How much does workers compensation insurance cost for assisted living facilities or group home?

Workers compensation insurance can be one of the biggest line items in an organization’s budget.  Making sure the costs are correct on this line of coverage can make a big difference to the profitability of an organization.  This post will help you understand the basics of what will determine the cost of your workers compensation policy.

Caregiver helps patient in their room

1.      Classification

There’s a difference between working in a group home or as an administrator in the home office.  The caregiver in the house is far more likely to be hurt lifting a client, getting pushed down the steps, or cutting their hand while preparing  a meal, etc… The way insurance companies differentiate between these employees is through classifications.  On your workers compensation policy, there is usually a number, then a description of the classification.

For Group Homes and Assisted Living facilities, this is important because there can be a big difference in cost between classifications.  Here are some common classifications that can be used.

8842 – Group Homes.  This classification is typically used for people that work as caregivers inside group homes for youth, developmentally disabled, and homeless shelters.

8833 – Hospital.  This classification is typically used for Residential Substance Use Disorder programs.  A common mistake that brokers will make working with SUD programs is by classifying the payroll under Group Home instead of Hospital.  The Hospital classification is typically much less expensive.

8824 – Nursing Home.  This is the classification for Healthcare employees at a nursing home.

8810 – Clerical.  If you have administrative employees who work in an office, never have contact with clients, and are at a site that is separate from where services are offered, you can make the case that the clerical classification can be used.  This is to your advantage because the clerical classification is a fraction of the cost of the other classifications listed.

2.      State of operation.

There are couple of ways that state influences the cost of workers compensation.

First, the medical costs in each state are different.

Second, the rules of employee classifications can vary by state.  In most states, the rules for classifications are written by a company named National Council on Compensation Insurance (NCCI).  However, there are some states that have variations on the NCCI rules.  Then, there are other states that write their own classifications like Pennsylvania and Delaware.  Lastly, there are monopolistic states like Ohio, where you can only purchase workers compensation insurance through the state. 

https://www.ncci.com/pages/default.aspx

3.      Payroll

If the first part is classification, second part is going to be which state you're in, and then the third factor is going to be how much payroll do you have.

The cost for every $100 of payroll is determined by the type of work the employee does.  The payroll helps them measure the size of your operation.

An assisted living facility with $300,000 in payroll for caregivers is larger than an assisted living facility with $100,000 in payroll.  Generally speaking, the assisted living facility is going to pay 3 times more for insurance than the organization with $100,000 in payroll. 

4. Experience Mod & Claims Experience

Workers compensation insurance is the one line of insurance where you are directly compared against your peers.  If your workers’ compensation policy is large enough, this is done by assigning you an experience mod factor.

An experience mod is a number that is used as a multiplication factor that either gives you a discount or applies extra cost.  It is based on your claims experience.

The experience mod is a bell curve.  1 is average.  Over 1, and you have worse claims experience than your peers and you will pay more for workers compensation.  Under 1, you have better claims experience than your peers and you will pay less.

Your claims experience will directly impact how much you pay for insurance.

5. Underwriter judgement

Based on the 4 factors noted above, there is still a lot of room for underwriters to apply either discounts or debits to an account.  They will review your type of operation, how it fits with their desired businesses, their opportunity to win your business, their competition, and then they will make a judgement call.

Sometimes they can apply more discounts to win your business.  Sometimes they will charge more money. 

This rating factor is very qualitative. 

Conclusion

These are the 5 factors that directly impact your workers compensation premiums.  Once you understand that these are the issues, all the guesswork can be removed, and strategies can be developed to manage the situation.

If you’re not sure employees are correctly classified, have someone review the classification descriptions.

If the payroll seems too high or low, review them.

If your experience mod is hurting you, develop risk management practices to manage your claims.

If it seems the underwriter is adding scheduled debits to the policy, understand why, then develop a strategy to have them removed.

There is no way to get workers compensation insurance for free, but at least understanding the program and the strategies to mitigate costs can help you feel confident with what you are buying.