For larger employers with a workforce spread across multiple states, managing workers’ compensation for everyone can be difficult because of the differing regulations between states. An alternative to the typical guaranteed cost workers’ comp plan exists, however, in the form of large deductible workers’ compensation plans. Functionally, these operate similarly to guaranteed cost plans, but they also include a special deductible endorsement, ranging from $100,000 to $1,000,000 per case and accounting for individual states’ requirements.
Why would an employer take this option, given the considerable deductible? There are other benefits available for employers that demonstrate they can pay, typically with an escrow account paying to the insurer. The insurer handles the entire claims management process for the insured, even across multiple states, while the employer essentially acts as self-insured. In this way, large deductible workers’ compensation plans benefit from improved cash flow management and potential tax savings. In addition, a wide range of insurance companies support large deductible plans, meaning more options for employers and more room to seek out lower premiums and stronger benefits.
Granted, these advantages are only considerable for employers with the resources and financial security to guarantee that they can reimburse the insurer. However, when these requirements are secured, large deductible workers’ compensation plans are a boon to bigger employers that need to manage the insurance claims of a widespread workforce.