to the doctor for scheduled appointments, so as he progresses through treatment the end-date for modified duty status can be established early-on in the process.
6. Encourage the injured worker as he performs modified duty. Modified duty should NEVER be construed as punishment. The work should be beneficial to the overall productivity of the company and the employee should feel good about doing the job. Continue to communicate with the treating physician about restructuring the restrictions as the injured worker’s condition improves.
Employers Resource has a modified duty program that we supply to all our clients who participate in our safety program. Contact us if you would like additional information on how to put modified duty to work in your company.