November 19, 2010
OPEN Forum Message
Affordably Build Your Brand
FedEx Global Brand Management Director Monica Skipper shares a cost-effective way to build a bigger brand for your small business.
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As small business owners, we are always under pressure to do more with less. In this difficult economic environment, careful review of your
workers compensation program may reveal opportunities to reduce expenses, while offering better protection to your employees.
Workers’ compensation insurance protects employees against the risk of sustaining a job-related injury. It covers medical expenses and disability income benefits for an employee whose injury is job related.
Premiums are assessed according to payroll and depend on the industry
classification of your business. An advertising firm would pay lower
workers’ compensation premiums than a construction company, reflecting the relative risks of injury to employees of those two businesses. That is why it is important that you classify employees accurately for their job descriptions and wages. If you are adding new employees to your payroll, be certain to update your workers’ compensation coverage to ensure that the new hires are covered with the correct job classifications.
You may be able to reduce your workers’ compensation premiums. First, ask your insurance company about merit-rating credits. In most states, small businesses that have favorable claims experiences may be entitled to credits toward their premiums.
Second, consider adding a deductible to your workers’ compensation policy. Workers’ compensation typically covers from the first dollar of
losses, but most states allow deductibles that will reduce your costs.
Consider foregoing coverage for yourself or other directors of the company. Many states let small business owners and certain officers and directors opt out of their workers’ compensation policy. This would lower costs, but would leave you without benefits should you be injured on the job. This may make sense if you have medical insurance to pay for medical expenses incurred in an on-the-job injury or other means of financial support, such as a disability income policy, if you or any of your directors and officers were medically unable to work.
Finally, cost shifting, which raises your workers compensation costs,
occurs more frequently during economic downturns. The National Council on Compensation Insurance reports that medical losses constitute more than one-half of total losses attributed to workers compensation insurance. An employee who is without medical insurance would easily be tempted to report an injury as job-related in order to avail himself of the medical coverage. Likewise, as deductibles and co-payments rise, employees who are under financial stress may face the same temptation. The shift of medical costs to workers compensation insurance increases the burden on small business. Mitigate this risk by using a higher-deductible medical plan (first dollar losses are always the most expensive) and then fund the deductible on behalf of the employees.
Careful review of your workers compensation insurance coverage will allow you to use your small business' resources in the most efficient way to protect your employees. Review your coverage annually to ensure that your coverage is appropriate.
Check your balance, review recent transactions and pay your bill on the go.
