High Deductible Health Plans and Workers' Comp Claims

Topics: Workers' Compensation Small Business

Is Your Company’s Health Plan the Reason for Increased Workers’ Comp Claims? 

If you’ve noticed an increase in the number of workers’ compensation claims being filed by your employees, there might be a few reasons why. Are there job site risks that haven’t been addressed? Do your employees need a refresher on safety training? Is there a lack of proper safety equipment available? All of these are possibilities, but there’s one you might not have considered: your company’s high-deductible health plan.

What is a High-Deductible Health Plan (HDHP)?

Let’s start with the basics. An HDHP is a health insurance plan that features a deductible of at least $1,350 for an individual or $2,750 for a family. That amount is what your employees pay out-of-pocket for any medical expenses before insurance takes care of the rest. Additionally, the out-of-pocket maximum for these plans cannot be higher than $6,650 for individual or $13,300 for family. In other words, this is the most amount your employees will pay in a year for medical expenses covered by the health insurance plan.

Advantages of a HDHP

The advantage of an HDHP are that typically your employees will have lower premiums than other types of plans (HMOs, PPOs, etc.). This plan also works to your employees’ advantage if they don’t expect to have a lot of medical expenses over the course of the year. The less they use their insurance, the more money they’ll save. In addition, your employees can set up a health savings account that they can contribute tax-deductible money to in order to help cover out-of-pocket expenses.

Disadvantages of a HDHP

HDHPs are generally not ideal for an employee with a chronic illness, as they will often have high out-of-pocket expenses. Office visits, prescriptions and tests are paid out-of-pocket until the deductible is reached. If they need surgery, the deductible will need to be met before insurance will take care of the remaining cost.

However, the biggest disadvantage is in the health plan name itself: high-deductible. As previously mentioned, the deductible for an HDHP family plan can be as high as $13,300. If your employee cannot afford the out-of-pocket maximum, the risk of falling into medical debt increases, making it even harder for them to pay their bills. This is where the increase in workers’ comp claims comes into play.

Why Are So Many Workers’ Comp Claims Being Filed?

If your company offers an HDHP, that means your employees pay more out-of-pocket when receiving health care. In order to avoid paying the large expenses, injured workers are more apt to file a workers’ comp claim, where there are no deductibles or copayments for their medical care, rather than use their own health care coverage.

In a recent report conducted by the Workers’ Compensation Research Institute (WCRI), injured employees are about 1.4 percent more likely to file a workers’ comp claim if the remaining health insurance plan deductible is $550 or higher, as opposed to no deductible at the time of injury. This amounts to an increase in workers’ comp claim volume of 5.3 percent.

Some other interesting facts the study found include:
  • The number of soft tissue claims far exceeds that of trauma claims – most likely because the source of the injury can be harder to determine
  • The increase in these types of claims was 6.2 percent between 2008 and 2014, with an additional 3.3 percent growth between 2014 and 2017
  • The highest concentration in the rise of claims occur in states where workers’ can choose their initial health care provider – most likely due to their ability to stay with their doctor in these states
As a small business owner, if you’ve noticed an increase in workers’ compensation claims in recent years, perhaps it’s not just your loss control approach that’s the culprit, but your company’s health insurance plan, too.

AmTrust for Workers’ Compensation Coverage

Protect your small business with a workers’ compensation policy from AmTrust. For more information on loss control, check out our wealth of resources and streaming video training materials, and be sure to check out the loss control section of our blog, PolicyWire.

This material is for informational purposes only. Neither AmTrust Financial Services, Inc. nor any of its subsidiaries or affiliates represents or warrants that the information contained herein is appropriate or suitable for any specific business or legal purpose. Readers seeking resolution of specific questions should consult their business and/or legal advisors. Coverages may vary by location. Contact your local RSM for more information.

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