Mitigating Claims Costs: Underused WCB Policies
As an Alberta employer, did you know that under certain circumstances you can control Workers’ Compensation (WCB) costs by paying your injured worker directly for wage loss and other expenses?
According to WCB Policy 04-02, Part II, when an injured worker is directed by the WCB or the Appeals Commission (AC) to attend medical appointments, rehabilitation treatments, and/or WCB sponsored Return To Work (RTW) programs, the WCB may pay the worker allowances to cover any wage loss, travel expenses or subsistence costs. It is important to understand that any payments made by the WCB, become part of the total costs associated with a claim.
However, under the above circumstances, if the employer pays the worker for lost wages to attend WCB-directed appointments and directly reimburses their other expenses as identified in the above policy, the costs should not become part of the claim.
Why is this important?
WCB claim costs are an integral part of the premium rate setting calculations, therefore keeping costs down is an excellent way of ensuring that WCB premiums are as low as possible. Since WCB claims remain on an employer’s record for 3 years and are used in rate calculations for each of those years, employers get hit with the cost of a claim 3 times. Simply put, every dollar an employer can save in claim costs can translate to $3 in premium savings.
As mentioned above, when an employer can pay a worker directly for expenses, the amount paid is not included in the total costs of the claim and therefore not part of the premium calculations. Although an employer may be out-of-pocket upfront, it avoids the cumulative impact of the cost over the three years that the claim stays on their experience record.
So, when possible, should an employer always pay a worker directly?
As is often the case with WCB matters, the answer is not necessarily straightforward. There are situations where paying a worker directly can actually increase the amount an employer pays for a claim. It is always beneficial if the employer has some knowledge regarding experience rating and the variables involved with rate setting, such as the Maximum Per Claim Cost (MPCC).
The MPCC is the maximum amount that an employer can be charged for a claim. Any amounts in excess of the MPCC are charged to the employer’s industry classification and no longer impact the premium-rate calculation.
If it is anticipated that claim costs will exceed an employer’s MPCC, there may be no advantage to the employer directly paying the worker for anything and they should let the WCB cover everything.
In this situation, the employer will have been charged the maximum amount for the claim as defined by their MPCC plus any amounts they have paid their worker directly out-of-pocket. However, if the employer had allowed the WCB to cover expenses, the cost of the claim would be capped at their MPCC.
On the other hand, if it appears the claim costs will fall significantly below the MPCC, then anything an employer can do to contain costs can be significant.
It is a judgement call that requires an employer to pay close attention to the life cycle of a claim to determine when and if it is a good time to offer to pay a worker directly, in the situations they are able to under the policy. If the window of opportunity is missed, it can be difficult, but not impossible, to retroactively change the payment process and get costs removed from a claim.
Dealing with the WCB, understanding premiums, managing claims, and staying on top of it all while running a business can be daunting for any employer, but engaging the services of a WCB consultant can be beneficial and cost-effective.
Through our knowledge, expertise, and experience with all matters pertaining to workers’ compensation, BCL can help you navigate the WCB system while trying to keep your claims costs and premiums under control.
If you would like to know more about WCB premiums calculations, WCB claims management or help understanding WCB policy, you can reach us directly, during business hours, using our chat feature or by phone at 1-844-377-9545, you can contact us by email at [email protected], [email protected], and you can always connect with us on Facebook, Twitter, or LinkedIn.