Workers Compensation in Florence and Columbia, SC
Keep Your Employees Protected.
Aiken & Co. understands the value of good employees. We know that your day-to-day operations depend on their hard work, expertise, and dedication, and if you supply them with quality benefits and plans, they can work with the peace of mind assurance that they’re properly protected.
Having the right Workers Compensation plan from Aiken & Co. can allow your business to ensure payments and cover expenses if an employee is injured from a work-related accident. Injuries can range from car accidents and back injuries to equipment malfunctions and, in some unfortunate cases, death.
Workers Compensation can cover financial obligations such as:
- An injured employee’s medical expenses/treatment
- The replacement of lost wages from injury time off
If your business does not offer Workers Compensation, serious injuries that occur on the job could lead to an employee suing your company for damages. That’s why it’s important to discuss your options with a specialist at Aiken & Co. who can help you find the right coverage options for all your business needs.
NCCI and the Calculation metrics of how your experience modification number is derived
APL + B + (W x AEL) + (1-W) x EEL =EMR
EPL + B + (W x EEL) + (1-W) x EEL
The above equation may look like mathematical physics problem, but when broken down by category with explainations, it is certainly becomes much less difficult if you know what all the abbreviations mean. See if this helps….
Illustrated above is the equation for the NCCI Experience Mod calculation, but there are definitely a few more pieces of information one will need if they want to have a better understanding of how this equation is calculated, whether or not it is correct, and how one can influence it to reduce Workers’ Compensation premium.
Starting at the beginning with the NCCI mod worksheet that is sent to qualifying companies in NCCI approved states, typically meaning your workers comp premium is in excess of $5,000, in South Carolina. When the company receives the mod worksheet either from their carrier, agent/broker, or directly from the NCCI, they will find everything they need to calculate the mod right on the cover page.
Below is an example of an experience mod worksheet furnished by NCCI:
For confidentiality reasons, the company name, effective dates, and the Risk ID have been removed, but this is a clear illustration of all the data on the cover sheet. Everything you need to calculate the NCCI mod is right here; begin with examining the top row of our column headings.
(A) Wt – this is the “weighting value,” and it’s a statistic provided by the NCCI which increases as the expected losses increase. What this means is that the larger a company is in terms of employees and payroll, the more its own claims experience influences the result.
(C) Expected Excess Losses – EEL is the difference between the Expected losses and the Expected Primary Losses (EPL)
(D) Expected Losses –is derived by using expected loss rates, and is a function of classification codes and payroll within those codes
(E) Expected Primary Losses – EPL is derived by taking a discounted portion of all the expected losses. Primary Losses are considered any claims valued under $5,000 (changing to $10,000 on 1/1/13).
(F) Actual Excesses Losses – AEL is the difference between Total Actual Losses and Actual Primary Losses (APL)
(G) Ballast – this is another NCCI statistic that varies based on expected losses, it’s designed to keep the mod close to 1.00.
(H) Actual Incurred Losses – is the total amount of claims (medical and indemnity only, no expenses). This total has per claim limits that vary by state. A $150,000 or $200,000 per claim limit is common. The Actual Incurred total can also have another significant limitation called the Experience Rating Adjustment (ERA), which provides a 70% discount for medical only claims.
(I) Actual Primary Losses – APL is the total of the first $5,000 (in actuality it is now capped at 16,500, for purposes of this illustration, this is an older calculation from 2012, when all claims were capped at $5,000-(since changed as of 1/1/13 from $5,000 to $10,000: effective 2017, it is now capped at $16,500).
Expected and Actual Losses
Examining any one of the other pages of the mod worksheet will provide state specific, annual results. Below is a snapshot/summary for one year of one state’s results…
The columns here help us understand where EEL and EPL come from.
Code – is simply the classification code that describes the type of work that is being done, for example “8810” is for clerical work.
ELR – is the expected loss rate, meaning for every $100 of payroll (in this class code) other companies, on average, have experienced this amount of workers compensation claims (medical and indemnity). Multiplying the (payroll/$100) times the ELR will give you the Expected Losses.
D-Ratio – is the Discount Ratio, which is the portion of expected claims that will be considered “primary,” or under $5,000 (changing to $10,000 effective 1/1/13). Multiplying the Expected Losses times the D-Ratio will give you the Expected Primary Losses (EPL). Subtracting the EPL from the Expected Losses provides the Expected Excess Losses.
Claim Data – this is the claim number from the insurance carrier and it identifies a specific case file. Specific claims will be listed individually if they are open, include any indemnity, or >$2,000. The worksheet will add together any closed, medical only claims under $2,000 and put them all on one row. In this example there were six closed, medical only claims under $2,000, added together.
IJ – this is the “injury” code that describes the severity of the claim; here are the definitions of the nine different injury codes:
1 – Death
2 – Permanent Total Disability
3 – Major Permanent Partial Disability
4 – Minor Permanent Partial Disability
5 – Temporary Total or Temporary Partial Disability
6 – Medical Only
7 – Contract Medical or Hospital Allowance
8 – Compromised Death – CA only
9 – Permanent Partial Disability
OF – is an identifier whether the claim is “open” or “final” (meaning closed)
Actual Incurred Losses – is the value of the claim provided by the insurance carrier, and includes medical and indemnity payments and reserves
Actual Primary Losses – represents the first $5,000 of each claim (changing to $10,000 effective 1/1/13)
Experience Rating Adjustment (ERA) – The ERA is a discount of 70% applied to claim values for claims that are medical only (no indemnity payments and no permanent disability). This discount, which is approved in most NCCI states, was first applied in 1998 as an incentive for employers to provide return to work programs, light duty, and get injured employees back on the job. The ERA is approved in the following states:
AL, AR, AK, CO, CT, DC, FL, HI, ID, IL, IN, KS, KY, ME, MD, MI, MN, MS, MO, NE, NV, NH, NC, OK, RI, SC, SD, TN, TX, UT, VT, VA, WV, and WI.
We hope this helps better explains and brings more insight towards the impact of workers compensation claims and the importance of Return to Work Programs, Wellness programs and any safety mitigation pertaining to your company’s employees.
Of course we do not expect our clients to calculate these every year, rather our goal is to inform and educate, allowing for more transparency with our insured’s. Letting everyone know that we are ready and willingly available to help provide further clairifation to your business’ specifc calculations. For more information, please contact one of our associates today!