Employees and employers pay into the worker’s compensation system to fund medical coverage for work-related injuries or illness and wage and disability benefits. The calculation of workers’ compensation rates varies from one state to the other. Like many other states, Florida uses a combination of factors, including company payroll, classification codes, and other factors. Having an understanding of how the rates are determined in Florida can help you make informed decisions about your workers’ compensation case. In this blog, we dig into how workers’ compensation rates are determined in Florida.
Determining Workers’ Compensation Rates
The first step in determining the workers’ compensation rates in Florida is through the manual rating. The employees are grouped according to their classification code. There are over 600 classifications, each having a specific rate or price. The rate of each classification represents the risk of workplace exposure. For example, the rate for a clerical employee is lower compared to a construction worker.
The estimated losses of each category or group are added together and this average cost is calculated through a ratemaking process. In Florida, the classification codes and rates are maintained by the National Council on Compensation Insurance (NCCI). The NCCI creates the code and analyzes claims data for each class so employees can recommend rates to the Florida Office of Insurance Regulation.
It is worth noting that the ratings are determined by evaluating risk, and not by a specific company. The manual rating is essentially the average cost of workers’ compensation insurance per $100 of payroll.
Employers can calculate the expected workers’ compensation claim by multiplying their employee’s payroll with the manual rating by $100. Businesses in Florida often use multiple classifications to group their workers by job type and use the rates linked to each classification. The resulting number is the manual premium for their workers’ compensation policy.
Experience Modification Factor
The manual rates are not the final rates used for the policy as the experience modification factor, also known as X-mod, has to be included in the calculations. The experience modifications are calculated by the NCCI and are an integral part of the final cost of workers’ compensation. The experience rating is used to predict future losses, allowing individual employers to have some influence on future payments.
For example, the average experience modification for each industry is set at 1.00. The final workers’ compensation premium for each policy is calculated by multiplying the manual rating by the experience modification factor. If the factor is 0.90, the business is saving 10 percent on the premium. On the other hand, if the factor is 1.10, then they are paying an extra 10 percent. Employers with fewer or less severe accidents have an experience modification factor of less than 1.00.
A key objective of having an experience modification factor is to enable the industry to tailor the cost of workers’ compensation to the nature of the job and the characteristics of the employer. It provides the employer an opportunity to manage its costs.
Employers can reduce the cost of workers’ compensation coverage by regularly reviewing insurance premiums and job classifications for their employees. Misclassifications are common. For example, if you have an employee who has clerical duties but works in a potentially hazardous environment or has employees who assume other roles temporarily. This can impact the job classification and have a major impact on the workers’ compensation rates.
Consult a Workers’ Compensation Lawyer
Did you get hurt while you were on the job? Are you unsure how to calculate fair compensation for your suffering? You could benefit from consulting an attorney. Your income will likely be impacted by serious injuries and you might have other financial expenses. A workers’ compensation lawyer can help you get relief. If you are covered under workers’ compensation claims, you could get compensation for your losses.
A workers’ compensation claim is often complex, so it is best to get a lawyer involved in the process as early as possible. Workers’ compensation lawyers are well-versed in workplace injury cases and will fight for your rights to get full and fair compensation for your suffering.
Also, if you are thinking of filing a personal injury claim, you should know that it is not the same as a workers’ compensation claim. While you are unable to recover non-economic damages with a workers’ compensation claim, you don’t have to prove fault. You can contact an attorney to determine which legal course of action is best suited for your case. 1-800-Injured is an attorney and medical referral service.