All businesses in Missouri with five or more employees must provide workers' compensation insurance to protect their workers in case of job-related injury, illness or death. Construction businesses with one or more employees must provide coverage. Some exceptions exist for specific types of workers, including independent contractors, domestic employees in private homes, professional athletes, volunteers, and certain agricultural help.

Companies can offer this protection through a private insurance carrier, or they can become self-insurers. Premium rates may vary depending on the risks associated with certain occupations. An employer wanting to become self-insured must satisfy the requirements of the Division of Workers' Compensation, including financial soundness, an acceptable safety and health program, case management, and administration ability.

Larger employers can apply to self-insure individually. Small to midsize employers can use a trust to self-insure. A self-insurance trust is a method by which small- to medium-sized employers can pool workers' compensation liability with other employers, usually within the same industry or members of the same association. Each member of the trust pays a premium. If the total losses of the trust exceed the premium, then each member will be required to make contributions. In turn, if there is a surplus, then the trust can refund in the form of dividends. However, each member of the trust is jointly and separately liable to all other members of the trust for all liability under the Missouri Workers' Compensation Law.

The advantages of self-insuring are that the employer is required to have safety programs in place that improve employer profits, as well as an improved cash flow, since payments are made as expenses are incurred. An employer who self-insures also keeps the underwriting profit that an insurance company would otherwise retain. The employer can also participate in case management, which may help to reduce the cost of the case and to be in a better position to proactively control costs. However, that employer may have to bear the cost of a catastrophic injury in the case of the self-insured.

When shopping for rates, make sure to check with several insurance carriers. Insurance companies are competing for your business, so rates will vary between companies. To help find a competitively priced policy, the Missouri Department of Insurance has a toll-free number (1-800-200-1697) to request a list of up to 30 companies with the lowest rates for your job classification.

Currently, more than 600 job-classification codes used in Missouri are listed as high-hazard and low-hazard occupations. The two major factors that determine an employer's cost of workers' compensation insurance are the classifications and the experience modifier. An employer should be familiar with the classification codes and make sure his/her business is coded correctly.

The experience modification is determined by comparing your company's loss experience to that of your industry's over the last three years. If your losses are less than average, you should be charged less premium; if they are greater than average, you will be charged more. Insurance companies also have a scheduled rating that adjusts your premium to reflect the conditions of your business, but these do vary from company to company. Therefore, an employer should inquire about scheduled ratings when obtaining workers' compensation insurance.

To control the costs involved, whether self-insured or through the experience ratio, a company must instill a safety consciousness in its culture. The following tips can help to create this awareness:

1. Perform job analysis and determine job specifications. These, in turn, become a part of the job description. Include any physical requirements of the job. In the hiring process, follow these requirements consistently to avoid claims of discrimination.
   
   
2. Maintain a drug-free workplace. Use drug testing in the hiring process. In the case of an accident, require that the employees involved be drug-tested. Workers' compensation does not apply to employees when under the influence of drugs or alcohol.
   
   
3. Create a safety program and enforce the rules. Train each employee in the safety requirements of the job. Training should be ongoing. The Missouri Workers' Safety Program can provide on-site safety and health reviews, safety publications and videos at no charge, and it does not make reports or referral to ASCII. Contact the Missouri Workers' Safety Program, P.O. Box 58, Jefferson City, MO 65102 for more information.
   
   
4. Maintain a clean work environment.
   
   
5. Perform routine safety checks and maintenance on all machinery and equipment.
   
   
6. Provide immediate medical care for any injured employee. If the treatment does not exceed $500, and if the employee misses no time from work (in other words, keep him/her on the time clock) and you pay the bill yourself, these costs are not factored into your experience modification factor. However, you must still notify the insurance company.
   
   
7. Use one physician for all work-related injuries when possible. Invite the physician to tour your facility periodically so that he/she fully understands the nature of the work performed. Therefore, the physician has a better understanding of the possibility of releasing the employee to return to work safely following an injury.
   
   
8. Follow all restrictions imposed by the physician on the employee. If the physician has released the employee to return to "light duty," make a spot in the workforce if at all possible. Many supervisors do not want to return an employee to work with restrictions, simply because they don't want the responsibility of supervising an employee who can't perform normal job duties. However, it is amazing how often injured employees recuperate quickly when they realize they are going to be required to be at work—especially if they are performing job duties they consider beneath their skill level.

Last and foremost, examine your business culture and work environment. Many of the suggestions above will have a negative impact on employee relations. In cases of collective bargaining agreements, they may even become bargaining issues.

If you have a safe, positive work environment with contented employees, or if it is possible to create one, discard many of the above suggestions. Well-satisfied employees are far less apt to have accidents, even in hazardous industries.

Much of the information in this article was obtained from the Missouri Division of Workers' Compensation. For more information, contact their Employer Toll-Free Information Line, 1-888-837-6069.

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Authored by: Willis Mushrush, Business and Industry Specialist, University of Missouri Extension.
Source: Creating Quality Newsletter, Volume 10, Number 4, April 2001

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