USA Workers Comp

[JR.]

I am not familiar with the workers compensation process, anyhow, my question is in regards to the expenses or claims paid.

Here is my scenario: we accrue for processed claims and have a reserve that sometimes swings both directions. In the month of Feb, we took a substantial hit for claims 2 months ago resulting from an injury even further back. In the same month, another employee suffered a work related injury but no expenses yet nor accrued liability. The claims processing is delayed and the reserve is not adjusted timely. I am aware the employee this month had surgery, and I’m wanting to ask the WC provider what the average surgery cost for this specific injury is so that I can accrue some expense and not get hit in later months like I did this month for the prior injury.

Can I account for workers comp expense through an accrual for expected cost and not just pending claims under the reserve?

How do others handle?

 

[bklynboy]

WC is one of those liabilitities that is estaimated based mostly on past experience but adjusted when known facts arise that are probable to be accounted for. At least thats what we do. Not much you can do to avoid swings as by the time you know of a claim its already happened and likely months after. Sticking to past history will smooth it out somewhat and is typical in setting up reserves for claims.

 

[JR.]

WC is one of those liabilitities that is estaimated based mostly on past experience but adjusted when known facts arise that are probable to be accounted for. At least thats what we do. Not much you can do to avoid swings as by the time you know of a claim its already happened and likely months after. Sticking to past history will smooth it out somewhat and is typical in setting up reserves for claims.

You are right on. The reserve was setting according to the nature of the injury based on past experiences and the knowns as you mention, and the adjustment was based on news facts that arouse. Thanks.