Although the full impact of the implementation of the Affordable Care Act (ACA) is still not being felt, there are indications that a side effect of the Act is rising costs for workers’ compensation coverage. The ACA was passed five years ago, but many of the more demanding portions of the Act were not in effect until the last couple of years.
In January 2015, employers with 100 employees were required to make an offer of healthcare to all full-time employees and pay at least 60 percent of the cost of the coverage. Companies with between 50 and 100 employees do not have to implement this requirement until January 2016. As a result, many companies are just now taking steps to offer healthcare coverage to their workers.
Even if an employer offers healthcare coverage to its employees, the employees still may decide not to accept the coverage—especially if it requires the workers to pay for a significant part of the coverage. Many companies, while following the letter of the law, are offering healthcare coverage with higher deductibles and capitated coverage. This means that workers pay more for coverage under their healthcare plan because they have to cover their deductibles before their healthcare coverage kicks in.
Some companies have complied with ACA by creating special programs to fit their needs. These programs include contracts with providers at reduced rates or with set payments. Since the costs for some injuries and illnesses may exceed these “capitated” or “limited” contracts, the healthcare providers may be motivated to find other sources to pay for these costs. Injuries or illnesses get “shifted” to workers’ compensation claims where there are no deductibles or limitations. In one study, a back injury was 30 percent more likely to be called “work-related” if the employer coverage was through a capitated plan. Soft tissue injuries were 31 percent more likely to be considered workers’ compensation claims in states where many employers were using capitated health plans.
Although employers may be able to mitigate their healthcare costs by shifting more claims to their workers’ compensation coverage, those savings may be very short term. As workers’ compensation claims rise, ultimately so will workers’ compensation premiums. Workers’ compensation costs will then increase to offset any potential savings from lower healthcare costs. A more practical and effective approach to dealing with both healthcare and workers’ compensation costs is to manage both programs effectively.
Western Growers Insurance Services works closely with employers on all aspects of their insurance coverages and can help an employer manage all of their insurance needs effectively. For information about managing your healthcare or workers compensation costs, contact Greg Nelson, Vice President of Western Growers Insurance Services, at (949) 885-2287.