New law can help employers stabilize workers’ compensation costs
The deadline for Gov. Nixon to take action on legislation passed in the 2016 Session expired this month. In all, the governor signed 115 bills, vetoed 23 and allowed three to become law without his signature. Senate Bill 700 was among the unsigned bills. While its passage received little fanfare, it could mean significant savings for Missouri employers by helping to stabilize workers’ compensation costs.
The legislation raises the amount of money an employer can pay out-of-pocket to cover medical costs for workers injured on the job. Current law capped that amount at $1,000. The new law indexes the threshold to an employers’ uniform experience rating, which comes to $3,200. Specifically, the act changes the medical cost provision of the statute to 20% of the current split point of the primary and excess losses under the uniform experience rating plan
“Indexing the threshold and avoiding having to take this issue back to the Legislature every few years is an advantage for employers,” said Randall Gammill, partner at Connell Insurance, Inc. “Employers have been operating under the same $1,000 cap for more than ten years and as you can imagine, $1,000 doesn’t go nearly as far today as it did a decade ago.”
Allowing employers more flexibility to “self-insure” small claims helps keep an employer’s experience modification rating low, which in turn, stabilizes workers’ compensation rates.
“Simply stated, the experience modifier is an employer’s individual ‘driving record’ that shows how the employers’s claims experience over a 3-year period compared to other employers in the same industry,” Gammill said. “And, just like our personal driving records, the experience modifier will increase the paid premium if claims are above average and decrease the paid premium if claims are below average.”
As under previous law, employers must pay the full medical cost, no formal claim can be filed and the employee cannot miss more than three days of work as a result of the injury.
“The key thing is if the employee misses more than three days of work, this new law doesn’t help employers at all,” Gammill said. “That’s why it is more important than ever for employers to establish a good relationship with a qualified company physician and to establish a formal return-to-work or light-duty program.”
The legislation was sponsored by Sen. Dave Schatz, a Republican from Sullivan. Other provisions of the bill include a workers’ compensation exemption for volunteers in veterans organizations and a provision regarding grants for firefighter organizations.
CONFERENCE CALL: Get the most out of Senate Bill 700
To help our members get the most out of this new law, the Missouri Chamber of Commerce and Industry is providing a 30-minute conference call 10:00 a.m. on Wednesday, August 17, 2016. We will explain the indexing provision of Senate Bill 700 and answer any questions employers might have. During the call, we can also show employers how to weigh their options for self-insuring or filing a workers’ compensation claim. The call will also provide tips for employers seeking to improve return-to-work or light duty programs. The call will feature Brian Bunten, Missouri Chamber general counsel, and Randall Gammill, partner and commercial insurance consultant at Connell Insurance, Inc., Hollister. Click here to register.