Workers' Compensation Insurance FAQ
How does the Self-Insured Workers' Compensation Fund work?
Pursuant to strict state regulations, a nonprofit organization is formed to pool the insurance premiums of all the Plan participants. The State of Michigan approved the Michigan Assisted Living Self-Insured Workers' Compensation Fund as of October 1, 2003. The Board of Trustees of the nonprofit organization is comprised of providers who are Plan participants. The Board of Trustees creates a set of bylaws that governs eligibility for participation, organizational structure and operation of the Plan according to state requirements. The bylaws ensure that only properly screened and eligible providers can participate so as to avoid the risk of one or more providers crippling the Plan with excessive claims.
From the pooled premiums, claims are processed, paid and challenged where appropriate. The services of a third party administrator are also obtained. Excess insurance is purchased by the Plan to protect its financial stability.
What other benefits are available through this Plan?
Citizens Insurance Company provides loss control to Plan participants at no extra cost. This includes on-site safety and accident prevention consultation. It also includes seminars on related issues such as industrial hygiene, ergonomics, accident prevention and other risk management topics.
Citizens Insurance dedicates specialized claims adjusters to the program to better manage, process and defend the claims. Included in the claims handling is the input from the Plan's Board of Trustees. Because the Board of Trustees is comprised of providers with experience in this field, its input helps the Plan better evaluate the validity of claims. This allows for not only the professional and aggressive management of claims but also the reduction of fraudulent and nuisance claims. The collective experience of the claims adjusters, Board of Trustees and seasoned workers' compensation insurance defense attorneys also promotes timely and sound outcomes for both the Plan and the employer.
What if the Self-Insured Workers' Compensation Fund does not have enough money to pay all of the claims?
State law requires that the Plan purchase "excess insurance." Specifically, if the Plan has $500,000 available to pay claims in any one year and the actual claims total is $600,000, then the excess insurance company, Citizens Insurance, pays the difference up to $10,000,000. The Plan further protects its financial stability by purchasing insurance for individual catastrophic claims in excess of a designated amount. For example, the Plan bylaws can establish that the excess insurance carrier is responsible for claims in excess of $300,000 per occurrence. In the event any one claim exceeds the established threshold, Citizens Insurance pays the difference. Thus, the Plan is well insured above the amount available to pay claims.
How does the Plan stay competitive and cost effective?
Upon initiation, the Plan is very competitively priced. It is designed to provide stability over many years. It is projected not to experience the more dramatic highs and lows of the open insurance market. Its cost effectiveness and competitive nature are also enhanced by the potential for the return of dividends to Plan participants. The Plan is truly designed to be efficient to the point of returning unspent insurance premium dollars and investment income to the Plan participants.
How many providers are currently participating in the Plan?
The Plan has over 100 participants. The total annual premium for the Plan exceeds $2,100,000.
When was the Plan approved by the State?
The Bureau of Workers' Compensation approved the Michigan Assisted Living Workers' Compensation Fund as of October 1, 2003.
Where can I get more information?
Michigan Assisted Living Association
15441 Middlebelt Road
Livonia, MI 48154
Phone: 1-800-482-0118
Fax: 734-525-2453