Today is the second in a series of Ask Approach articles on wages, time-loss, and pensions. In case you missed it, start with our post on Wage Calculations from last week.
What is case reserve?
Case reserves are basically a rainy-day fund, with L&I setting money aside to cover the costs they expect to pay during the life of the injured employee. And where does that money come from? Well, it’s charged to your workers’ comp account, which can cause your rates to go up in future years.
Case reserves used to only be applied to claims that were open at 8-10 months old or that had specific “triggers”, such as time-loss. But now (as of early 2019) every worker’s comp claim in Washington state gets a reserve added within the first 30 days. This reserve is auto generated by a computer and updated every 30 days for the first 18 months of the claim.
How much is the reserve adding to my claim cost?
You can view the auto-generated reserve in Claim & Account Center (your Approach Retro Coordinator can assist you in registering for CAC if you are currently not signed up). Your Approach Retro Coordinator will also check the reserve for accuracy and request a reduction should the reserve be over-inflated based on the current status of the claim. Our goal is to mitigate costs if there’s an error or there are other factors for which we disagree.
Because the reserve is recalculated each month, you still want to use your best practices for workers’ comp claims – a combination of return-to-work and kept-on-salary can keep your claim “medical only,” without any indemnity costs. This will reduce the actual costs of your claim, so the system has less reason to predict higher costs going forward.
Are claims still referred for Case Reserve?
Yes, the Case Reserve Unit (CRU) at L&I will continue to review certain claims that remain open between 9 and 18 months after filing. And, as always, indemnity costs (such as time-loss or loss-of- earning power) are the big red flags that can cause a CRU review.
Reserves applied by the CRU can impact an employer up to $5 for every $1 of actual claims cost. So, a claim that ended up costing $5,000 can look like a $25,000 charge to your account. This has a big impact when it comes time to set rates — many employers see an increase of 25% in a single year, nearly doubling by the third year. These big reserves can also reduce your retro refunds.
In short, whether it’s an “early” auto-generated reserve or one added by the CRU, lower-cost claims that appear to be headed in the right direction will attract lower reserves. They’ll also support your Approach Retro Coordinator’s request for a reserve reduction. This is why our priority is always to bring the worker back to regular or light-duty work as quickly as possible — and to use Kept-on-salary when they’re not yet able to return.
Learn more about Case Reserve and all the topics in this series at Claims 201, our free class for Approach clients looking for a deeper dive into managing their claims and keeping workers’ comp costs as low as possible.