Today's Veterinary Business

FEB 2019

Today’s Veterinary Business provides information and resources designed to help veterinarians and office management improve the financial performance of their practices, allowing them to increase the level of patient care and client service.

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24 Today's Veterinary Business Business Workers' compensation insurance policies are available in all 50 states and are legally required in most states. It's important to note: • Some states, like Georgia and Florida, require employers to maintain insurance if a certain number of people are employed or if specific types of activities are performed. • Texas does not require most private business owners to carry workers' compensation insurance, although private employers that contract with governmental entities must provide coverage and employ- ers that opt out have notifica- tion and filing requirements. • Ohio, North Dakota, Wash- ington and Wyoming are monopolistic workers' com- pensation states. Employers must buy insurance for all workers residing in these states through a state govern- ment-operated fund. Your insurance agent or broker can explain your state's require- ments. Contact information for each state's workers' compensation office is available at Find the Right Policy Workers' compensation insur- ance policies are most frequently obtained through a brokerage firm representing one or more insur- ance companies, a self-insured group or a government-operated fund. Employers may purchase policies that pay claims either on a first-dollar or deductible basis. Though some policies offer deduct- ibles as low as $5,000, the majority are large deductible in nature — $100,000 or more. As one might expect, the high- er the deductible, the lower the annual insurance premium. The type of policy that is right for your veterinary practice depends on several factors: • The state in which the practice and employees are located. • The size of the business. • The practice's financial status. • Ownership's risk profile. • The business's loss history. Larger businesses with an excel- lent history might enjoy significant annual savings with a large deduct- ible or self-insured group. Business- es with a poor loss history might be forced to self-insure a portion of their claims expenses through a small or large deductible policy. Regardless of the laws in your state and the size of your prac- tice, you should strongly consider having some form of workers' compensation insurance. Though premiums can be a significant expense, an insurance policy helps protect your business from costly litigation and settlement costs and ensures that injured employees receive necessary medical care and wage-replacement benefits. Because most practices pur- chase a first-dollar policy from an admitted carrier, I want to focus now on this type of coverage. Consider the Variables Annual premiums are based on: The type of work per- formed by employees. This is determined by job classification definitions, or class codes. The most common class codes applicable to the veterinary industry are: • 8831 — Veterinary. Employ- ees who come in contact with animals even on a limited ba- sis. That is, almost everyone, including receptionists. • 8810 — Clerical. Employees with no exposure to animals. Examples include accoun- tants, payroll clerks and bookkeepers who work out- side the primary location that provides medical services. Employer's gross payroll. Premiums are calculated Business PROTECT & DEFEND Workers' compensation insurance is a form of no-fault coverage developed specifically to provide medical and wage-replacement benefits to employees who are injured or become ill on the job. In addition, injured employees might be eligible for temporary or permanent disability, vocational rehabilitation or death benefits. In exchange, employees surrender their right to bring negligence claims against an employer for potentially large sums of money, including non-economic damages. 1 Brush up on workers' comp Your practice's injury history goes a long way in determining insurance costs, but a good risk-management program can pay off down the line. based on the rates filed with each state and are applied to every $100 of payroll. Loss experience. This means the number and se- verity of past work-related injuries and illnesses. Loss experience can significantly impact the final premi- um in two ways: • Carrier underwriting. Insurance companies can reward or penalize individual policyholders through sev- eral pricing methodologies. The most common are tiered pricing and schedule credit/ debit utilization. • Experience modification rating. This system, also known as x-mod, incentivizes employers to maintain safe working conditions. X-mod modifies an employer's insurance premium according to the loss history. The x-mod for each business is set each year by a workers' compensa- tion insurance rating bureau. Some states have their own bureau while others utilize the National Council on Com- pensation Insurance. More About X-mod Smaller businesses, as deter- mined by annual gross payroll, do 2 3 By Ed Branam, DVM, CIC

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