Many business owners assume workers’ compensation costs are fixed, but in reality, several programs and adjustments can help reduce premiums. Employers who take advantage of these opportunities can save money while maintaining compliance with state regulations.
1. Premium Discounts for Large Policies
Policies with high premium amounts automatically receive discounts to account for economies of scale in administrative expenses. This is not available for policies written through the New Jersey Workers’ Compensation Insurance Plan (PLAN).
2. Managed Care Credits
Employers who partner with insurer-approved managed care organizations receive premium reductions. Managed care providers help reduce medical costs and speed up employee recovery, leading to fewer lost workdays.
3. New Jersey Construction Classification Premium Adjustment Program (CCPAP)
The Construction Classification Premium Adjustment Program (CCPAP) offers premium credits to construction employers who pay their workers above-average wages. As of January 1, 2024, the minimum average hourly wage required to qualify for this program is $34.00.
Employers meeting or exceeding this wage threshold can apply for the CCPAP to potentially receive credits to reduce their workers’ compensation insurance premiums. The specific credit percentage increases with higher average hourly wages, providing greater premium reductions for employers who pay more.
It’s important to note that the CCPAP wage thresholds are reviewed annually and may be adjusted on changes in the state’s average weekly wage. Therefore, employers should stay informed about the current eligibility criteria to maximize potential premium savings.
Employers must submit an application to NJCRIB annually.
4. Schedule Rating Plan
This program adjusts premiums based on unique risk factors such as:
- Workplace safety measures
- Hiring and training practices
- Use of advanced safety equipment
Schedule rating can either increase or decrease premiums, depending on the evaluation of risk.
5. Optional Rating Programs
For businesses willing to take on some risk, two special programs allow flexibility in premium determination:
- Retrospective Rating Plan: Adjusts premiums based on actual claims experience during the policy period.
- Large Risk – Large Deductible Program: Allows employers to cover part of each claim in exchange for lower premiums.
Lower Workers’ Compensation Costs Without Compromising Coverage
Employers have multiple ways to lower workers’ compensation costs, from premium discounts to risk-based adjustments. By taking advantage of these programs, businesses can optimize their insurance costs without sacrificing employee coverage.
Schedule a call with us to how we can assist with workers’ compensation management.
