Return-to-work (RTW) programs provide support to employees as they reintegrate into the workforce following a work-related injury or illness, enabling them to return to work with shortened hours, lighter workloads, or different tasks. By providing these adjustments, employees may resume working even if they are not quite ready to return to their original roles. However, RTW programs also benefit businesses; such programs help minimize the overall complexity of associated workers’ compensation claims and expenses by reducing claim values and premiums. With this in mind, employers should consider how developing effective RTW programs can lower their workers’ compensation expenses, specifically by impacting indemnity costs, experience modification factors (EMFs), and underwriting outcomes.
Reduced Indemnity Costs
Workers’ compensation insurance includes coverage for medical costs and wage replacement expenses, also called indemnity benefits. RTW programs permit employers to help affected employees safely transition back into their roles rather than forcing them to remain absent from work for the duration of their recovery. This can lower indemnity benefits costs by allowing injured employees to reenter the workforce faster and engage in transitional duties while they continue to heal. In turn, employers’ related workers’ compensation claims and total claim values may be reduced.
Additionally, implementing RTW programs can help injured workers feel appreciated and stay positive amid recovery. Such attitudes can lessen the risk of employees experiencing a lack of support and motivate them to resume work while minimizing the likelihood of prolonged claims or possible litigation issues.
Improved EMFs and Underwriting Outcomes
The EMF plays a major role in the cost of workers’ compensation premiums. It represents an employer’s workers’ compensation claims history, based on frequency and severity, compared to other businesses of a similar size in the same industry. The average EMF is 1.0, so an EMF that exceeds 1.0 indicates that a business’s claims history is higher than its peers’ average.
Generally, maintaining EMFs below 1.0 allows employers to receive reduced workers’ compensation premiums. Since RTW programs can improve injured employees’ recovery outcomes and ease them back into the workforce, employers who have effective programs can be better positioned to improve their workers’ compensation claims history and, subsequently, lower their EMFs. This is because employers generally cover injured employees’ salaries once they return to work rather than having insurers provide such compensation, ultimately reducing claims costs and improving their EMF. Additionally, by implementing RTW programs, employers can better detect potential incidents and injury patterns over time, allowing adjustments to be made to prevent future incidents. This, too, can lower overall workers’ compensation claims and lead to lower EMFs and premiums.
Along with EMFs, underwriters typically review employers’ workplace safety policies, procedures, and related documentation. With RTW programs in place, employers can demonstrate a commitment to workplace safety and showcase their dedication to helping injured employees successfully navigate the recovery process. Underwriters often view RTW programs as a signal of decreased workers’ compensation exposure, so employers should include their written RTW programs within any workplace safety documentation they provide to underwriters. This assists underwriters in evaluating workers’ compensation risks and increases the likelihood of lower premiums. As RTW programs evolve, employers should share these changes with underwriters to emphasize their ongoing commitment to workplace safety.
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