Over the last several years as we speak to different groups on workers’ compensation we continue to find employers that think it is best for them to pay small workers’ compensation claims out of their pocket. The main reason is these business owners have never been educated on how their experience modification factor is developed and the minimal impact that a medical only claim has on their experience modification factor. The insurance industry and some agents have done a poor job addressing this key area and there is a lot of misinformation that has been spread regarding this subject. I want to address a few key points on employers paying small medical only claims out of their pocket.
1. It is illegal in Nebraska to do this. The Department of Insurance can issue a fine of up to $1,000 for every act or violation.
2. Nebraska is one of many states that are an ERA (Experience Rating Adjustment) state. This means that medical only claims are discounted 70% as they apply to your experience modification factor. For example if you have a medical only claim of $500 only $150 of that will apply when your e-mod is calculated. That one medical only claim would likely cost a company around $125-$175 over a three year period. So why would you want to pay $500 out of your pocket to pay this instead of paying a much smaller figure if you turned it in? I have a client that was doing this and I finally was able to show them that they were paying out double what they would if they had turned those small claims in. It is very easy to use our E-Mod software to show companies exactly how their claims impact them. There is nothing in the E-Mod formula that penalizes you if you have several small medical only claims.
3. We have seen instances where companies have not turned in small claims only to have that claim blow up on them due to the injury becoming worse. When situations happen like this it adds a lot of extra cost to the claim in addition to issues for not reporting the claim on a timely basis.

Don’t feel bad if you didn’t know any of this. The vast majority of business owners will speak to have never been educated on this or how the ERA status in Nebraska affects them. Keeping a claim medical only is so crucial for a company because it will help them lower workers’ compensation costs. This is why it is so important to stress early claim reported as well as having a good return-to-work program. Workers’ compensation is the most controllable form of insurance you have and you can have an impact of the profitability of your company by taking steps to improve your program. Don’t hesitate to contact us so we can evaluate your E-Mod and show you exactly how your claims are impacting your company.
In 2010 UNICO Group was named the National Work Comp Agency of the Year by The Institute of Work Comp Professionals. You can contact Carl Zeutzius at czeutzius@unicogroup.com and visit our site at www.unicogroup.com and view our UNICOMP section.