How One Addiction Treatment Program Saved 50% on Workers Compensation Insurance

I’m excited to share a story that shows how one simple change can save a business a ton of money on workers' compensation insurance. It’s a real-life example of a business owner that cut costs without compromising on coverage.

I was working with a residential substance use disorder program that operated sober homes and provided 3.1-level programming for people in recovery. For those who might not know, 3.1 programming refers to clinically managed low-intensity residential services in the world of addiction recovery. This organization was doing amazing work, but they were overpaying—big time—on their workers' compensation insurance.

An operator of a residential recovery program that is thrilled to learn they will save 50% on workers compensation insurance

Let’s dive into what happened and how we turned things around for them.

The Importance of Correct Employee Classification

First off, workers’ compensation insurance is primarily based on two factors:

1. Job Description: This determines the classification code, which directly impacts the cost of insuring employees.

2. Payroll: This measures the size of the organization and influences the total premium.

In this case, the employees at the organization were initially classified under the code 8842. For those of you not familiar with insurance jargon, that’s the classification for group homes in Maryland. At first glance, it made sense. After all, it’s a home where a group of people live, right? Wrong!

Why Classification Matters

Here’s the thing: not all group homes are created equal, and that’s especially true for substance use disorder programs and addiction recovery centers. The correct classification for this type of work isn’t 8842; it’s 8833. What’s the difference, you ask? A lot—especially when it comes to cost.

Under the group home code (8842), the organization was paying about $3 for every $100 in payroll. But with the correct classification (hospital code 8833), the cost dropped to roughly $1.50 for every $100 in payroll. That’s a 50% reduction. Let that sink in for a moment: half the cost, just by using the right code.

The Big Savings

Now, you might be wondering, “Did this affect their coverage?” Not at all. We didn’t change anything about their coverage. We didn’t touch the payroll numbers. We didn’t make any adjustments that would hurt the organization or its employees. All we did was make sure their job descriptions were correctly classified.

This one small tweak ended up saving them tens of thousands of dollars annually on their workers' compensation insurance. That’s money they could redirect toward their mission of helping people in recovery. And honestly, that’s what makes this job so rewarding for me—knowing that these savings make a real difference in people’s lives

.

Why This Applies to Every Business

This isn’t just a tip for substance use disorder programs. Every industry has its nuances when it comes to classification codes. Whether you’re running a tech startup, a construction company, or a nonprofit, getting your classifications right can mean huge savings on your workers’ comp insurance.

Here are a few things to keep in mind:

• Understand Your Industry’s Nuances: Not all jobs within your business will fall under the same classification. Take the time to break down your employees’ roles and match them to the correct codes.

• 
  

• Work with an Expert: Insurance can be complicated, and unless you’re an expert, it’s easy to overlook details like classification codes. Partner with someone who knows the ins and outs of your industry.

  
  

• Review Regularly: Businesses evolve, and so do job roles. Make it a habit to review your classifications annually or whenever there’s a significant change in your operations.

Take Action

If you’re wondering whether you might be overpaying on your workers' compensation insurance, don’t wait to find out. A simple review of your classifications could lead to substantial savings. And if you’re not sure where to start, that’s where I come in.

Feel free to reach out. My contact info is on the channel page, and I’m always happy to take a look at your program or answer your questions. Even if you just want to run something by me, I’m here to help.

Wrap-Up

This story is a great reminder that small changes can lead to big savings. Whether it’s reclassifying employees, optimizing your coverage, or simply getting a second opinion, taking a closer look at your insurance setup is always worth it.

If you found this helpful, subscribe for email updates about new content on the page.