A number of factors may contribute to an increase in workers compensation premiums in the years ahead. One is the rising cost of health insurance, with its attendant change in employee cost participation. “An employee who has a $5,000 annual health care deductible might be more inclined to attribute an injury to workplace duties,” says Daniel C. Free, President and General Counsel of Insurance Audit & Inspection, Indianapolis, IN. (insuranceaudit.com). Drug prices, too, can play a role. “As drug prices go up, insurance companies may try to recover their higher costs through premium hikes.”
Another potential cost driver is the recent trend toward legalization of the medical and recreational use of marijuana. “Suppose your employee obtains a prescription for medical marijuana,” poses Free. “Can you lawfully deny the drug’s use? Maybe so, if the employee is in a high-risk job, but maybe not if the individual works in a low-risk setting.”
In such cases there are bound to be questions as to whether injuries arise from workplace conditions or from cognitive impairment resulting from marijuana use. “That’s a puzzle piece that has yet to be figured out,” says Free.
Finally, state regulators can make changes that impact premiums. Stay alert to what your own state has planned in the areas of proposed increases in benefit levels, additions to the list of compensable injuries, or new entries to drug formularies.
“State insurance commissioners have a lot of authority regarding regulations, fines and penalties,” says Free. “You can stay abreast of what is happening by monitoring the web site of your state department of insurance.”