What Is an Insurance EMR Rating?

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EMR can affect your company's workers compensation premiums.
EMR can affect your company's workers compensation premiums. (Image: Hailshadow/iStock/Getty Images)

Experience modification rate, or EMR, is a method of determining workers' compensation premiums for businesses. A mathematical formula is used to calculate the rate on an annual basis, and your premiums can go up or down depending on your company's claims experience. By learning how to monitor your company's processes, you can exercise some control over your workers' compensation expenses.

Comparing Your Company With Others

The EMR is a comparison between the number and cost of workers' compensation claims made by your employees with those of other companies in the same industry. Companies that pay in excess of $3,000 in annual workers' compensation premiums will receive an EMR rating.

How EMR Calculation Works

EMR is calculated by an insurer examining your company's payroll and claims for the previous five years. The insurer then sends its findings to the National Council on Compensation Insurance. This organization assigns a rating based on the three-year period starting one year prior to the current effective date. For example, when calculating your EMR for 2015, the council would examine the years 2002 through 2014.

Looking for Improvement

When your company receives its EMR rating, you can compare it to those of other companies in your industry to see how you stack up. If your rate is higher than the industry norm, take a close look at your company's safety procedures or loss prevention techniques to discover areas for improvement.

Other Ways to Apply EMR

EMR can play a role beyond its direct impact on your company's workers' compensation premiums. For example, you might decide that you will hire vendors and outside contractors only if they have an EMR that is better than the average for their industry. This way, you can exercise more control over your own EMR by minimizing the risks to your own employees.

Claims Impact

In general, medical-only claims have less of an effect on your EMR and do not result in additional penalties as long as they do not cause a loss of work time. If a loss of time occurs, the first $5,000 is counted at full value, while any amount that exceeds $5,000 receives a discounted rate.

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