We all know the best Work Comp claim is the one that never happens. When you do have a workplace injury that becomes a claim, you probably know that each claim is going to increase your X Mod and drive up the cost of your premiums. (We can also help you figure out how much each claim will impact your premiums).
With this in mind, you’re probably wondering how long you’ll be feeling the financial pain from each claim that arises. The short answer: Each individual Worker’s Comp claim will impact you for a maximum of 3 years.
However, you won’t see the effect of each claim right away. As X Mod experts, our team is intimately familiar with the duration that each claim can impact your Mod. Here we’ll explain exactly which 3 years impact each X Mod and how unusual types of claims factor into this timeline.
The Rating Period
Every company in California has a Rating Period determined by the Worker’s Compensation Insurance Rating Bureau (WCIRB). The Rating Period is the window of time from which payroll, class codes, and claims data are used to calculate your Experience Modification Rate.
The Rating Effective Date
Determining your company’s specific rating period always begins with your Rating Effective Date. The Rating Effective Date is the date when your insurance policy begins.
So, if you renew your Worker’s Compensation insurance on January 1st, your Rating Effective Date is January 1st. If you renew on 6/19, your Rating Effective Date is 6/19.
The Experience Period
Once you know the Rating Effective Date, you can determine your Experience Period. The Experience Period will start 4 years and 9 months prior to your Effective Date. The Experience Period ends 1 year and 9 months prior to your Effective Date. The WCIRB describes the Rating Period and provides examples and visuals on their site.
As you can see in this graph from the WCIRB, claims impact your Experience Mod for 3 years – but they don’t impact the X Mod right away. A claim in 2020 does not impact the X Mod for the Jan 2021 renewal.
To simplify the idea (rather than having to always subtract years and months from your Effective Date) consider this: The rating period is the trailing 3 of the last 4 years.
If you want to know what the rating period would be for your 2021 X Mod, remove 2020, and the rating period is 2019, 2018, and 2017. Following the same concept, your rating period for 2033 would be 2031, 2030, 2029.
This is a much simpler way to understand the Rating Period, but only works if your renewal date has been consistent over the past 4 years.
If your renewal date has changed in the last 4 years, things get a bit less straightforward and the formula provided by the WCIRB would be required. If this is the case for your company, we’d be happy to give you a hand. Furthermore, if you’d like us to confirm your rating period, just shoot us a quick email at info@whiteboardrisk.com.
Less Common Scenarios To Be Aware Of
Open vs. Closed Claims
A common question that we receive from clients and prospects alike revolves around the opened or closed status of a claim.
Some people expect that when a claim is closed, the claim is removed from your Rating Period.
Unfortunately, this is not the case. While it’s a good thing the claim is closed (less of a headache and no new claims costs), it will still impact you for all 3 years until it “falls off” your rating period.
More often, business owners are concerned that open claims will remain on their rating period, even if they are 5+ years old. Good news: They do not!
Even if a claim is still open, if it has worked it’s way through your rating period and has impacted you for the last 3 years, it will still “fall off’ the calculation for your future X Mods.
Hopefully your claims don’t stay open for 5+ years – if they do, check out our article about claims management.
Non-Specific Injuries (Such as Cumulative Trauma, Repetitive Motion)
Once you know the Rating Effective Date, you can determine your Experience Period. The Experience Period will start 4 years and 9 months prior to your Effective Date. The Experience Period ends 1 year and 9 months prior to your Effective Date. The WCIRB describes the Rating Period and provides examples and visuals on their site.
Most injuries happen on a very specific date. These are called Specific Injuries. For Example, someone hits their thumb with a hammer. That’s an injury that happened one time at a specific time and date.
It’s easy to imagine where Specific Injuries fall into the rating period because they’re on one exact date. With other injuries – like Cumulative Trauma or Repetitive Motion injuries – it’s not so easy.
Repetitive Motion claims from doing the same motion over a period of time until an injury occurs. Like if a massage therapist gets carpal tunnel from doing the same hand motions over 10 years of employment. Cumulative Trauma is even more vague. It’s basically when injuries arise from general labor over a period of time working for an employer.
These injuries can develop over a period of 5, 10, 15 or more years – so how do you figure out where to put them in the rating period? Do they still only impact your X Mod for 3 years?
The answer is yes – still only three years. And the way that they determine where to include these claims on your rating period is based on the “end date” of the injury.
Whenever someone files a claim for Cumulative Trauma or Repetitive Motion, they’re claiming that their injury happened over time. So, they are required to submit dates when the injury “started” and when the injury “ended”. The injury usually “ends” when they begin seeking treatment, or if they’re represented, at a date determined by their attorney.
Using the “end date” of the injury period for both of these types of claims allows you to fit the claim into the appropriate rating period.
Claims Reported Late
Technically, a Worker’s Comp claim must be filed within one year of the injury. However, employees are often able to get away with filing claims outside the one year requirement if they have an attorney (or otherwise know how to take advantage of loopholes).
If an employee were to report a claim so late that it missed certain years on the rating period, this works out in your favor. Any claims that are reported years down the road, still go back and fall in the rating period under the date of injury. If you had an employee report an injury from 5 years ago, the carrier may have to pay out on the claim, but it would not impact your X Mod at all.
