Control your workers’ comp claim costs
When it comes keeping workers’ comp rates in Washington state as low as possible, there are three steps every employer should follow:
- Prevent workplace injuries with a robust safety program – the cheapest claim is always the one that never happens!
- If an injury does occur, help your employee return to work as soon as possible. You can create a temporary light-duty position and earn Stay At Work refunds up to $13,900.
- If your employee can’t return to any form of work, use Kept on Salary as a bridge until return to work is approved.
If you’re not familiar with Kept on Salary, or KOS, let’s take a closer look at this important money-saving tool for Washington state employers!
What is Kept on Salary?
Employees in Washington state must be paid during recovery from a workplace injury or occupational disease. We recommend KOS, which means paying your injured employee’s full wages while they are completely off work. KOS is an alternative to time-loss payments from L&I. Time-loss and its cousin, Loss of Earning Power (LEP), are typically the costliest elements in a workers’ compensation claim.
Warning: Claims costs impact your rates!
- You pay higher rates for every hour, every employee
- Just one expensive claim can cause rates to increase for three years in a row
- Rates can rise by up to 25% each year
KOS helps lower the cost of your claims
With KOS, you pay your employee directly at the same amount they were earning before the injury. That way, there’s no impact to your L&I rates and Retro refunds from time-loss or LEP.
KOS sounds expensive, but keep in mind it just bridges the gap while your injured employee is unable to work at all. You can stop KOS as soon as your employee is back on the job in a light-duty position or their usual job. For many claims, KOS lasts just a few days.
We recommend KOS as a strategy to both control claim costs and maintain overall control in a claim. Ideally, time-loss or LEP should never appear on a claim — KOS is the better choice!
Paying employees while they’re not working?
You may be wondering, “How does KOS save my company money?” Or, your manager might want proof that KOS is the right thing to do.
You are not alone! After all, it might seem backwards to pay an employee who’s not working. Employers who are new to Kept on Salary often have many questions about the costs and benefits. Yet, KOS is one of the best tools available to employers to control claim costs, move claims to a positive resolution and reduce future increases to workers’ comp insurance rates. Keep reading to find out how!
When does Kept on Salary begin and end?
You should begin KOS immediately once the injured employee is certified as off work, which is usually communicated through an Activity Prescription Form from the medical provider.
KOS often lasts just a few days, but can sometimes last up to 30 days or to the extent required in the participant agreement with your Retro association. If we ask you to pay KOS for longer than that, your Approach retro coordinator can help you calculate the financial cost and benefits.
KOS sounds expensive, but keep in mind it just bridges the gap while your injured employee is unable to work at all.
KOS, Light duty, and COVID-19
We’ve been through lots of ups and downs in 2020, but some things never change: L&I has continued to pay time-loss, even when businesses have closed due to stay-at-home orders. “It’s been more important than ever to keep an eye on claims this year,” says Jamie Graham, VP of Claims at Approach, “because time-loss can start back up as soon as an injured employee notifies L&I that the job they worked in has been interrupted.”
This means KOS may be needed midway through a claim, not just for the first few days or weeks as was usually the case before COVID-19.
Learn more about your 2021 rates – Sign up for our Nov 17 webinar
On the plus side, light-duty work is more accessible than ever, thanks to flexible telehealth and work-from-home policies. Through June 2021, injured employees can see a doctor from home for both the initial and follow-up visits. They can also be set-up with light-duty work-from-home positions, which stop KOS and make your company eligible for Stay-at-Work refunds up to $13,900.
“We’ve added many work-from-home and COVID-related light duty positions to our light-duty job library,” says Graham. The job library is available to Approach clients through our online Client Portal.
5 reasons Kept on Salary is better than time-loss
- More predictable for your employee – your employee can focus on recovery with confidence that wages will continue to be paid
- Reduces or prevents future rate increases due to claim costs
- Keeps the claim “medical only,” preserving the Claim Free Discount earned by many employers
- Provides better control over the claim – you’ll stay in close contact with your employee and monitor their recovery
- Increases the potential amount of Retro refund
How do I pay Kept on Salary?
While Kept on Salary is essentially what it sounds like – continuing to pay your employee’s regular salary – here are a few important details and suggestions to keep in mind:
You must pay 100% of wages from all employment, including any contribution to healthcare benefits that is normally paid to your employee
If your employee has a second job (W2), KOS must reflect these wages as well, or your employee may be eligible for loss or earning power benefits.
For seasonal or part-time employees, average 3 months’ pay to calculate KOS wages
KOS must be paid directly by the employer. You cannot ask your employee to use vacation, sick leave, paid time off, etc. as KOS.
Do not pay workers’ comp premiums on KOS – no work is being performed
Consider turning off direct deposit when KOS begins and asking your employee to pick up his or her checks in person (if physically able).
Your employee should bring an updated Activity Prescription Form (APF) each time he or she arrives to pick up a check.
KOS must be offered to all injured employees who are certified as temporarily totally disabled. Employers cannot usually KOS one qualifying employee but not another.
KOS is a bridge to facilitate light-duty return to work, so begin light-duty work as soon as the APF indicates a release to any type of work. However, there are times when KOS is not advantageous or feasible. Your Retro Coordinator can help you determine if KOS is the right choice for a particular claim.
Approach and our clients credit much of their success over more than two decades to our return to work programs and KOS – we believe they are powerful tools that all employers should use to their advantage. These programs give employers greater control over their claims and provide long-term positive impacts on their experience modification rate (EMR) and retro refunds.
KOS represents a bigger up-front expense, but it reduces long-term costs for your company and provides stability for your employee. Your Approach Retro Coordinator can provide policy templates and guide you through implementation and analysis on specific claims.