Find answers to frequently asked questions about workers' compensation coverage.
What should I do when an accident occurs?
- Notify Eastern immediately whenever there is a workplace injury. The faster we receive notice of an injury, the faster we can help the injured worker to access the most effective medical care.
- When you submit your claim, we will file the First Notice of Injury with the appropriate state agency.
- OSHA may need to be notified as well.
- When a fatality occurs in the workplace, within eight hours after the employer learns about the event, OSHA must be notified, regardless of the size of the employer or its industry.
- All employers are required to report any work-related inpatient hospitalization, amputation or loss of an eye, within 24 hours after the employer learns about the event.
What can I do to prevent workers’ compensation fraud? If I suspect fraud, what do I do?
How is my workers’ compensation premium calculated?
- Your premium will vary based on what your organization does, where you are located, your payroll, and your claim history. Let’s take a look at how each of these factors can impact your premium:
- Your organization is categorized by class codes specific to the type of work your employees do. You may have a few or several class codes, depending on how many employees you have and their duties. Some types of work are riskier than others, so insurance carriers charge differently for each class code.
- Many states use the NCCI class codes, but some have their own system. States establish a Loss Cost for each class codes.
- Insurance carriers file a Loss Cost Multiplier for each class code in each state in which they do business. The Loss Cost x Loss Cost Multiplier is the Rate for a class code.
- Insurance carriers use an estimate of your annual payroll (sometimes referred to as your “exposure”). At the end of your policy term, a premium audit will compare your estimated payroll with your actual payroll, and your premium may be adjusted.
- State workers’ compensation bureaus assign you an experience modification factor based on your organization’s claim history. If your history is better than average for your type of business, your modification factor will likely be below 1.00. If it is worse than average, your modification factor will likely be above 1.00.
- The basis for workers’ compensation premiums is this formula: Class Code Rate x (Employer’s Payroll/$100) x Experience Modification Factor
- There will be a different premium calculation performed for each state in which you have employees.
- Other factors can increase or decrease your premium.
- Some states may provide for a credit if your organization has a formal safety program.
- Other credits or debits may apply, depending on a variety of factors.
- In some states, smaller employers may have a merit rating factor assigned instead of a modification factor. These are also based on your organization’s claims history and can impact your premium.
- Various charges may be applied, such a flat Expense Constant to cover the costs associated with issuing, recording and auditing policies, or a Minimum Premium to bring your policy to the class or policy minimum premium.
- Some states may require additional assessments to be applied to the premium.
- Some policy endorsements (such as adding a location) may result in a change in premium.
What is a premium audit?
- The purpose of a premium audit is to compare the estimated annual payroll used to calculate premiums with the employer’s actual annual payroll. If there is a difference, an adjustment will be made – either the carrier will owe the employer money (because the actual payrolls are less than the estimated payroll), or the employer may owe the carrier additional premiums (because the actual payrolls were higher than the estimated payroll).
What are classification codes?
- Workers’ compensation class codes are codes used by insurance carriers to identify specific categories of work. Businesses are categorized by class codes specific to the type of work their employees do. Insurance carriers charge different rates for each class code, because some types of work are riskier than others. In most states, the classification system used is one devised and maintained by NCCI, the National Council on Compensation Insurance; rates and class codes vary by state.
- Each classification code is comprised of a group of employers with a similar exposures, or types of hazards. A basic classification code denotes a particular type of job duty within a business. Therefore, a class code is the systematic arranging of properties, persons, or business operations into groups or categories according to certain criteria. This arrangement is done to create a basis for establishing statistical experience and determining workers’ compensation rates, and to avoid unfair discrimination by insurance companies.