New Rule Simplifies X-Mod Calculation, Encourages Reporting First Aid Claims

A new method for calculating workers’ compensation experience modifications (X-Mods) took effect in California on Jan. 1.

The Workers’ Compensation Insurance Rating Bureau of California has created a new simplified formula for calculating X-Mods as part of its efforts to add more transparency to the process. The new formula excludes the first $250 of every claim for the X-Mod computation, no matter how large or small the claim is.

This also means that if an employer pays, say, $200 for first aid on a minor workplace injury, they are required to report it as a claim. Doing so will not affect their X-Mod in any way, no matter how many first aid claims they have.

The goal is to encourage employers to report all claims, even those that may require minimal medical treatment or first aid.

Examples:

• If you have a $10,000 primary threshold and you have a claim that ends up costing $6,000, the amount used to compute your X-Mod would be $5,750.
• If you have a $10,000 primary threshold and you have a claim that ends up costing $17,000, the amount used for calculating your X-Mod would be $9,750.
• If you have a claim that’s valued at $250 or less, the claim will still show on your experience rating worksheet, but it will not be used at all when calculating your X-Mod.

Does this affect your current X-Mod?

Yes. Any claim incurred against policies incepting during the experience period for your 2019 experience modification, which includes 2015, 2016 and 2017 policy years, will be used in the X-Mod computation at $250 less than its reported value.

Claims costing $250 or less will be shown on worksheets, but will not be used in X-Mod calculation.

Reporting first aid claims is required

Workers’ comp regulations require that all claims that cost some amount of money to treat must be reported to your workers’ comp carrier, which in turn must report to the Rating Bureau so that it can accurately keep workers’ comp records on employers that are experience rated.

The rules have already been on the books for years, but the problem of non-reporting became too great, so the Rating Bureau has stepped up to encourage employers to follow the rules. And in this case, it can’t work against you.