Preventing Workers’ Compensation Reporting Lag
No business wants to think about the possibility of one of their employees falling ill or becoming injured as a result of their job, but once an injury occurs, it’s imperative that the injury be reported to the employer and the workers’ compensation company as soon as possible. Lag time, which refers to the period of time between the date that the incident occurred and the date that the claim is officially reported to the insurer, can be very dangerous to the employee and the business if allowed to build up.
The Consequences of Late Reports
Reporting lag is one of the biggest cost drivers in workers’ compensation claims. For each day that passes with the claim unreported, the costs increase. Some estimate that:
- A week in lag time can increase the claim cost by 10 percent
- A claim filed a month or more after an injury have settlement costs 48 percent higher than claims reported within a week
- Claims reported 24 hours or more after the initial incident can be up to 33 percent more expensive
- The longer the lag time, the higher the probability of litigation, which is an additional cost driver; litigated claims costs are at least 40 percent higher than non-litigated claims costs
Finances are not the only thing that are negatively affected by a lag in reporting. If an employee is injured in an on-the-job incident and they feel as though they cannot report it to their employer or their employer does not report the incident or keep them updated about the claim, this can be very damaging to their morale, and can negatively impact the company climate. In addition, the longer it takes for a claim to be reported, the longer it takes for the workers’ compensation and return-to-work processes to be initiated, which in turn can impede the recovery process, further harm the employee’s health, and reduce productivity while they wait to fully recover.
Preventing Reporting Lag
There are no acceptable excuses for late claim reporting. Every organization, no matter their industry or rate of safety incidents, should have a claims reporting process in place to minimize reporting lag. These are the measures that should be highlighted in the plan:
- Employee training. All employees should be thoroughly educated (and regularly trained) on claims reporting procedures and what to do in the event of a safety incident.
- Specific delegation. The last thing a business wants is for an incident to occur and no one report it because they “didn’t know it was their job”. The claims reporting plan should clearly delegate who is responsible for reporting an incident to the employer and in turn who should file the claim with the insurance company. Backups should also be specified in the event that the designated employee is on vacation or otherwise unable to report.
- Positive reinforcement. Some employees are reluctant to report safety incidents because they fear that they will be terminated or otherwise punished. Businesses should clarify that reporting injuries takes precedence, and encourage employees to be honest and quickly report incidents. Some businesses even have a “near miss” program where they encourage employees to report potential safety incidents.
About Caitlin Morgan
Caitlin Morgan specializes in providing Workers’ Compensation insurance to residential care facilities, including offering a program designed for members of the Indiana Health Care Association (IHCA), HOPE, and Leading Age Indiana associations. We can assist you in reviewing an existing Workers’ Compensation plan, securing coverage, boosting safety plans and implementing RTW programs for your nursing home clients. Please contact us at 317.575.4440.