An incentive program designed to lower premium expense in exchange for a per claim deductible.
The Bureau of Workers' Compensation's (BWC) Deductible Program is an alternative rating program that allows private, state-funded employers or public employer taxing districts to lower their premium expense by offering an upfront premium discount in exchange for the employer assuming a per claim deductible.
There is a Small and Large Deductible Program so employers of different sizes, hazard groups and risk tolerance levels have options that best fit their organization. The Small Deductible Program includes levels between $500 to $10,000. The Large Deductible Program includes levels between $25,000 to $200,000. There is no deductible level available between $10,000 and $25,000. An employer is limited to 25% of their annual premium if the deductible selected is less than $10,000, and 40% of their annual premium if the deductible is $25,000 or more.
Employers participating in the large deductible program may also select an aggregate stop-loss limit of three (3) times the deductible limit.
Example of savings calculation using the Small Deductible Program (assuming mid-sized service company):
Based on the deductible level chosen and the employer’s hazard group (which is based on the employer’s manual classifications and risk level), the discount can range anywhere from 1.4% to 26% for small deductible options and 6% to 77% for large deductible. The discount is applied to the employer’s standard premium.
Example using a Small Deductible level of $5,000:
• Payroll - $5,000,000
• Individual premium - $460,000
• Deductible discount savings - $32,000
• Premium with discount - $428,000
• Plus estimated deductible billing - $10,000
• Net premium - $438,000
• Net savings - $22,000