Workers’ Comp Alternatives

As we discussed previously, in regards to health insurance, many companies choose a self-insured option for their workers’ compensation. The benefits are similar: higher control over costs, better cash flow, and more readily controlled care for employees.

Unfortunately, in Florida, the requirements for a new company to become self-funded are hard to meet. According to FSIGA (Florida Self-Insurers Guaranty Association, Inc.), a company must have 3 years of audited financial statements and a net worth of $10 million. If you happen to meet those requirements and aren’t currently self-funded, you could be missing out on some advantages. For the rest of the companies that don’t meet these marks but like the idea, some carriers offer large deductible plans.

Large deductible plans feel like self-funded plans because the deductibles are so large. The minimum is usually $100,000 and can go up to $1 million per occurrence; meaning every time a worker gets injured, the employer funds up to that deductible. The savings and cash flow increase come from the much lower premiums. The premium savings are high due to the employer being liable to fund the deductible for each occurrence. With the minimums at $100k, the vast majority of injuries are completely funded by the employer. The savings aren’t quite as high as fully self-funded plans, but the risks and requirements aren’t as high either.

If your company is considering either of these options, it’s important that you consider the risks involved and make sure you’re prepared to take them on. Ask your current broker or carrier for any data they can provide. Knowing your claim frequency and claim cost is crucial in determining if your company is a good fit or if it’s financially worthwhile. Having someone to guide you through this process can be a great help and take some weight off your staff’s shoulders. If you’d like some more information or would like us to help you with your transition, please don’t hesitate to reach out.