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Employers in Massachusetts and abroad have a lot to be concerned about regarding a hardening Workers’ Compensation market and the impending rate increase. Employers, you should be aware of several tools at your disposal that may present an opportunity to reduce Workers’ Comp costs and improve employee outcomes. One such tool is a QLMP, or Qualified Loss Management Plan.
For those who find themselves in the Workers’ Comp Assigned Risk Pool (22 states including MA have such programs) participation in a QLMP may be an option. The application of the QLMP credit is restricted to guarantee cost policies (including those with a small deductible endorsement) for employers in the pool or for employers who qualified for a credit in the pool but have since moved to the voluntary market. Employers taken out of the pool on a Large Deductible Program, Large Risk Rating Option or other voluntary market retrospective rating plan, are not eligible for credits under the Qualified Loss Management Credit.
A QLMP program reduces employers’ costs through a credit applied to an employers assigned risk workers comp modified premium. Those who successfully engage in a program can reduce their experience modification (ex. mod) including ARAP charges, or All Risk Adjustment Factor – a surcharge that increases premiums over and above the experience modifier.
Employers commit to engage for four years in which time close scrutiny is made of the employers claim history. The goal is to improve a company’s management of claims. Better claims practices such as assigning claimants a medical rep to walk them through the recovery process and fraud investigation may be recommended. A complete review of facility safety procedures and equipment improvements may be recommended. The employer must implement all recommendations made by the QLMP specialists in a timely manner.
Due to up-front costs to employers it may not make economic sense for those whose annual premiums are less than $50,000. Credits range depending on the provider. Currently an employer may expect credits in the range of 10-15% for the first year, and decrease over the following three years to 5-7.5%. Employers are eligible only once. The credit is in effect for 4 years but the years do not have to be consecutive.
Keep in mind improvements made to your company’s ability to manage Workers’ Compensation claims will have a lasting effect by reducing costs over a much longer period of time if you continue to manage your Workers’ Comp issues successfully. Given the current economic environment, aging worker population and hardening Workers’ Compensation market it pays to be aware of all the tools available to you as an employer. Working with knowledgeable professionals will ensure you develop the right strategy.
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Scott Graves is passionate about helping business owners. Tune in to his show ‘The No Boundaries Radio Hour’ with co-Host Dennis Mannone on the No Boundaries Radio Network. Meet him at the crossroads between strategy and innovation at scott@smgravesassociates.com or twitter @smgcreative.
