Why do you have a high Florida workers compensation modifier?

All business owners and managers look for ways to improve profitability, and margins for many businesses are always tight. One concern then is how much they pay for insurance, and in this case, we’re taking a closer look at workers compensation. Do all businesses pay the same amount for workers compensation in Florida? Yes and no.

In the state of Florida, the rates you’re paying are determined by the state itself. When you begin your business and obtain workers compensation coverage for the first time, you begin paying the same rates as is standard across the entire industry of your classification. So there’s not much flexibility or control involved in what you’re paying to begin with.

This startup rate includes a modifier of 1.0, which means the rate you pay is 100% of the state’s mandated, industry-wide rates. That’s basically the starting point, which means that this modifier can be changed, including going into the fourth year of a business’s operation.

Depending on the number and type of workers compensation claims you’ve had in the previous three years, your rate may be increased. This leads to the high workers comp mod rates we began this discussion with. For instance, a 1.15 modifier rate would be a 15% increase from the state mandated rate for your industry.

There’s good news too though. Your Florida workers comp mod rate can also be lowered. So going into year four you can end up with something such as a .97 rate, or only 97% of the statewide mandated rate.

Now, is there any way to change your Florida workers compensation modifiers? Working with PEOs is one way, as they have increased flexibility and some capacity to lower mod rates. PEOs can then offer further savings, too. For instance, startup state unemployment tax rates, or SUTA, is 2.7% and can also be increased or decreased. PEO companies in Florida will typically be able to obtain a lower rate, and by working with them, you’ll be able to capitalize on that.

Back to workers compensation rates, another option is the FWCJUA, or Florida Worker’s Compensation Joint Underwriting Association. This, however, is typically but not always reserved for those who are unable to otherwise receive this coverage due to excessive or fraudulent claims, or other issues. It also is much less common than the plan and organization it replaced.

Understanding and working to reduce your Florida workers comp mod rate is always a goal for any business owner. If you have any questions, give us a call at 407.272.1976 and we’ll be happy to talk you through your options.