<\/p>\n
What is an Experience Modification? \u00a0Some call it Emod, some call it Xmod\u2026. I like Xmod, and that\u2019s what I call it\u2026. so it what is it? \u00a0An Xmod is a discount or surcharge applied by the state of California to your workers comp. \u00a0It follows you where ever you go: whether you\u2019re with Insurer A or Insurer B, you will still have the same Xmod.<\/p>\n
How is it determined? \u00a0It is a kind-of-complex formula based on your payroll and losses over a three year period of time. \u201cLosses\u201d = the amount paid out for your employees\u2019 injuries, both medical costs and supplemental income for time away from work. \u00a0I won\u2019t go in the details but it works like this: the more payroll you have and the fewer dollars paid out for losses you have, the lower your Xmod will be. \u00a0The lower payroll you have and the greater your dollars paid out for losses you have, the higher your Xmod will be.<\/p>\n
What is the purpose of an Xmod? \u00a0It is simply this: to reward businesses that have small amounts of losses\u00a0and offer incentive to businesses that have high amounts of losses\u00a0to reduce their losses.<\/p>\n
Some of you are now thinking I\u2019m crazy. \u00a0You\u2019ve had workers comp for 20 years and have never had an Xmod. \u00a0That may be true. \u00a0That\u2019s because you\u2019re too small to receive an Xmod. \u00a0In order to qualify for an Xmod you have to meet a certain threshold, which is another detail I won\u2019t get into now because it involves introducing and defining too many new terms which will cause us to lose sight of the purpose of this post.<\/p>\n
What is the purpose of this post? \u00a0To let you know that Xmods are changing, again, in 2017. \u00a0As mentioned, the purpose of the Xmod is to reduce losses. \u00a0But we all know that no matter how compliant, careful, or proactive you are about safety, you may have a very large shock loss that you could not have prevented no matter what. \u00a0A freak accident resulting in death or permanent disability. \u00a0The math that created your Xmod doesn\u2019t understand this and will penalize you the exact same way as the grossest grossly negligent employer that has ever existed. \u00a0The WCIRB (the organization that determines your Xmod) has been aware of this and has made measures in the past to prevent one large shock loss from sending your Xmod so high it puts you out of business. \u00a0And in 2017, with the introduction of\u00a0variable split plans<\/strong>, they are further refining the formula in the same way. \u00a0 This new change will make it so that one large loss won\u2019t have as much of an impact on your Xmod, but a higher frequency of claims will.<\/p>\n