Controlling Workers’ Compensation insurance costs involves focusing on safety programs and loss prevention. Additionally, one of the most powerful cost-control tools that is often underused is the Experience Modification Rating (EMR). A well-executed Early Return to Work (ERTW) program can significantly improve it.
What Is the Experience Modification Rating?
Your Workers’ Compensation premium is based on three key factors: payroll, employee classification codes, and Experience Modification Rating (EMR). Your EMR is a numerical representation of your company’s Workers’ Compensation claim history compared to others in your industry. It compares your organization’s actual losses to expected losses for companies of similar size and industry. A rating of 1.00 is considered average. Ratings below 1.00 indicate better-than-average performance and can result in lower insurance premiums. Conversely, a rating above 1.00 signals higher-than-average risk and leads to increased premium costs.
Notably, recent claims have more impact than older ones, and indemnity claims (those involving lost time from work) weigh more heavily than medical-only claims. That’s why managing the nature and duration of claims is so critical.
How an Early Return to Work Program Helps Control Your EMR
Early Return to Work (ERTW) programs are successful in helping you control your EMR. These programs allow employees who are recovering from injury to return in a modified or light-duty role when they can’t immediately perform their original job. They will earn at least a portion of their regular paycheck, reducing the amount of Workers’ Compensation indemnity payments.
Moreover, if an employee returns to work promptly and the claim only involves medical treatment (no lost time benefits), the claim may be categorized as medical-only. In many states, medical-only claims are discounted by 70% when calculating the EMR, a substantial advantage. This means fewer dollars are used in the calculation, resulting in a better EMR and, ultimately, lower premiums.
In addition to helping to improve your EMR, ERTW programs provide the following benefits:
- Reduce claim severity and duration by maintaining engagement between the employer and the injured worker.
- Improve employee morale and retention, showing that you value your team and support their recovery.
- Enhance compliance and competitiveness, as companies with lower EMRs are often preferred in contract bidding.
- Lower long-term insurance costs by minimizing both the frequency and impact of claims.
Building an Effective ERTW Program
A successful ERTW strategy requires preparation and coordination across departments. Here’s what a strong program typically includes:
- Clear internal policies outlining return-to-work procedures
- Pre-identified light-duty roles that are appropriate across job functions
- Open communication with treating physicians, employees, and insurance partners
- Training for supervisors and HR personnel on how to manage modified work arrangements.
- Documentation and tracking to evaluate performance and adjust as needed.
Prescient National Is Available to Help You Design a Tailored ERTW Program
A better EMR not only means lower insurance premiums, but also improved patient care. It also reflects your commitment as an employer to creating a safer, more proactive workplace. Even minor improvements can translate into significant annual savings, making ERTW programs an essential strategy for financially savvy employers.
For help designing a customized ERTW program, contact your Prescient National Risk Manager. We’re here to help you reduce costs, improve safety, and build a more resilient workforce.