Can I Make Out-of-Pocket Payments for Worker Injuries?

When an employee receives a minor injury at work, it may be tempting to pay for their doctor’s visit out-of-pocket rather than claim it under your workers’ compensation policy. After all, this would avoid the hassle of filing a workers’ comp claim and reduce usage on the insurance policy, meaning future premiums would not increase as much from utilization.

But is this a smart strategy to contain workers’ compensation insurance costs?

While it sounds cost-effective, here is a breakdown of the risks to paying for workers’ comp medical bills out-of-pocket rather than claiming them under your workers’ compensation policy.

Risks for Paying Out-of-Pocket for Workers’ Comp Injuries Sustained

1. You will pay more.

Even if the injury only requires medical attention from one doctor’s visit, you will likely pay more out-of-pocket expenses for that treatment than the actual cost of the workers’ compensation claim. This is because workers’ compensation insurance typically has pre-negotiated rates with contracted providers that are much lower than what the general public pays.

2. The injury could turn into something bigger, leaving you on the hook.

While you might think that the injury is minor, it could turn into something much more complicated and expensive. For example, an injured worker who tripped and fell may have a swollen ankle at first, but their back may end up hurting from the fall several days later. Then what?

When initial workers’ compensation claims are not reported within the required timeframe, the insurance carrier may reject the claim, leaving you responsible for all medical bills and other injury-related medical expenses.

3. Filing workers’ comp claims is your legal obligation.

Even if you are not concerned about paying more for an office visit or being on the hook for excessive medical bills, it is the law to file all job-related injuries (even if they are minor) and illnesses as a workers’ comp claim. This includes anything beyond first-aid treatment.

Not only is it against the law, but employers who try to self-fund injuries may face lawsuits from employees, as well as penalties from labor authorities. Workers' compensation laws require employers to provide insurance, and the federal government requires insurers to cover medical expenses.

How can I control workers’ compensation costs?

If you are interested in containing costs to lower your workers' compensation premiums, the better approach is to focus on workplace safety and preventing work-related injuries. But keep in mind that reducing workers’ comp insurance rates is not something that can happen overnight.

Safety Trainings and Adjustments

Your company may need a culture change by implementing preventative methods like safety trainings or adhering to timely reporting procedures. You may also need to make changes to your equipment layout, install machine guards, or display warning signs to keep safety top-of-mind.

Part of your workers’ compensation carrier’s role is to help you identify trends from claims and provide recommendations to contain your e-mod. Reach out to your insurance company or contact your certified HR expert for more information.

What is an e-mod?

An experience modification rating (e-mod, Emod, or EMR) is the multiplier used to determine your workers’ comp premium. An e-mod of 1.0 is the industry average, so if your workers’ comp premium prior to being multiplied by the e-mod is $100,000, an e-mod of 1.0 means your total premium is $100,000 x 1.0, or exactly $100,000.

If your company pays more or less money towards workers’ comp claims than other companies of comparable size and industry in your state, your experience modifier will be adjusted by the National Council on Compensation Insurance (NCCI). Companies with fewer claims and/or expenses will be adjusted to lower than 1.0 (a credit e-mod), whereas companies with more claims and/or expenses will be higher than 1.0 (a debit e-mod).

How long do workers’ comp injuries impact your e-mod calculation?

An experience rating effective date generally lasts for three years. This means that if a worker gets injured in 2024, it will show up in your e-mod rating for policy year 2026 and will stay there for three years. Overall, the less you pay out for workers’ comp insurance claims, the less your company’s e-mod will increase.

Severity and frequency of claims directly impact your e-mod, which determines how much your company pays for workers’ comp insurance in the future. Because the experience rating effective date lasts for three years, it will be several years before an accident on your policy is no longer part of the e-mod calculation. This is why many business owners implement safety programs and light duty accommodations: to prevent claims and minimize total claim payouts.

How much of an impact do minor injuries play on your e-mod calculation?

Injuries that do not include any lost time on the job only have a small percentage (usually 30%) of that claim go towards your e-mod calculation. In other words, the portion that a minor injury on a workers’ compensation claim would be attributed to your experience modifier is far less than any of the risks you would be taking for not claiming the injury.

How does offering light duty reduce workers’ comp rates?

In most states, employees receive 66.67% of regular wages from the workers’ comp insurance carrier while recovering from their work-related injury. Any work they perform while recovering, at a reduced capacity or with restrictions, lowers the amount of money they receive from the workers’ comp payout. In return, this reduces the fiscal responsibility associated with the claim and the overall impact on your e-mod.

Spending time at work also helps keep injured employees engaged, fulfilled, and more positive about work. Be sure to follow the doctor’s restrictions and keep your expectations realistic.

Stratus HR helps companies contain workers’ comp costs

With certified experts on hand, Stratus HR is ready to help your business implement safety initiatives and industry-specific safety training materials, as well as create a return-to-work program to minimize workers’ compensation claim costs. Our team will also help you procure workers’ compensation insurance coverage, eliminate the down payment and end-of-year premium audit, manage your workers’ comp claims, and maintain your OSHA 300 logs.

For more information, please book a free consultation and our team will contact you shortly.