Getting employees back to work as soon as possible following an injury is beneficial to both employers and their employees. Early-Return-to-Work programs help control overall Workers’ Compensation claim costs and ultimately future premiums. They also help employees recover faster and stay in the routine of working and feeling productive.
Let’s take a look at why Early Return to Work makes good business sense.
Minimize Lost-Time Claims
Workers’ Compensation insurance pays for medical care to employees who are injured on the job. Employees who are unable to return to work are compensated by their Workers’ Compensation carrier for their wage loss. Sometimes, an injured worker cannot return to work because the treating physician believes additional healing is necessary. However, many times, the treating physician believes the injured worker can return to work during the healing period, but in a limited, “light duty” capacity. It is during this period when employers can make the biggest impact on their lost-time claims experience. Employers who establish a strong relationship with their medical provider(s) and find creative solutions for offering alternative job duties to injured workers will have better claims experience and a happier workforce.
It’s important to note that medical-only claims do not have the same adverse effect that paid lost-time benefits (wages) have on an employer’s loss experience. Here’s why: Workers’ Compensation premiums in part are based on an employer’s claims history for the previous three years. Claims costs are calculated differently when looking at an organization’s claims history and determining its experience modification (ex-mod) factor. To encourage employers to implement an Early- Return-to-Work program, most states value medical-only claims at 30%, while lost-time claims are valued at 100%. If an injured worker’s treating physician indicates that he or she can return to work during the healing period, the employer can reduce that claim’s value by 70%! In order to keep a claim medical only, an employee must return to work within a specific waiting period, which varies by state.
Let’s Do the Math
Let’s say an employee makes $20.00 per hour working in a warehouse and injures his back while lifting boxes. The physician during the employee’s medical evaluation determines he can return to work but in a different capacity until he’s physically capable of performing his regular job. He can be placed in a temporary position, for example, answering the phone and doing light-duty filing. The employer can either pay his employee the same salary or adjust it to reflect the temporary light-duty position. If the employer pays the same salary, there will be no lost-time benefits paid under Workers’ Compensation. If the salary is reduced, the lost-time benefits from Workers’ Compensation will be applied to the portion that the employee is not paid.
In most states, Workers’ Compensation carriers pay two-thirds of an injured worker’s lost wages. In this example, if the injured employee were to remain out of work because the employer didn’t offer a light-duty job, Workers’ Compensation would pay $13.40 per hour in lost-time wages (0.67 x $20) with this full amount applied toward the employer’s ex-mod. If, on the other hand, the employee were to return to work and be paid $12.00 per hour for the temporary position, Workers’ Compensation would pay the employee $5.36 per hour (0.67 x $8.00, which represents the difference in pay between his regular and temporary job). In absorbing some of the lost-time benefits, the employer would reduce this claim’s future adverse impact by 60% (and remember…for three years)!
It’s best for an employer, if possible, to pay the exact wages for the same hours to an injured employee in the light-duty job so that the injuries remain medical-only claims. Some employers may question the economic viability of paying an injured employee the same wages for a temporary position, especially when it’s necessary to employ another worker to do the injured employee’s regular job. Since claims costs remain on the books for three years, impacting an employer’s ex-mod, it’s prudent to absorb lost-time benefit costs as much as possible. A lower ex-mod means lower Workers’ Compensation premiums, unless there are large increases in other factors such as payroll.
Return to Work Is Good for Employees, Too
When an employer offers an injured worker a light-duty job, it shows that employee that they care about their wellbeing. Employers who consistently practice Early Return to Work and maintain regular contact with the injured worker during the healing period will improve morale and productivity. The longer employees are out of work, the more difficult it is for them to return. The likelihood of attorney involvement also increases drastically. Getting back to work keeps the employee mentally and physically acclimated to the work schedule.
Making Early Return to Work “Work”
Communication with the medical provider is key in facilitating an effective Early-Return-to-Work program. The medical provider is critical in determining the employee’s medical condition, functional capacity, and work restrictions. However, physicians are frequently unaware that transitional opportunities exist for injured employees. At Prescient National, we recommend employers provide treating physicians with a list of light-duty jobs that are available for their employees to perform while they are recuperating from an injury. This enables the physician to make the appropriate recommendation for return to work. A list of light-duty and/or transition work may include data entry, inventory management, file organization, telephone operation, housekeeping, internal mail distribution, etc.
An Early-Return-to-Work program is designed to reduce disruptions and costs by assigning an employee temporary, transitional, or modified work duties. Early intervention allows the injured worker to maintain a positive connection to the workplace and can reduce employee frustration and concern while minimizing claims costs and future premiums.
Reach out to a Risk Manager at Prescient National for guidance in implementing a strong Early Return-to-Work program.
