Modified duty job offer letters communicate more than just RTW details

Return to work date, restrictions, hours, wages…

These are important elements of a modified duty job offer letter.  A modified duty job offer represents much more than a letter – it sends long lasting messages about an employer’s relationship with their employees, particularly in a time of stress or uncertainty.

If I get hurt, my employer will work with me to bring me back to work.

When employers offer modified duty, it demonstrates that they are willing to make some accommodations for someone who wants to work.  Involving the injured worker in the return to work (RTW) conversation is an important step – after all, they are the ones who are doing the work.  Listen to the injured worker’s complaints.  Consider altering their assignments or scaling back their hours if indicated.  Not every RTW will be a success the first time around.  Instead of throwing in the towel, talk to the claim representative, nurse case manager, and ask them to address this with the treating physician. 

My employer offers modified duty, so getting injured at work does not equate to sitting at home.

This is an incredibly important message.  Employees learn from what they see happen with other injured workers.  While the overwhelming majority of claims are legitimate, there are a sometimes people who wish to file an illegitimate claim or “build” their legitimate claim.  Having a strong RTW program that consistently gets injured workers back to work can help eliminate the motivation for filing illegitimate claims or exaggeration of existing claims.  Modified duty job offers shorten the time and injured worker will be out of work.

A RTW Case Study: How a $500 wage loss claim cost this employer thousands

Five hundred dollars if $500, right?  Not for this Indiana employer. 

Using actual claim figures and premium calculations, this post will demonstrate how $500 in indemnity (wage) payments resulted in a premium increase of more than $4,000.

Each year, an employer’s experience modification factor is calculated based on prior years’ losses. 

In some states, such as Indiana in this example, medical-only claims are reduced by 70%.  Medical-only claims are claims in which only medical costs were paid, and no indemnity (wage) payments were made under the claim.  So, for explanatory purposes, if an employer has a $1,000 medical-only claim, it is reduced (for the sake of calculating their experience modification factor) by 70%, to $300.  The claim still cost $1,000, but only $300 of that will be considered in their “mod” calculation.

So, how does $509 end up costing the employer $4,000?

If the employer would have brought the injured worker back to modified duty without incurring any wage payments under their policy, it would have reduced the costs of their indemnity claims dollars paid to $0.  They would have also counted as medical-only claims.  However, because these claims in their loss history were not kept as medical-only, the employer loses the benefit of the 70% reduction in claims.

Think of keeping claims as medical-only like a discount coupon at the grocery store.  You must return all injured workers to modified duty to get 70% off your [medical] claim costs.

So, how does $509 end up costing the employer $4,000?

What happens after RTW?

If you’ve been following this blog, you’ll realize many of our posts focus on the process of identifying modified duty, the benefits of RTW, and developing RTW programs.  Getting someone back to work is important, but it doesn’t stop at the RTW date.  It’s a phase of the return to wellness process that must be managed.

What happens after an injured worker returns to work?
I’m sure one could find bits and pieces of answers to this question in books, and there are plenty of scholarly journal articles on this topic, trust me.  Personal experience will teach employers the most in this regard.  Not the answer you were looking for?  What follows is an attempt to summarize the most frequently learned lessons.

Communicate the return to work date to your claim representative immediately!
There simply aren’t enough font embellishments with which one can emphasize this point!  Prompt communication of the injured worker’s return to work will prevent plenty a problem:  over payments, taking credits against future benefits, getting the appropriate forms filed with the state’s workers’ compensation authority…  It’s also a great feeling for the claim representative to know that we’re returning someone to modified duty.  So it not for any other reason, notify your claim representative to provide them with the good news.

Medical treatment
Just because an injured worker returns to modified duty, doesn’t mean that they are no longer entitled to medical benefits.  This is a concern of injured workers when they contemplate RTW.  Returning to modified duty is part of an injured worker’s recovery.  As one person put it, you don’t get better and go back to work, you go back to work to get better.  It is common for an injured worker to continue physical therapy or use of prescription medications after RTW.

Employers should encourage injured workers to schedule their physical therapy and doctor’s appointments outside of the work day.  Check with your claim representative, as it depends on the state and the type of appointment (IME, etc.).  It may also be a good idea to locate a physical therapy location that is on the injured worker’s way home.

Wages
What happens if the injured worker receives less in wages than they previously earned?  As with all answers to WC claim questions…it depends.  In most states, there are temporary partial disability benefits.  These are paid as a percentage of the difference, or gap, in post-injury wages compared to pre-injury wages (calculated as the average weekly wage – AWW).  These percentages range from 50% to 90%. 

Employers process their payroll as usual and if the injured worker’s weekly earnings are less than the pre-injury average weekly wage, they should submit the payroll records to their claim representative who will review and process any TPD benefits due to the injured worker.  So, the injured worker will receive a paycheck for hours worked, and a TPD check for a percentage of the gap. 

What if the injured worker is disruptive or violates company policies?

What's the ROI on RTW?

It’s no surprise that claims-people like to use acronyms and abbreviations.  It’s as if we’ve got our own language…TTD, IME, PPD, IRE, RTW, ABC…just kidding with that last one, but it’s plausible.

The knee-jerk response of any business owner when asked to bring someone back to modified duty is typically, what’s this going to cost me?  It is important that employers understand what their potential return on investment is with a return to wellness (or, as others call it, return to work) program, but that is only part of the picture.  Examining the opportunity costs associated with modified duty will help an employer/business owner make the best decision, for their business and their employees.

What’s the return on RTW programs?
A 1993 study conducted by Crawford & Company estimated returns ranging from $8-10 for every $1 invested in a RTW program.  This same study noted an overall reduction in WC costs of 54%.

Roto Rooter Services Co. experienced a reduction in incurred WC losses from $1.4 million to $356,000 in one year, which was largely attributed to their RTW program¹. 

Gibson Greetings’ RTW program reportedly reduced their incurred WC losses from $400,000 to less than $50,000 the following year¹.

The RAND Institute (2010) published a working paper which examines the effectiveness of RTW programs.  The study suggests that for large employers, RTW programs are highly effective at reducing duration of absences due to work injuries, resulting in about a 3.6 week reduction in the median number of weeks away from work for an injured worker.²

Obviously, individual companies will experience varying results.  These statistics represent case studies that are likely not applicable to every industry nor every employer. 

What is the cost of doing nothing?
Without going into the nitty-gritty of calculating experience modification factors (if you’re a glutton for punishment, you can learn more on this by going visiting your state’s compensation rating bureau), the higher your experience mod is, the higher your premium calculation will be.  A credit score is used to assess a creditor’s risk when lending you money.  Similarly, an experience modification factor is used, among many other factors, to determine an insurer’s risk of insuring your company for workers’ compensation insurance.

The impact of a RTW program, or not having one, will depend on what type of policy you have.  If you’re an employer with a large deductible, you will see more “immediate” savings than someone on a guaranteed cost policy.  If you’re an employer who has a retrospective rating plan, then you have an incentive to lower your claims – a dividend! 

These are the direct costs associated with insurance premiums.  Consider your profit margin.  Think about how much more you would have to sell to offset a WC premium increase of $10,000.  Now, reconsider the cost of offering a few hours of modified work per day for 6 weeks.  There’s an opportunity for even greater savings in some states when a claim remains medical only as opposed to becoming a lost-time claim in regards to your experience modification factor.

We haven’t even discussed the indirect costs associated with having an injured worker out of work…lost productivity, decreased employee morale, increased potential of illegitimate claims, increased turnover, increased injury rates, increased costs of overtime, increased health insurance costs…  We’ll save that for another post.     

References:
1.   Friedman, S. (May 8, 1995).  Back-to-work WC programs pay big dividends.  National Underwriter, 99(19), 3;26.
2.   McLaren, C., Reville, & Seabury, S. A. (March, 2010). How effective are employer return to work programs? (Working Paper No. WC-745-CHSWC).  Retrieved from RAND http://www.rand.org/content/dam/rand/pubs/working_papers/2010/RAND_WR745.pdf.

Meet JAN, your new best friend

Who is JAN?

The Job Accommodation Network (JAN) is the leading source of free, expert, and confidential guidance on workplace accommodations and disability employment issues.  Working toward practical solutions that benefit both employer and employee, JAN helps people with disabilities enhance their employability, and shows employers how to capitalize on the value and talent that people with disabilities add to the workplace.

JAN’s Workplace Accommodations:  Low Cost, High Impact  reports  the results of a recent survey of 723 employers who utilized JAN’s services.  We’ve provided some of the most relevant findings below.

An astounding 57% of accommodations didn’t cost anything.  Zilch.  They were free.  The average cost of a one-time expenditure was $500 for employers.   Do the accommodations work?  76% of employers reported they found the accommodations to be “very effective” or “extremely effective.”

What benefits have employers utilizing JAN received?

Direct Benefits
 

39% reported a savings on workers’ compensation or other insurance costs

90% reported the retention of a valued employee

71% reported increased the employee’s productivity

60% reported the elimination of costs associated with training a new employee.

Indirect Benefits

66% of employers reported improved interactions with coworkers

61% cited an increased overall company morale level

45% reported increased workplace safety

57% reported increased overall company productivity

99% of employers stated they would use JAN again.

There’s a Searchable Online Accommodation Resource (SOAR) database which provides information, suggestions, examples and resources for employers interested in implementing a job accommodation.  These suggestions are sorted by impairment or by industry.

 

References:

Job Accommodation Network (Original 2005, Updated 2007, Updated 2009, Updated 2010, Updated 2011, Updated 2012). Workplace accommodations: Low cost, high impact. Retrieved August 12, 2013, from http://AskJAN.org/media/lowcosthighimpact.html