Workers’ compensation claims have become even more complex amid COVID-19, in great part due to the increasingly large remote workforce. This article addresses the top questions employers are asking to help them navigate today’s altered workers’ comp environment.
What state statutes now apply?
Your workers’ comp policy will have a list of covered states. For companies with employees whose remote work location is in another state, you may not have coverage for a claimable workers’ comp injury at home unless you have that state on your policy. Your safest bet is to ensure that your policy lists all states where employees are working. However, this is a topic best discussed with your broker.
What is the definition of a work-related injury?
OSHA explains it in such a way that if the exposure in their home/remote work location is the same as the exposure in the office, the injury would most likely be considered work related. For example, if an employee is carrying a box of work files and drops that box on their foot and breaks it, that could also happen at work; therefore, that is probably going to be deemed a work-related injury and claimable on workers’ comp. Now, if an employee takes a lunch break and trips over their dog and breaks their wrist, that likely will not be considered work related, as that same exposure does not exist in the workplace and, therefore, most likely will not be covered. Every state is a little different. Some are more lenient than others; some are more forgiving to the employer versus the employee.
How do employers know if a claim falls into the workers’ comp bucket or the health insurance bucket?
The ultimate determination is made by the workers’ comp claim representative; the employer shouldn't have the burden of that decision. A general rule of thumb is that any time there is even a potential chance of a workers’ comp injury, alert the carrier and ensure the claims representative gets all of the correct information. However, if you as the employer (or somebody acting on your behalf) is not intimately involved and proactively monitoring all of your claims – on both the health insurance side and especially on the workers’ comp side – incorrect employee identification of a workers’ comp injury can slip through the cracks . . . and it will negatively affect you in some way.
Workers’ comp or health insurance – what are the ramifications?
Any time you add workers’ comp claims, you're potentially going to increase your experience modification factor and rates. And an injury that happens this policy term may affect your future mod calculations. Therefore, you want to make sure that the injury is being compensated in the correct category. If it was a clear-cut case of workers comp, it has to go on your workers’ comp; that's where it should be and why you have the coverage. However, with the earlier example of the person tripping over the dog, that's a health insurance issue, so you need to ensure that's being reported appropriately to the employee’s health insurance. On the flip side, if an injury occurs that should be filed as a workers’ comp claim is filed as a health insurance claim, you may be subjecting your employee to unnecessary out-of-pocket costs in the form of medical plan deductibles.
Has the real exposure lessened and where are the corresponding savings?
This question is most relevant to non-office companies, for example, restaurants, manufacturing facilities, etc. Many got PPP loans to continue paying employees even though they weren't really working. Let's take the example of production line workers. Are they having the same exposures at home, not performing any work but receiving a paycheck, as they would in the workplace? Obviously not, so you don't want to be charged for that same level of exposure when it isn't there. A common mistake is to forget to have that conversation with the auditor during your workers’ comp and general liability policy audits to say, my employees were working at home and being paid under PPP, so they should be looked at under a different classification. If you don’t have that conversation, you very well may not get those reduced-exposure savings.
How can you “reset” premiums based on current reality, not past history?
For many companies that temporarily shut down or reduced staffing, they were still paying for a higher level of exposure that they thought they would have at their last renewal but did not. If you’re in this situation, there still may be time to reduce your insurance spend up until your renewal. Ask your broker to reach out to the insurance carriers to negotiate with the underwriters to adjust your current term exposures. If you do make those changes, be sure to review your exposures at your next renewal to ensure you adjust for any changes that occur.
Do the issues that have been described so far typically arise at the claim submission level or the claim payment level by the third-party administrator (TPA)?
Both. Sometimes they arise at the claim submission level. For example, an employee is at the hospital, someone at the provider asks them what type of injury occurred and they “check a box” that indicates it is not a workers’ comp injury. That claim then flows through the TPA (for the self-funded side), the claim is adjudicated by a claims payer and they will pay that claim. During an audit of self-funded plans, it is not uncommon to find that many workers’ comp claims are also being submitted to the health insurance or only to the health insurance plan. Sometimes the claim is paid by both, and sometimes it is paid by the medical plan in error.
How can employers monitor these cases?
A plan sponsor can perform a claims audit of their self-funded TPA for any type of claim. For the workers’ comp category of the claims audit, you will need a list of everyone who was injured, the date of injury, the type of injury and any other relevant details so that as the audit is being conducted the auditor can compare any claims against that information to identify errors/overpayments.