A Publication of WTVP

I believe the changes to the Illinois workers’ compensation laws don’t paint a pretty picture for many employers. Some professionals argue the costs will be a wash when weighing the medical payment restrictions versus the increases in TTD, PPD, and disability schedules. However, it’s likely many employers will experience unexpected increases in their workers’ compensation premiums.

Last month, I illustrated how the most expensive costs of a claim are those associated with lost workdays. Consider another example. Two workers making $15 an hour ($600 per week) incur the same injury at the end of their shift but are sent to different medical providers. Medical Provider A—a comp specialist—charges $1,000 for the necessary care and returns the employee to work the next day with restrictions. Medical Provider B—who doesn’t specialize in work-related injuries—charges $500 for the care and takes the worker off work for two weeks. Who cost the employer more: A or B?

Provider A cost the employer $1,000. Provider B cost the employer $500 in medical costs and another $800 in TTD, for a grand total of $1,300, right? Wrong. That’s only the initial costs. How these costs affect the employer’s workers’ compensation premium paints a different picture. Provider A’s charges that went against the employer’s comp premium were $300. In comp premium calculations, direct medical costs are discounted 70 percent and capped at $5,000 per incident.

It’s a different story with Provider B. Thirty percent of the $500—or $150—goes towards calculating the employer’s premium as well as all of the $800 in TTD, for a grand total of $950. Plus, the $800 affects the premium for the next three years. In the end, Provider B costs the employer more in both the short and long term.

How does this relate to the changes in the law? While our legislators worked to decrease medical payments to providers, they worked even harder to increase employers’ indemnity costs. Interestingly, I’ve heard rumors that many Illinois employers supported these changes.

If you did support this legislation, my question is this: did your legislator tell you that while medical care for your injured workers will cost less, you’re more likely to see your future workers’ compensation premiums increase anyway? Has your premium calculation been explained to you? In short, did he tell you that while you might pay less in the short term, you’re likely going to pay more in the end?

The statute changes reach farther than the medical payment reductions scheduled for February 2006. A few actually were necessary for effective reform. However, sweeping legislation, regardless of the circumstances, rarely is positive. Each change doesn’t occur in a vacuum; it will always interact with other changes in ways not necessarily intended or readily apparent with a cursory review. I suspect that because of the legislative changes that blew through Springfield, Illinois industry is more than likely to experience many unnecessary negative ramifications in years to come. IBI