How to reduce workers’ compensation costs: 3 proven strategies

Are you battling the way to reduce workers’ compensation costs for your business? If not, does one understand the sizeable risk that workers’ compensation claims pose to your business, and does one have an idea in situ for when these claims arise?

From an easy muscle strain to more serious, long-term ailments, on-the-job injuries are not any joke. As a business owner, your preparedness for these situations can determine the fate of your business. You’re probably well-aware of the direct costs you pay in workers’ compensation insurance premiums, but you may not have considered the indirect costs of on-the-job accidents and injuries.

You may need to train replacement employees, adjust work schedules, investigate accidents, and implement corrective measures. You may lose productivity, need to repair damaged equipment and property, and affect lower employee morale and absenteeism.

For an eye-opening check out just what proportion a workplace injury can cost your business, use the Occupational Safety & Health Administration’s (OSHA) $afety Pays tool to calculate the direct and indirect costs to your business. You’ll see how many accidents and injuries, from a simple muscle strain to a more serious concussion, can set your company back.

That’s why controlling workers’ compensation audit is so important to your bottom line. Here are three strategies to get you started:

1. Set up a safety program

Many injuries can be prevented before they occur. Having a security program helps you identify and eliminate workplace hazards which will cause accidents. The return-on-investment for such programs is well proven.

Various studies have shown that for each dollar invested in injury prevention, businesses see a $2 to $6 return, consistent with Safety and Health Magazine. This strong return may explain why many states, like California, require employers to possess a written safety program. Moreover, putting standards and procedures on paper shows that your company is committed to providing a secure work environment for workers.

How to set up a safety program

Ready to start planning? The Occupational Safety and Health Administration offers many useful tips and tools to begin your health and safety plan. When drafting it, make certain to include their seven core elements of recommended practices for health and safety programs:

• Management leadership: Make safety and health a core organizational value, establish safety and health goals and objectives and communicate them, provide adequate resources and support for the program, and set a good example.
• Worker participation: Involve workers and their representatives altogether aspects of the program—including setting goals, identifying and reporting hazards, investigating incidents, and tracking progress.
• Hazard identification and assessment: Put procedures in situ to repeatedly identify workplace hazards and evaluate risks.
• Hazard prevention and control: Cooperate with workers to spot and choose methods for eliminating, preventing, or controlling workplace hazards.
• Education and training: Train all workers to know how the program works and the way to hold out the responsibilities assigned to them under the program.
• Program evaluation and improvement: Establish processes to watch program performance, verify program implementation, and identify program shortcomings and opportunities for improvement.
• Communication and coordination: Make a commitment to supply an equivalent level of safety and health protection to all or any workers, and communicate hazards present at the worksite.

If you’re ranging from scratch and have a perceivably safe work environment, you'll get some extra help designing your safety program from a spread of sources at different prices. Consider using:

• A third-party consultant – Independent workplace safety consultants typically charge about $100/hour.
• An industry-specific template – Some online companies sell downloadable safety program templates designed for various industries for about $100-$150.
• Your workers’ compensation insurance carrier – Many carriers provide fee-inclusive safety consultation services to their customers.
• Occupational Safety & Health Administration – OSHA’s On-site Consultation Program offers free and confidential advice to small and medium-sized businesses. Although these services are “separate from enforcement,” be prepared to plan to complete OSHA’s recommendations.

And remember, a security program has got to be quite the document. Only the support of top management and proper on-the-ground training will put it into practice (and make a true difference in employee safety, also as controlling your workers’ compensation costs).

Once you have an effective health and safety plan up and running, you can also apply to participate in OSHA’s Voluntary Protection Programs (VPP). VPP officially recognizes employers and employees who have achieved exemplary occupational health.

In the program, management, labor and OSHA work cooperatively and proactively to stop workplace fatalities, injuries, and illnesses through a system focused on hazard prevention and control.

VPP participants undergo a rigorous onsite evaluation by a team of safety and health professionals and are re-evaluated every 3 to five years to stay within the programs. VPP participants are exempt from OSHA programmed inspections while they maintain their VPP status. OSHA also offers several other cooperative programs aimed at preventing workplace injuries.

2. Build a return-to-work program

Even with a sound safety program, accidents can still occur. When they do, a return-to-work program can create an immediate cost-benefit to the workers’ compensation claim.

It’s often the case that the longer a workers’ compensation claim stays open, the costlier the claim. For example, when injured employees return to figure later, the claim must cover more replacement income.

The goal of a return-to-work program is to proactively help injured employees revisit to figure as soon as possible, albeit it’s on a modified basis as they recover. This could include allowing an employee to figure part-time or light-duty hours, coordinated in conjunction with the employee’s medical provider.

An active return-to-work program also can have indirect cost benefits. It can assist you to maintain workplace ties with injured employees and avoid the alienation which will occur on each side during a protracted absence. And an early return-to-work lowers the prospect that the worker will never return.

3. Join a PEO

Finally, joining knowledgeable employer organization (PEO) can help manage workers’ compensation costs and claims, while also helping you navigate the security challenges in your business.

A PEO can help you:

• Choose workers’ compensation plan coverage. A PEO can cut its workers’ compensation premiums by negotiating competitive programs with insurance providers
• Evaluate the security of your workplace and style a security program that helps prevent injuries
• Resolve claims efficiently when they occur
• Manage relations with injured employees
• Implement a return-to-work program that increases employee morale and reduces the length and price of workers’ comp claims

Bundled together, these efforts can make an enormous difference in workers’ compensation and therefore the added, indirect costs of workplace injury. A good PEO’s safety services can go an extended way toward fostering a high-return “culture of safety” at your organization.