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Kansas Workers Compensation Insurance in 2024: What to Expect

Workers’ compensation provides medical care, wage replacement benefits, and other support for workers injured on the job or who develop an occupational disease. Kansas requires all businesses with at least one employee to carry workers’ compensation coverage. This insurance protects both employers and employees in the event of a work-related injury or illness.

Background on Kansas Workers Comp

Before looking ahead, let’s briefly review the basics of the Kansas worker’s compensation system. Three key state agencies oversee the program:

Kansas Department of Labor

This department establishes rules and regulations for carriers, employers, and providers. It also handles disputes, including Workers Compensation Administrative Law Judge hearings.

Kansas Workers Compensation Fund

This semi-public fund insures many high-risk employers who can’t obtain private market coverage. It is also the designated payor of last resort.

Kansas Insurance Department

This agency regulates insurers and oversees rate filings. It strives for a balance between adequate benefits and affordable premium costs.

In Kansas, employers have two coverage options:

Private insurance: Most firms purchase commercial workers’ compensation policies, with many large companies self-insuring. Premiums are based on occupational risk codes and past claims experience.

State fund: High-risk businesses can obtain coverage through the Kansas Workers Compensation Fund. Its premium rates are set annually by the Insurance Department.

For employees, benefits include:

  • Medical care for work injuries paid in full by the employer/insurer
  • Partial wage replacement of 80% of lost pay
  • Vocational rehabilitation for seriously injured workers
  • Permanent partial disability awards for lingering impairment
  • Dependents’ benefits for death on the job

Now let’s explore what changes may unfold in 2024.

Economic Outlook and Inflation Impact

Nationally, economists project steady economic expansion to continue into the new year, though at a slower pace as the Federal Reserve raises interest rates to curb high inflation. How might these macroeconomic trends filter down to Kansas worker’s compensation?

Higher inflation inevitably feeds into higher insurance costs on several fronts:

Medical costs: With overall prices rising at a rapid clip, the cost of medical care, such as providers’ fees, drugs, and hospital stays, is accelerating as well. This will put upward pressure on claim costs for insurers.

Wage inflation: The monetary value of wage replacement benefits tied to a percentage of weekly pay must rise along with wage gains across industries. Greater lost time from work due to injuries further adds to insurers’ exposure.

Operational expenses: Like any business, insurers face increasing outlays for items like technology, rents, salaries, and other overhead that must be offset somehow, likely through higher premium dollar investments.

On top of general inflation, certain risk classes may experience disproportionate cost hikes:

  • The construction industry still sees elevated injury rates as projects ramp up, leading to larger claim burdens.
  • Healthcare work remains hazardous amid chronic understaffing and COVID-related challenges.
  • Transportation carriers grapple with higher fuel prices and supply chain disruptions, which may contribute to accidents.

While inflation will drive many 2024 workers comp rates upward, the degree of increase may vary from insurer to insurer depending on each carrier’s unique book of business. Overall premium levels could also depend on whether inflation proves temporary or more enduring. One thing is certain – rising costs will feature prominently in next year’s insurance landscape.

Anticipated Rate Filings and Approvals

In late 2023 or early 2024, private insurers will submit proposed average rate change requests to the Kansas Insurance Department for 2024 policies. Based on historical economic cycles and industry trends, here are some possibilities:

  • Single-digit percentage increases, e.g., 3-7%, may be sought by many carriers based purely on standard actuarial rate indications. This would track broad inflation forecasts.
  • Double-digit hikes of 10-15% are plausible from insurers with concentrated exposure to hardest-hit classes like construction, transportation, manufacturing, and healthcare.
  • The state fund, which insures many high-risk employers, may file for even larger 15-20% boosts given its risk makeup.

How will regulators likely respond? Due to strong economic growth, the Insurance Department may be less inclined to intervene in “adequate” private carrier filings under 10%. Double-digit requests could see some compromise reductions required.

For the state fund, as the primary insurer of last resort, regulators may approve sizeable increases while exploring ways to control growth, such as tighter medical cost containment or return-to-work incentives.

Barring unforeseen circumstances, most private insurers should achieve mid-single-digit approvals on average. The fund may see low double-digit rates if inflation persists. Final decisions won’t emerge until late spring or early summer 2024.

Employer Cost Management Strategies

In this inflationary environment, firms will need proactive strategies to curtail premium hikes:

Safety Improvements

The best approach is preventing injuries in the first place. Investing in ergonomic equipment, training programs, and safety compliance audits can lower incident rates over time, helping rein in losses and future premiums.

Enhanced Return-to-Work Programs

Getting injured employees back on lighter duty jobs promptly after an accident shaves costs compared to lengthy lost time. Accommodations, rehabilitation aid, and oversight promote recovery.

Leverage Deductibles and Retrospective Rating

Employers able to bear some risk upfront may opt for higher deductible policies in exchange for lower base rates. Retros plans tie final costs to claim performance, creating incentives to curb incidents and their severity.

Utilize Managed Care Networks

Directing medical care through approved provider panels containing negotiated fee schedules can pare expenses on individual claims and the overall claims burden.

Consider Self-Insurance or Group Programs

Large companies able to withstand risk may self-insure with reinsurance backup. pools allow groups, including trade associations, to share risk at lower average premiums.

Smart cost management can now help stabilize future premium obligations in an inflationary insurance climate. Employers and insurers working cooperatively on solutions will find the most success.

Employee Benefit Adjustments

Besides coverage rates, certain inflation-adjusted workers’ compensation benefits may see changes proposed for 2024. Here are two possibilities:

Maximum Weekly Wage Replacement

In Kansas, temporary total disability benefits are capped at a percentage of the state average weekly wage (SAWW). For 2023, the maximum weekly benefit is $1,208.40.

The SAWW increases yearly based on growth in average wages statewide. With strong wage gains anticipated in 2024, look for the Employees Compensation Division to propose lifting next year’s weekly ceiling commensurately, perhaps into the $1,250-1,300 range.

Permanent Partial Disability Ratings

Workers left with lingering physical impairments receive lump sum PPD awards tied to a disability rating schedule. This values specific injuries like joint replacements or scarring based on medical outcomes.

Higher medical costs may warrant inflationary adjustments to certain ratings to maintain their intended impairment compensation level. Increases of 2-5% across schedule ratings are a possibility insurers and employers should monitor.

As with coverage rates, benefit adjustments aim to retain adequate benefits coverage while balancing affordability. Regulators will weigh input from all interested parties before finalizing new benefit guidelines.

Preparing for 2024

With inflation carrying considerable uncertainty, proactive stakeholders can position themselves favorably. Consider the following recommendations:

  • Carriers should initiate internal discussions on building rate requests based on multiple inflation scenarios
  • Employers can evaluate premium projections and surplus budgets for potential allocation increases
  • All parties should monitor economic data and publicly available filings for emerging rate and benefit trends
  • Providers may need to revisit fee schedules and contracts to factor in higher operational expenses
  • Injured worker’s associations can stay updated on benefit adjustments that may affect member services

Above all, maintaining open communication channels will benefit everyone. Insurers should educate employer clients on managing exposures cost-effectively. Likewise, injured employee representatives ensure a voice during regulatory proceedings.

With advanced awareness and preparation, Kansas stakeholders can make informed choices to stabilize the workers’ compensation system amid challenging inflationary pressures on the horizon in 2024. Staying coordinated will bring the stakeholders through successfully.

FAQs About 2024 Kansas Workers Compensation

Now let’s address some frequently asked questions:

1. Will my worker’s comp rates definitely increase in 2024?

While inflation strongly suggests rates will rise on average, the degree of increase can vary. How well your business controls losses, your risk classification and carrier, and the overall economy all factor in. Some employers may experience lower single-digit hikes – or even rate decreases – depending on improved safety and claims management programs. Proactivity is key to managing premiums in an inflationary environment.

2. What can I do if my carrier requests an excessive rate hike?

You have options if a proposed increase seems unjustified. First, carefully review your loss experience record with your agent or carrier to understand their rationale. If you disagree, you can file a formal protest with the Kansas Insurance Department. As part of its review process, regulators will consider protests in determining a reasonable approved rate. You can also shop around and switch carriers if approved increases are too high or if another insurer offers a better rate. Maintaining a good safety record increases your leverage when negotiating or protesting rates.

3. How does the health of the Kansas economy impact my premiums?

A strong economy with low unemployment helps keep claim frequencies lower as fewer accidents occur. It also supports potentially faster recovery and return to work for injured employees. Both factors can exert downward pressure on insurance rates. However, sustained periods of high inflation may outweigh economic strengths in driving premiums upwards. Overall the relationship is complex, so maintaining a focus on internal cost controls is important regardless of external conditions.

4. If I get a large rate hike, can I drop my comp coverage instead?

No, it is illegal under Kansas law for any business to operate without valid workers’ compensation insurance in place. Doing so risks significant penalties from state regulators. Your only options are negotiating with your carrier, protesting an excessive increase, or changing insurers – not canceling coverage altogether. Maintaining continuous protection for your employees who are hurt on the job is mandatory.

5. How can employers help control medical costs on claims?

Employers play a key role in managing the medical side of claims since healthcare inflation greatly impacts insurance rates over time. Options include establishing managed care arrangements directing employees to approved doctors and hospitals with contracts stipulating negotiated fee schedules. You can also require preauthorization for elective surgeries or transfers of care, appoint nurse case managers to claims, offer on-site clinics, and establish return-to-work programs expediting recovery. Promptly reporting new injuries ensures proper treatment from the start as well. All of these efforts can decrease both individual claim costs and aggregate medical loss burdens.

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