Do Small Deductible Workers Comp Programs Really Work?

This was a question that was emailed to me earlier this week.  We have audited the policies for a few small deductible programs.  The most recent one had a $250 deductible.  The claims were still handled by the insurance carrier from the first dollar.  After examining the policy and the results of the $250 deductible, there was no difference than if the the employer had just let the insurance company pay the claim from the first dollar. 

A company cannot hold the claim on a small deductible program until it reaches the small deductible maximum and then attempt to report it late to the carrier.  This type of situation can be the recipe for disaster as a small deductible program may cause the employer to hold off reporting a very serious claim.  I have seen the late reporting on a small deductible program cause a few claims to become out of control.  A serious claim festering with the claims adjuster not knowing about the Workers Comp claim is a worst case scenario for controlling your Workers Comp claims.   

The NCCI and most State Rating Bureaus allow for a 70% discount for medical only claims as a way to encourage reporting the smallest claims.  If an employer has many medical only claims and just a few lost time claims, the 70% discount may be more attractive than the the small deductible program.  

There are quite a few states that do not allow small deductible programs due to the late reporting that may be caused by the program.   There may be a few cases where small deductible programs may be a successful part of a Workers Comp program.  I have not seen one in my career.