The Upside to Thoroughly Explaining Comp Benefits

Orienting and training employees is a crucial step in promoting a safe work environment, which will determine company insurance costs in the near future.

• By Henry Wright
• Feb 29, 2012

Most insurance professionals and risk managers know worker's compensation (WC) as insurance that began in 1915 and is a regulated offering mandatory benefit to protect individuals injured on the job. WC pays for 100 percent of worker medical bills and lost wages from work-related injuries. If you are a risk manager, human resources manager, or benefits administrator, you may be one of the many managers who firmly believe that expounding on the benefits of worker's compensation to front-line workers will ultimately lead to an escalation in claims or rampant WC fraud. After all, the prevailing thought is the more they (employees) know about the system, the more loopholes they can find. Explaining worker's compensation benefits to your employees upon hire sounds counterintuitive, right?

For years, the classic strategy in controlling WC claims has been: Report the claim early; direct the medical care (if allowed by the jurisdiction); implement a return-to-work or transitional duty strategy, medical cost containment, and bill review; determine impairment ratings if necessary; and close the claim as quickly as possible. While each of these elements can be impactful in its own right, this entire process omits one very basic component -- an educated workforce with a clear understanding of what worker's compensation coverage does and does not cover. Because coverage specifics may be different for different jurisdictions, I will not belabor the nuances here, but what we need to consider is the message that we are delivering to employees regarding such benefits. One constant is that all states require an employee's injury or occupational disease to "arise out and during the course of employment" to be deemed compensable under worker's compensation.¹

It is important for young, inexperienced workers to understand company job expectations. as well as the safety rules they should heed while performing their daily job tasks. It is also important they understand what should happen in the event they get injured on the job. By educating the employees on the specifics of worker's comp, employers will ease apprehension, fears of isolation, and lack of empathy that some workers suffer. These fears often drive injured workers to seek attorney involvement or to extend periods of disability beyond average recovery times for the injury. Lack of education also could drive late reporting, which has been statistically shown to ultimately increase the cost of claims. Liberty Mutual Insurance conducted a study of its national customers who reported claims over a three-year period between 2007 and 2009. Liberty Mutual found these reported claims cost 32 percent more when reported between two and three weeks of the date of injury. If they were reported later than a month, the cost increased by 72 percent.²

Educating workers on WC benefits during their initial orientation could prove most beneficial. This includes educating employees about the impact of insurance fraud and the importance of early reporting. Employers should:

• Make WC fraud a regular topic of discussion at safety meetings
• Utilize flyers and payroll stuffers to advance fraud awareness
• Emphasize your tough stance on WC fraud perpetrators

Orienting and training employees is a crucial step in promoting a safe work environment, which will determine company insurance costs in the near future. During orientation, employers will find that many employees resist asking questions. To counter this reluctance, the employer should use checklists and fill any gaps by explaining, in detail, what they expect of the new employee. At the end of the orientation training, ask new employees to sign the checklist to confirm they understand and have been instructed in the company's safety policies and claim reporting procedures. This signed checklist should become part of the employee's permanent record.

This practice, by no means, should be used as a substitute for sound health and safety principles and guidelines. This education is meant to reassure injured workers of the process that will take place after an injury occurs. Employees who feel valued are less likely to cheat the system. Employers should keep in touch with an injured employee and make it clear they are looking forward to having him or her back at work as soon as they have the doctor's approval.

References
1. Beyer, Calvin. "A Winning Strategy for Workers' Compensation Management," Zurich Journal Article, January 2011.
2. Liberty Mutual Group. "The Cost of Late Reporting," retrieved from http://libertymutualgroup.com/business, October 2011.

This article originally appeared in the March 2012 issue of Occupational Health & Safety.