Business of Medicine

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Should You Buy Insurance Through Your Payroll Provider?

Executive Summary

No matter the size of your healthcare organization, workers’ compensation insurance provides important protections for your employees as well as your business. However, the cost of workers’ compensation will vary depending on several factors. It is important not only that healthcare organizations understand their obligations for workers’ compensation coverage, but also how to accurately compare policies to choose the best option. 


Recommended Actions
  • Stay up to date on workers’ compensation laws and regulations in the states in which your healthcare organization operates
  • Ensure that your healthcare organization has a workers’ compensation policy in place 
  • Consider conducting annual training to improve worker safety and prevent workers’ compensation claims 


Utilizing a payroll company to ensure accuracy and efficiency can be beneficial for many practices. However, using that same company for related services such as workers’ compensation insurance is another story. It’s a move that may save time, but doesn’t usually provide value to a practice.

Why? The inclusion of other services can be likened to add-ons at a car rental company. Added services, such as a collision damage waiver, fuel service option or daily GPS rental, markedly increase the car rental company’s profit margin. Similarly, the addition of workers’ compensation insurance, although convenient, likely comes at a higher cost than if purchased independently.

Here are some questions that healthcare practices should consider when choosing how to purchase workers’ compensation insurance:
    1.    What is the annual cost for your workers’ compensation insurance alone?
    2.    Does your payroll provider’s program offer a dividend?
    3.    What loss prevention/OSHA support is provided?
    4.    What employer’s liability limits are provided?
    5.    What is the provider’s experience modification rate?
    6.    What would your practice’s experience modification rate be if calculated individually?


Although purchasing your workers' compensation insurance through your payroll provider might be the best option for your practice, we encourage you to consider the above when making that decision.

 
Lessons Learned: 

  • Become familiar with the workers’ compensation laws of the states in which your healthcare organization operates
  • Before purchasing workers' compensation insurance with a particular insurer, vet the company by discussing the benefits/disadvantages with at least two other healthcare organizations that are covered by that insurer
  • Consider whether you will cover independent contractors under any workers’ compensation coverage your healthcare organization obtains 


Potential Damages

Failure to carry the required workers’ compensation insurance when an employee is injured could subject a healthcare organization to administrative penalties, such as fines or stop-work orders, and even criminal penalties in some states. Additionally, the healthcare organization is responsible for the cost of any medical treatments, lost wages and other benefits that a workers’ compensation policy would have paid.


Quiz

Answers are provided below

True or false?
Question 1: Although convenient, obtaining workers’ compensation insurance through my payroll company may end up costing my healthcare organization more money. 
Question 2: Before choosing a workers’ compensation insurance company, my healthcare organization should consider the loss prevention support provided by the insurer.
Question 3: Before choosing a workers’ compensation insurance company, my healthcare organization should consider the employer’s liability limits that the insurer provides.
 
Question 1: True. The addition of workers’ compensation insurance, although convenient, likely comes at a higher cost than if purchased independently.
Question 2: True. Before deciding where to obtain your workers’ compensation coverage, consider the loss prevention/OSHA support provided by the insurer.
Question 3: True. Before choosing a workers’ compensation policy, consider if there are any employer’s liability limits provided by the insurer.

05/22

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Disclaimer

The information provided in this resource does not constitute legal, medical or any other professional advice, nor does it establish a standard of care. This resource has been created as an aid to you in your practice. The ultimate decision on how to use the information provided rests solely with you, the PolicyOwner.