Q&A: Is there a right time to use Kept-On-Salary for claims (or not)?
Featured Worker’s CompWorkers’ Comp
If Kept-On-Salary (KOS) always produced the best financial result for your company, all Retro groups would likely have KOS requirements. The truth is, KOS will always be good for the retro sponsor but there are times when KOS isn’t the best move for you. You need to be armed with the information you need to understand the impact of different claims management tactics, rather than being mandated to use just one. It is important you understand the cost/benefit and feel equipped and empowered to make the best choice for your business.
RUN THE NUMBERS
So how can you know when KOS is the right choice for a claim? For our workers’ comp and Retro members, we provide analysis on a claim-by-claim basis. Because each claim is unique, your approach and analysis should be too. We recently worked with a member who was considering KOS and determined that paying $12,420 in KOS wages resulted in only $1,456 in premium savings. Using KOS in this case results in a net loss of $10,964 for this member. In another example we recommended our member use KOS and they saved $16,794. Taken alone, neither of these may seem like a lot of money but when you apply the impact across multiple claims, it adds up quickly. This is why it’s important to run the numbers to look at more than just the reduction in claim costs but also:
- The premium impact
- The breakeven point
- Your unique situation
When you’re provided a financial comparison of upfront KOS wages versus the claim breakeven point and long-term premium savings, you will then have powerful data to assist you in making a KOS use (or not) decision. While the use of KOS is most often positive, it is important to have the flexibility to consider how it may impact the organization overall accounting for many factors such as your people, your culture, and the unique circumstances of each claim.
BE ARMED WITH DATA
Kept-On-Salary can and should be used strategically. We’ve invested heavily in our team’s ability to use proprietary data analytics coupled with our application of 30+ years of learning based on running a successful Retro group, to help employers do just that. When a claim occurs–any claim–we do the analysis to see the full picture before providing a recommendation. We then trust our members to make the decision best for their business and people.
At Vigilant we’re all about providing our workers’ compensation and Retro members with the counsel, team and services needed to keep their workers’ comp costs at a minimum while also keeping their employees safe, working and well. If this is the type of support and partnership you’re looking for, then let’s talk