The Most Common Problems That Arise During Workers’ Compensation Claims Reporting
Workers’ compensation (workers’ comp) insurance is an integral part of the American business landscape. Designed to provide financial support for workers injured on the job, this insurance solution is mandated by most state laws. The claims process when a worker becomes injured often takes place behind the scenes, leading many employers to lose control over the administration of the insurance and causing staggering rises in costs. Employees filing claims may also run into significant hurdles, resulting in denial of coverage. There are several common problems in the workers’ comp claims process that employers and employees need to be aware of to both ensure adequate coverage and to keep expenses in line with expectations.
Rising Expenses in Workers’ Comp Policies
Many worker’s comp policies are experience-rated; in other words, the frequency and number of claims have a direct bearing on premium costs. Insurers use experience rating factors like XMOD or EMOD to calculate modified premiums. If an employer experiences higher numbers of claims in a given year, the next year’s premium costs can be expected to climb.
Another contributing factor in rising costs related to experience modification ratings is that high scores may lead to safety inspections by regulatory agencies such as the Occupational Safety and Health Administration (OSHA). These inspections may ultimately result in fines and penalties, further increasing overhead expenses. It is in the interest of employers to manage claims frequency, helping to keep insurance costs in check while avoiding potentially damaging safety inspections.
Claims Reporting: Common Problems for Employers
There are many common problems associated with workers’ compensation claims processing. These problems often occur during the reporting phase, but may also arise from the lack of certain employee programs and services as well as in claims management. Common problems for employers include:
- Late or improper claims reporting – Some employers may attempt to delay reporting a worker injury and subsequent claim, which can interfere with the insurance company’s ability to adequately investigate that claim. Improper claims may result from confusion in the reporting process, including who is responsible for submitting claims and what specific course of action is needed if an employee is injured on the job.
- Invalid claims – It should come as no surprise that the workers’ comp sector is inundated by invalid claims, such as an employee becoming injured out of the course or scope of his/her at-work duties. These claims are often processed as if they were valid.
- Failure to monitor or review claims – Unfortunately, many employers tend to take a hands-off approach to workers’ comp claims, believing that insurers have adequate resources and knowledge to provide oversight. Reviewing claims is another problem area; employers are recommended to utilize the services of a third-party claims consultant to verify the validity of claims.
- Failure to provide “return to work” programs for injured workers – Return to work (RTW) programs help manage costs by providing light-duty positions for workers, getting them back on the job as soon as possible. These programs work to keep employees involved and to reduce overall claims costs.
Employers must establish clear-cut protocols when it comes to submitting injury claims, including the monitoring and periodic review of claims. Designating a person or team to be responsible for all aspects of workers’ comp administration can provide the needed oversight and to eliminate confusion about the process.
Claims Reporting: Common Problems for Employees
When a worker is injured on the job, he or she may have to navigate a complex and confusing set of tasks to file a workers’ compensation insurance claim. Naturally, problems may arise; these problems may lead to delayed or denied coverage when an injured worker needs financial support the most. Common employee-related claims reporting problems include:
- Failing to report an injury in a timely fashion. Delayed reporting can often result in a denial of coverage.
- Omitting critical medical information and details on the accident report, or failing to submit this information as part of a claim.
- Errors in filling out forms or skipping submission of requested forms.
- Information submitted by medical professionals that indicate the injury was not work-related.
- Failure to submit to medical testing, including drug screenings as mandated by many worker’s comp policies.
A denial of coverage for a valid at-work injury can result in the injured employee having to pay out of pocket; this can be financially damaging to the employee, even with other forms of health insurance in place. Employees denied coverage may seek legal remedies, which can cause employers to face significant expenses in legal representation and defense.
Workers’ compensation insurance is governed by rules and regulations to protect all concerned parties, whether that is an injured employee or his/her employer. By taking the steps needed to manage claims reporting, both employer and employee benefit, ensuring the coverage needed in case of an accident and helping to keep overhead costs from skyrocketing.
About Caitlin Morgan
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