Is there a minimum dollar amount before a workers compensation claim is reported for experience rating?

We were recently asked this question by an insurance agent looking for an answer so they could properly advise a client. The short answer is no, there is no minimum claim amount required before it’s reported for experience rating. However the more complete answer may just be a little more complicated.

You see there’s a few things that may change this answer and to get to the bottom you need to know more details.

  • Is your client’s policy experience rated? – To begin, a workers compensation policy must meet certain subject premium levels during it’s experience period before it qualifies for experience rating. You’ll find these subject premium levels will vary from state to state. Those 38 states who follow NCCI as their experience rating organization will also all have different thresholds of eligibility. There are two qualifying periods that are reviewed. First is the established subject premium developed in the most recent 24 months and second is the subject premium developed over a longer period of time. Both are independent of each other. As an example say in Missouri you have a client who in the first year has a subject premium of $8000. They would qualify for experience rating because their premium exceeded the minimum of $7000. Another example in Missouri, your client has had a subject premium of $3900 for two years, they would also qualify for experience rating as their premium has exceeded the minimum of $3500. See the chart below. Here’s a sampling of some of the NCCI states and their eligibility for experience rating:

      Colorado         1st Year Premium $8,000    or   2 Consecutive Years $4,000

      Georgia           1st Year Premium $10,000  or   2 Consecutive Years $5,000 

      Illinois             1st Year Premium $10,000  or   2 Consecutive Years $5,000

      Missouri          1st Year Premium $7,000    or    2 Consecutive Years $3,500 

      Tennessee       1st Year Premium $9,000    or   2 Consecutive Years $4,500

  • Does your client take advantage of State mandated deductibles? – Some states allow an employer to pay the first so many dollars of a claim, usually medical only. Think first aid. Just because the employer is allowed to pay up to a certain level like say $1,000, the claim still has to be statistically reported. Whether the employers state requires “net” reporting or “gross” reporting of the deductible amount will be the guide as to how the deductible amount will effect their experience rating.
  • Does your client use a small, intermediate or large deductible plan? – Same concept as above. You must consider the “net” or “gross” reporting basis.

Of course there are other considerations but these should get the point across that the answer to this question may not be that simple!   Be sure to check with your individual state rating authority for eligibility thresholds for your state and how they apply.

Hope this helps you out! Thanks for visiting!

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