How To Help Businesses With Worker’s Compensation

The past year has been a serious struggle for many business owners, and many who have managed to stay in business are confused and seeking help from agents about their insurance options. Many businesses are looking to reduce costs and recover some of the losses they have experienced. In addition, some businesses have had to let go of some of their employees, or have had to change the roles of their workers, which could put those employees at greater risk of injury. Business owners will turn to agents like you for help evaluating their worker’s compensation needs, and will also be looking to save money, so be prepared with your strategy for how to help them.

illustration of money bills over a person's hand with a suit on
Payroll changes will affect the worker’s compensation benefits and costs.

Discuss Payroll Changes

How much an employer pays their employees plays a crucial part in determining worker’s compensation premiums. This also means that the number of employees a business has determines how much they will pay in premiums. The less employees they have (possibly due to layoffs), the less they will have to pay. You can help your customers save money on their premiums by going over their payroll changes with them.

Ensure Employees Are Correctly Classified

During the pandemic, some businesses were forced to lay off workers, or needed to change some employees’ positions – and classifications – due to being short-staffed, or both. These changes will affect how these workers are covered for the new risks they can face. When an employees’ classification is changed, the cost of your customers’ premiums could change, as well. Incorrectly classifying employees, or forgetting to change their classifications, is an easy mistake for business owners to make. Make sure to discuss this with them in order to make sure employees are correctly classified, so you can possibly save them money.

two set of hands each holding a magnifying glass.
When an employee gets hurt, it is important to send them to see a medical professional and then investigate what happened.

Know What To Do When Employees Get Hurt

In the event that one of their employees is injured, your client might come to you for help. Knowing the process will make it easier for your clients. Let them know the steps: first, they should always direct their employee to get checked out when they are injured. Next, your client needs to investigate the accident and take any statements. Finally, they can file a worker’s compensation claim with the insurance company.

Be The Middleman

Sometimes a business owner will come to you to play the middleman between them and the insurance company. It is your job to point them in the best possible direction and, because you work directly with the insurance company, you can serve as the intermediary between them.

Help Build A “Recovery-At-Work” Plan

If your customer’s employee gets hurt, getting them back to work can be a long process. When the employee is able to return to “light duty,” they will have some restrictions. You can help your client come up with a great return-to-work plan to show employees that they can still be productive and be part of the team, when they are ready. You can help your customer identify work activities that their employee can engage in based on their doctor’s restrictions.

The best way to help your client and keep them happy is by explaining employee classifications, how to deal with payroll changes, and what to do when an employee gets hurt. You can help them save money by going over their options, pointing them in the direction of their best option, and providing the best customer service you can.

Get Ready For The 2020 Health Insurance Tax

Insurers were given a pass in 2019 by Congress regarding their annual health insurance tax. The reason was that the government was concerned about consumers’ out-of-pocket costs. However, if the ACA’s health insurance tax resumes as planned, this ‘free pass’ might be over and insurers will face a $15.5 billion tax bill in 2020. The health insurance tax was created to fund the implementation of the ACA’s marketplace exchanges. For consumers, this means that insurers will raise premiums by more than 2% if the tax is implemented by the IRS.

Health Insurance Tax Over The Years

Oliver Wyman Actuarial Consulting recently analyzed the projected impact of the health insurance tax on health insurer premiums over the next 10 years. They found that premiums are likely to increase by 2.2% in 2020.

The tax started at $8 billion in 2014, increased to $11.3 billion for 2015-2016, and had a suspension in 2017. The tax was then reinstated at $14.3 billion in 2018, and then given another suspension for the year of 2019.

Who It Applies To

A fully-insured health plan is the more traditional way to structure an employer-sponsored health plan. With a fully-insured health plan: The company pays a premium to the insurance carrier. The health insurance tax applies to all insurers offering fully-insured coverage. This goes for :

  • on-exchange and off-exchange individual markets
  • large and small group markets
  • insured public programs such as Medicare and Medicaid.

The Rise In Premiums

Premium increases will vary by state. However, premiums are expected to increase annually anywhere from $154 to $479. A person in the individual market can face a $196 increase. A person in the small group market can expect a $154 increase, while a family of 4 faces a $479 increase. As for families in the large group market, the increase for an individual will be about $158, while a family faces a $458 increase.

The Outcome Following The Tax

If the tax is implemented and is as high as almost $16 billion, then increased tax burdens on small employers will follow. Fully-insured small employers will face the repercussions, while private and self-insured public employers will not. Employers are not the only ones who will have to pay for the tax increase. State taxes will go up for everyone in order to cover the increased tax on Medicaid.

More importantly, many people might opt out of insurance due to the increase in premium costs. Healthier individuals opting-out will cause an imbalance in the risk pool, meaning higher premiums for the (less healthy) people who are insured.

As of now, there is no definitive answer if the tax will be implemented in 2020. Congress is considering bipartisan legislation that would suspend the tax through 2021, but it is not a guarantee. If the health insurance tax is implemented, insurance rates and premiums will be more expensive than it already is.

Commercial Insurance Rates are Rising. Here’s Why

No one wants to pay more for insurance, but it is our unfortunate reality. Commercial insurance rates are rising, meaning higher premiums across the board for many businesses. Coverage affected ranges from Business Owner’s Policy to Worker’s Compensation. It is projected that prices will continue to rise throughout the rest of 2019. From underwriting to pricing, these changes come from two major sources: cars and catastrophes.

Vehicles

Auto insurance aside, vehicles have become a major factor in the rise of our commercial insurance rates. You may think “why does this matter to me?” It matters because vehicles are our main source of transportation, influencing our economic structure deeply. Everything you have as a business owner is brought to you by some type of vehicle. With more production and vehicles on the road come more opportunities for accidents to occur. This involves more than just passenger cars.

With our economic boost, we see an increase in areas like construction. Motorized vehicles operate in these zones, causing more concern for insurance companies. More work means more workers are needed to operate these vehicles. It only leads to an upward climb in insurance rates.

There is no easy solution for the car aspect contributing to this climb. We can only wait for legislation to step in.

Catastrophes

We’ve recently experienced a lot of natural disasters. In November 2018, California was ravaged by wildfires. While it is accustomed to fires, these were the worst in years, affecting areas as far north as San Francisco, and areas as richly populated as Malibu. The Woolsey Fire destroyed over 1600 structures (including most of Paradise, CA) and caused the death of three individuals.

Besides fires, hurricanes are a force to be reckoned with annually. In 2017, Texas’ southeastern area, including Houston’s almost 6 million people, were decimated by Harvey. This storm solely caused $125 billion worth of damage. Not to mention the opioid epidemic, which is heavily affecting our medical industry with 60,000 people dying from it in 2016. All of these things only scratch the surface of the disasters our country is experiencing.

This is causing rates to climb between 1-5% for insurance deductibles depending on how close you are to at-risk areas. As people scramble to make sure they are covered more for potential disasters, insurance companies raise their rates. At the same time, claim payouts are in the billions of dollars, forcing the capital in insurance companies to deteriorate. It’s simple supply and demand affecting the market.

While it may not provide much comfort, the reality is that an increase in productivity added to the disaster influx is causing inflation for commercial insurance prices. While it’s mostly liability markets that are affected, the results can be felt by everyone.

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