Workers’ Compensation Insurance Terms: Employee Leasing Solutions

Helpful Workers’ Compensation
Terms and Definitions

Accident Report
Workers' Compensation Commission form entitled "EMPLOYER'S FIRST REPORT OF OCCUPATIONAL INJURY OR ILLNESS", required to be filed by an employer in cases of an employee's occupational injury or disease that results in incapacity from work of one day or more.

Advisory Organization
The new designation for what were formerly known as rating bureaus (such as the NCCI). This new term, recently coined by the National Association of Insurance Commissioners, is meant to reflect more accurately the role of NCCI and other such organizations (like Insurance Services Office) which compile rating data and file policy forms for use by member insurance companies.

Approved List of Medical Practitioners
The Workers' Compensation Commission Chairman (in consultation with the Workers' Compensation Advisory Board) may establish a list of approved physicians and other practitioners who may render medical services to employees with compensable work- related injuries or occupational diseases.

Assigned Risk Plan
Sometimes called "the Pool", this is a mechanism established by individual states to make sure that employers can obtain workers' compensation insurance even if insurance companies are not willing to write such insurance on a voluntary basis. Assigned risk plans in many states carry higher rates than the voluntary market.

Audited Premium
The final premium for the policy term, produced by auditing actual payroll exposures.

Attending Physician's First Report of Injury
Workers' Compensation Commission Form 48 used by an attending physician to report initial medical findings related to an employee's compensable work-related injury or occupational disease.

Attorney Fee Schedule
The Workers' Compensation Act requires the Workers' Compensation Commission Chairman to annually publish the maximum fees claimants are required to pay attorneys for legal services rendered in workers' compensation cases.

Average Weekly Wage
Average weekly earnings of an employee with a compensable work- related injury or occupational disease, used to determine the employee's weekly workers' compensation benefit rate.

Benefit Rate Table
The Workers' Compensation Commission Chairman (in consultation with the Workers' Compensation Advisory Board) is required to annually publish tables which specify weekly workers' compensation benefit rates, based upon the gross average weekly wage, the federal tax filing status, and the number of claimed exemptions of an employee with a compensable work-related injury or occupational disease. These tables must be consulted for the determination of weekly benefit rates ONLY for compensable work- related injuries and occupational diseases on or after October 1, 1991.

Benefits
Workers' compensation benefits or other payments mandated by the Workers' Compensation Act including, but not limited to, indemnity; medical and surgical aid or hospital and nursing service under Section 31-294d of the Act; and any type of payment for disability, whether for total or partial disability of a permanent or temporary nature, death benefit, funeral expense, payments made under Sections 31-284b, 31-293a, or 31-310 of the Act, or any adjustment in benefits or payments required by the Act.

Classification Code
Also, called Class Code. The workers' comp premium rate commensurate with the risk associated with that workplace exposure. For example, the classification code for an office clerk should carry a significantly lower rate than the code for a roofer. Misclassification is one of the most common causes of overcharges.

Claimant
Any person who makes a claim for workers' compensation benefits for an alleged work-related injury or occupational disease. Claimants are either employees claiming a compensable work- related injury or occupational disease or surviving dependents of an employee killed by a compensable work-related injury or occupational disease.

COLA
Annual cost-of-living adjustment in a claimant’s basic compensation rate. This adjustment applies ONLY to Temporary Total Disability and Dependent Survivors' benefits, and is paid ONLY for injuries/illnesses on or before June 30, 1993. There are NO COLAs for other types of workers' compensation benefits or for injuries/illnesses on or after July 1, 1993.

Compensation Rate
Weekly workers' compensation benefit rate of an employee with a compensable work-related injury or occupational disease

Day of Injury
Day a work-related injury occurs. An employee with a compensable work-related injury or occupational disease is entitled to full wages for the entire day an injury occurs and, for purposes of determining workers' compensation benefits, that day is not counted as a day of incapacity from work.

Dependency Allowance
Extra payment (in addition to a claimant's basic compensation rate) for each of a claimant's dependents. This allowance is paid ONLY to claimants whose compensable work-related injuries or occupational diseases occurred PRIOR to October 1, 1991.

Disclaimer
Workers' Compensation Commission Form 43 used by an employer or its workers' compensation insurance carrier to deny or contest liability for a claim for workers' compensation benefits.

Dividend
A return of premium, calculated after policy expiration, based on the over-all performance of the insurance company or of a group of insured’s. Dividends cannot be guaranteed in advance, although they are often shown on proposals for insurance.

DOI
Date of Injury. The date a work-related injury occurs or, for occupational disease, the date of total or partial incapacity to work due to the disease. (The Compensation Review Board has held the date of injury for repetitive trauma to be the last day of exposure to the incidents of repetitive trauma, i.e. the last day worked.)

Employer Mutual Association
Employer association formed to insure the employers' liabilities pursuant to the Workers' Compensation Act. Such an association may only include employers who are in the same or similar trades or businesses and who have substantially similar degrees of hazard of injury to their employees

Experience Modification Factor
An adjustment to Manual Premium, calculated by an advisory organization (also known as rating bureaus) such as NCCI, based on historic loss and payroll data of a particular insured. Also called Experience Modifier, or Experience Mod.

Experience Period
The window of time from which loss and payroll data is used to calculate an experience modification factor for an employer. Normally this window is a three year period, starting four years prior to the effective date of the experience modifier. However, rating bureaus do not wait until three full years of data are in the experience period before producing an experience rating for an employer. If an employer reaches a certain, relatively low threshold of workers' compensation insurance premiums in any one of the three years in the experience period "window", this will make that employer eligible for experience rating.

First Report of Injury
Workers' Compensation Commission Form WCC-15 required to be filed by an employer in cases of an employee's occupational injury or disease that results in incapacity from work of one day or more.

Formal Hearing
Formal meeting between the parties in a workers' compensation case and presided over by a Workers' Compensation Commissioner for the purpose of resolving differences, disagreements, and the like to provide appropriate workers' compensation benefits to a claimant. Witnesses in Formal Hearings are sworn and testify and evidence is introduced, resulting in a binding written decision by the presiding Commissioner. Usually held in a Workers' Compensation Commission District Office, a Formal Hearing is the second level hearing available to adverse parties in a workers' compensation case and is scheduled when disputes cannot be resolved in any earlier Informal Hearing(s). There may be one or, more infrequently, two Formal Hearings in a workers' compensation case. Written decisions from Formal Hearings may be appealed to the Compensation Review Board

Governing Classification
The classification code on an employer's workers' compensation insurance policy that generates the most payroll aside from standard exception classifications such as clerical or outside sales (unless there is no other workplace classification applicable other than a standard exception).

Guaranteed Cost
A Workers' Compensation insurance policy that is not subject to adjustment due to losses that occur during the policy term. In a guaranteed cost policy, the only variable affecting premium that should change between policy inception and audit is payroll. This is in contrast to the various kinds of loss sensitive plans, such as retrospective rating, retention plans, or sliding scale dividend plans, where there is a premium adjustment made based on losses incurred during the policy term.

Hearing
Informal or formal meeting between the parties in a workers' compensation case presided over by one or more Workers' Compensation Commissioner(s) for the purpose of resolving differences, disagreements, and the like in order to provide appropriate workers' compensation benefits to a claimant

Incurred Losses
The paid losses plus loss reserves for estimated future claims costs. Many loss sensitive insurance policies adjust premium based on incurred losses rather than just on paid losses.

Informal Hearing
Short informal meeting between the parties in a workers' compensation case and presided over by a Workers' Compensation Commissioner for the purpose of resolving differences, disagreements, and the like in order to provide appropriate workers' compensation benefits to a claimant. Held in a Workers' Compensation Commission District Office, an Informal Hearing is the first level of hearing available to adverse parties in a workers' compensation case and involves discussion of any disputed issue(s) and production of appropriate supporting documents and other evidence. A workers' compensation case may include one or more Informal Hearing(s); cases in which no resolution of disputed issues occurs are recommended for Formal Hearings. However, nearly all cases involving disputed issues are resolved in Informal Hearings.

Light Duty
Work prescribed by an employee's attending physician to fall within certain physical restrictions while the employee continues to heal from a compensable work-related injury or occupational disease.

List of Approved Medical Practitioners
The Workers' Compensation Commission Chairman (in consultation with the Workers' Compensation Advisory Board) may establish a list of approved physicians and other practitioners who may render medical services to employees with compensable work- related injuries or occupational diseases. Administrative Regulation 31-280-1 specifies standards for approval of medical practitioners to treat employees in workers' compensation cases, as well as criteria for the removal of practitioners from the list.

Lump Sum Payment
The payment of a workers' compensation award of benefits or other sum(s) as one or more partial or total payment(s). Instead of the more common weekly or biweekly payments which equally distribute such sum(s). A lump sum payment may result from a Commutation or a Stipulation.

Manual Premium
Workers' compensation premium calculated by multiplying payrolls by appropriate rates, before application of experience modifier, schedule credit, or premium discount.

Medical Fee Schedule
The Workers' Compensation Commission Chairman (in consultation with employers, their insurance carriers, union representatives, physicians, and third-party reimbursement organizations) is required to develop and annually publish maximum fees payable to medical practitioners for medical services rendered in workers' compensation cases.

Minimum Compensation Rate
Lowest weekly workers' compensation benefit rate provided for by the Workers' Compensation Act. The minimum rate may vary from employee to employee, depending on the date of an employee's injury (and in turn the law which applies to that injury) and the type of benefit for which an employee is eligible.

Modified Premium
Workers' Compensation premium calculated after application of experience modification factor. Similar to standard premium, but does not reflect any schedule credits or debits.

NCCI: The National Council on Compensation Insurance br /> The organization responsible in many states for determining proper Workers' Compensation classifications, experience modification factors, and collecting data used for ratemaking. NCCI also writes the manuals used in many states to calculate Workers' Compensation premiums, and also administers the Assigned Risk Plan in many jurisdictions. NCCI is a private organization, not connected with government, although it is often mistakenly thought to be a governmental agency. In fact, it is a non-profit privately held corporation owned by major insurance companies, whose executives constitute a majority of the directors on NCCI's board

Occupational Disease
Disease peculiar to an employee's occupation and due to causes in excess of the ordinary hazards of employment as such.

Occupational Injury
Accidental injury which may be definitely located as to the time when and the place where the accident occurred, and is causally connected with the injured person's employment, or is the direct result of repetitive trauma or repetitive acts incident to such employment, as well as occupational disease.

Permanent Partial Disability Benefits
Workers' compensation benefits paid to an employee with a compensable work-related injury or occupational disease for a Permanent Partial Disability of one or more part(s) of the employee's body.

Posting Notice
Workers' Compensation Commission notice required in each employer's workplace to notify its employees of its workers' compensation insurance coverage

Premium Discount
A premium credit, based on size of the premium paid. It is normally given automatically on voluntary market policies, although retrospective rating or sliding scale dividend policies usually do not have a premium discount.

Primary Losses
In the experience modification factor, the first $5,000 of any single loss.

Rating Bureau, or Rating Organization
See NCCI. Some states maintain their own separate rating bureau, although these often follow NCCI rules and use NCCI manuals. Currently, the states of California, Delaware, Hawaii, Indiana, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Carolina, Pennsylvania, Texas, and Wyoming operate their own non-NCCI rating bureaus. Many of these largely follow NCCI rules for computing premiums and classifications, but California, Delaware, Texas, and Pennsylvania are notably different than NCCI in some aspects of classification and premium computation.

Remuneration
The basis for calculating Workers' Compensation premium. Remuneration is primarily payroll, but may also include other forms of employee compensation. Workers' Compensation premium is computed by applying varying rates (for different classifications) (per hundred dollars of remuneration).

Residual Market
Workers' comp written through an assigned risk plan.

Respondent
The employer or its workers' compensation insurance carrier in a workers' compensation case.

Schedule of Injuries
The list in the Workers' Compensation Act providing the maximum number of weeks of Permanent Partial Disability benefits for each body part. Only injuries (body parts) in this statutory schedule are eligible for Permanent Partial Disability benefits.

Scopes Manual
Manual produced by NCCI which details what kinds of workplace exposures belong in particular Workers' Compensation classification codes.

Self Insurance
Manner in which an employer provides workers' compensation insurance coverage for its employees by insuring itself rather than by purchasing workers' compensation insurance coverage from a private insurance carrier.

Settlement
Term used for Permanent Partial Disability benefits or to refer to a Stipulation, which is a final close-out of a workers' compensation case.

Standard Premium
Premium after application of Experience Modifier and Schedule Credit/Debit, but before Premium Discount

Total Temporary Disability
The temporary, but total incapacity from work of an employee with a compensable work-related injury or occupational disease. During a period of total incapacity, an employee is unable to perform ANY type of work and is eligible for Temporary Total Disability benefits.

Third Party Claim
Claim for workers' compensation and/or other benefits made by an employee with a compensable work-related injury or occupational disease against a third party (party other than employee or employer).

Vocational Rehabilitation
Services provided to an employee with a compensable work-related injury or occupational disease to return that employee to the workforce in a new occupation, the performance of which is within that employee's physical limitations resulting from the injury or disease. The Workers' Compensation Commission's Rehabilitation Services unit provides a full range of vocational rehabilitation services, without charge, to eligible employees who cannot return to their initial occupations. Employees may apply to Rehabilitation Services themselves or may be referred to Rehabilitation Services by an employer, an insurance representative, a medical practitioner, a Workers' Compensation Commissioner, or another party

Voluntary Compensation
An endorsement to the standard Workers' Compensation insurance policy which extends coverage to employees not required to be covered under the state's statutory Workers' Compensation provisions.

Waiting Period
The first three calendar days of a work-related incapacity from work, during which an employee with a compensable work-related injury or occupational disease is ineligible to receive workers' compensation benefits, other than appropriate and necessary medical care. For employees incapacitated from work for seven or more calendar days due to the injury or disease, the waiting period is waived and they are eligible to receive workers' compensation wage replacement benefits for the entire period of incapacity from work.

Workers' Compensation Advisory Board
Board provided for by the Workers' Compensation Act to assist the Workers' Compensation Commission Chairman in the performance of his duties. The Board is comprised of four individuals representing employee organizations, four individuals representing employer organizations, and a ninth individual who is selected by the Board to serve as an impartial chairman of the Board.

Written Notice of Claim
The claimant's written notice alleging a compensable work-related injury or occupational disease and claiming workers' compensation benefits for such. The Workers' Compensation Commission Form 30C serves as a proper written notice of claim.