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- iHaveNet.com: Small Business Guide
Small Business Money Matters
The cost of workers' compensation insurance is within your control. If you take some time to understand how the system works, how your premiums are calculated, and what options are available, you will be able to keep your payments low.
Here are eight cost-saving moves to investigate with your workers' compensation insurance agent.
Make sure your company classification is correct
Check that your company and employees are properly classified. Misclassification is one of the most common reasons for overpaying on workers' comp. Non-hazardous jobs have much lower rates than hazardous ones. If you misclassify even one worker into a high hazard job, your total premium can increase significantly.
If you believe your classification is wrong, call your state's workers' compensation rating bureau and review your case with the department that handles classification.
To do independent research on classifications and rates, look for a copy of "The Scopes Manual" (formerly "The Scopes of Basic Manual Classifications") published by the National Council on Compensation Insurance, Boca Raton, FL. This manual gives descriptions of what operations are handled by the more than 700 different classifications. Most states use this manual as the basis for their classification schedules.
Get out of the pool
If your company's workers' compensation is provided through your state's assigned-risk pool... get out. Chances are you may be penalized with higher premiums and poorer service.
To leave the assigned-risk pool, the first thing you need to do is figure out why you were put there in the first place. Your insurance agent should be able to answer that question for you.
If it's because your company has a high number of claims, you should immediately begin to institute safety programs to reduce accidents. Don't expect to leave the pool immediately. You will probably have to demonstrate several years of reduced claims before anything can happen.
If it's because you're a company that insurers don't like to cover, look to join a self-insured workers' comp purchasing pool. Check with your industry association to see if one is available for groups of companies like yours.
Conduct a payroll audit
Your workers' comp premiums are usually based on your regular payroll figures, excluding overtime. Many states may allow you to deduct overtime pay to straight time for the purpose of figuring your payroll, but you may need to keep special records to do so. Check with your state office of employment for your state's guidelines.
Use a deductible
Thirty-one states permit employers to reduce their workers' comp premiums by paying a deductible -- usually somewhere between $100 and $5,000. Contact your state insurance office or your insurance broker to find out if you can use this money-saver.
Make sure your experience rating is correct
An experience rating compares your company's claims history to that of other firms in your industry. The higher your claims, the more risky you are to insure, and the higher your premiums. Make sure your insurance company is calculating your experience rating correctly. You can analyze your rating using worksheets available from the National Council on Compensation Insurance (NCCI), Boca Raton, FL.
Use managed care to reduce your medical costs
Talk with your insurance agent about finding a workers' comp insurance plan that uses managed medical care to treat injured workers. Most states allow HMOs, PPOs and other managed-care providers to handle workers' comp claims.
Get injured workers back to work
The quicker an injured worker returns to work, the lower your disability claims costs may be. You may need to modify the injured worker's assignment, or put him or her on light duty. But that's a small price to pay for returning to work. Early-return-to-work programs can also be big morale boosters -- injured workers are often afraid of being displaced or forgotten.
Institute safety programs
A company-wide safety program that reduces the number of workers' comp claims can pay off in lower premiums. Make sure your employees have and use appropriate safety equipment like goggles and hard-hats. Inspect your facilities for safety hazards, and look for other ways to stop accidents before they happen. Train people in the correct way to lift (back injuries are a common workers' comp claim) and the right way to use their computers (to reduce claims for repetitive stress injuries).
Small Business Guide
- Starting Up Your Business
- Coming Up With a Winning Business Idea
- Common Startup Mistakes
- The New Rules for Startups
- Business Incubator FAQs
- Naming Your Business
- Researching Your Business
- Your Personal Savings
- Registration, Licenses, and Permits
- Getting a Tax ID Number
- Fast-Growth Startup Resources
- Structuring Your Business
- Overview: Corporations
- State Offices of Incorporation
- Incorporate Out of State?
- Writing a Partnership Agreement
- Choosing a Board of Directors
- Basics of a C Corporation
- Basics of an S Corporation
- Basics of an LLC
- Basics of a Sole Proprietorship
- Basics of a Non-Profit Corporation
- Basics of a Professional Corporation
- Basics of a General Partnership
- Basics of a Limited Partnership
- Your Company's Public Relations
- Elements of a Successful Public Relations Campaign
- How to Use Your Press Coverage Effectively
- Press Releases
- How to Write a Successful Press Release
- Sample Product/Service Press Release
- Sample Commentary Press Release
- Sample Event Press Release
- Sample Tips Press Release
- Sample Personnel Press Release
- Effective Competitive Analysis
- Managing Purchasing to Maximize Cash Flow
- Top Six Pricing Mistakes Businesses Make
- How to Avoid Lowering Your Prices
- Bidding Basics
- Hiring Staff
- Creating an Effective Job Description
- Do You Know How to Pick Them?
- Little-Known Hiring Resources
- Classifying Contract Workers
- Tips for Successful Interviewing
- What You Can't Ask in a Job Interview
- New Hire Paperwork
- Small Business Insurance
- Types of Insurance for Small Businesses
- Small Business Insurance FAQs
- Insurance Resources for Small Businesses
- Home Office Insurance: Myths & Realities
- Small Business Resources
- Government Resources for Small Business on the Web
- Resources for Women Entrepreneurs
- Fast-Growth Startup Resources
- Small Business Security Resources
- Taking Time Off
- Your Pre-Vacation Checklist
- How to Take a Vacation
- Learning to Delegate
- Getting Away When You Can't Get Away
- Preparing for Tax Season
- Year-End Planning Tax Savers
- 10 Ways to Pay Less in Tax
- 25 Common Business Deductions and Expenses
- Avoid These Common Errors and Audit Triggers
- Understanding the Home Office Deduction
- Corporate Income Taxes Primer
- Employment Taxes Primer
- Sales Tax Primer
- Sole Proprietorships and Partnerships Tax Primer
- How to Get a Filing Extension
- Year-End Reconciliation
- Getting the Most from Your Accountant
- Developing Accurate Financial Projections
- Cash Flow
- 10 Ways to Help Increase Your Cash Flow
- Cash vs Accrual Accounting
- Bookkeeping and Record Keeping Basics
- Quick Ways to Get Through a Cash Crunch
- Projecting Cash Flow
- Cash Flow Triage
- Getting Funding
- Cash Flow Through Factoring
- Small Business Investment Corporations (SBIC)
- Traditional Funding Sources
- Non-Traditional Funding Sources
- Your Company's Credit
- How to Read a Business Credit Report
- Credit Terms Glossary for Your Small Business
- How to Protect and Improve Your Business Credit Rating
- Give Your Business the Financing Edge
- Employee Compensation
- Employee Benefits
- Bonuses: How To Be Fair
- Workers' Compensation Q&A
- Keeping Workers' Compensation Costs Down
- Payroll Management Choices
- Key Elements of Payroll
- Working with a Payroll Service Provider
- How to Create a Business Plan
Small Business Money Matters - How to Keep Workers' Compensation Costs Down
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