3 Proven Ways to Reduce Your Workers’ Compensation Costs

If you’re looking for ways to save on workers’ compensation insurance, you’re well aware of the direct costs that you pay in premiums.

But what you may not have considered are the indirect costs of on-the-job accidents and injuries, which go beyond what you pay for workers’ compensation insurance. You may have to train replacement employees, adjust work schedules, investigate accidents and implement corrective measures. You may lose productivity, have to repair damaged equipment and property, and must deal with lower employee morale and absenteeism.

That’s why my first suggestion – controlling workers’ compensations costs via a safety program – is so important to your bottom line.

1. Setting up your safety program

Many injuries can be prevented before they occur.

Having a safety program helps you identify and eliminate workplace hazards that may cause accidents. The return-on-investment for such programs is well proven.

Various studies have shown that for every dollar invested in injury prevention, businesses see a $2 to $6 return, according to Safety and Health Magazine.

This strong return may explain why many states, like California, require employers to have a written safety program.

Moreover, putting standards and procedures on paper shows that your company is committed to providing a safe work environment for employees.

If you’re starting from scratch and have a perceivably safe work environment, you can get help designing your safety program from a variety of sources at different prices. Consider using:

  • A third-party consultant – Independent workplace safety consultants typically charge $100/hour.
  • An industry-specific template – Some online companies sell downloadable safety program templates designed for different industries for approximately $100-$150.
  • Your workers’ compensation insurance carrier – Many carriers provide fee-inclusive safety consultation services to their customers.
  • Occupational Safety & Health Administration (OSHA) – OSHA’s On-site Consultation Program offers free and confidential advice to small and medium-sized businesses. Although these services are “separate from enforcement,” be prepared to commit to completing OSHA’s recommendations.

And remember, a safety program has to be more than the document. Only the support of top management and proper on-the-ground training will put it into practice (and make a real difference in employee safety, as well as controlling your workers’ compensation costs).

2. Return-to-Work Program

Even with a sound safety program, accidents can still occur. When they do, a return-to-work program can create a direct cost benefit to the workers’ compensation claim.

Research shows that the longer a workers’ compensation claim stays open, the more expensive the claim. For example, when injured employees return to work later, the claim must cover more replacement income.

So the goal of a return-to-work program is to proactively help injured employees get back to work as soon as possible, even if it’s on a modified basis as they recover. This could include allowing an employee to work part-time or light-duty hours, coordinated in conjunction with the employee’s medical provider.

An active return-to-work program can also have indirect cost benefits. It can help you maintain workplace ties with injured employees and avoid the alienation that can occur on both sides during a prolonged absence. And an early return-to-work lowers the chance that the employee will never return.

3. Join a PEO

Finally, joining a professional employer organization (PEO) can help manage your workers’ compensation costs and claims, while also helping you navigate the safety challenges in your business. A good PEO’s safety services can go a long way toward fostering a high-return “culture of safety” at your organization.

A PEO can help you:

  • Choose workers’ compensation plan coverage. PEOs can cut workers’ compensation premiums by negotiating competitive programs with insurance providers
  • Evaluate the safety of your workplace and design a safety program that helps prevent injuries
  • Resolve claims efficiently when they occur
  • Manage relations with injured employees
  • Implement a return-to-work program that increases employee morale and reduces the length and cost of workers’ comp claims

Bundled together, these efforts can make a big difference in what you spend on workers’ compensation and the added, indirect costs of workplace injury.

Want to learn more about how a PEO can help you save money on workers’ compensation? Download our free e-book, HR Outsourcing: A Step-by-Step Guide to Professional Employer Organizations (PEOs).

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Travis Parsons

When is comes to discounts for a Return to Work Program, I know every state is different. Do you have a list of states that provide this discount?

Insperity Blog

Hi Travis, discounts in your workers compensation plan should be discussed with your workers compensation carrier or insurance broker. These discounts (if available) may differ based on your insurance carrier and your current program. I am not aware of a specified list of states that offer discounts for a return to work program – it’s best to search for this information based on the state of interest.

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B. Pratte

Working for an insurance company that specializes in temp staffing and PEO’s I can testify to these three ways. Credits can be awarded for formal safety programs and implementation as well as a formal return to work program. I appreciate the simplicity of this blog posting. It is easy to understand from anyone’s perspective, especially the employer. I have read through a lot of blogs that are over my head due to the insider lingo employed. Check out my blog at http://brittanypratte.weebly.com/blog.

Insperity Blog

Thanks for your feedback! Glad you found our post informative and not packed full of corporate jargon 🙂