What is EMR Rate and Why Should You Care?
The Experience Modification Rate (EMR) is like your company's safety report card. The lower the score, the safer your workplace, and the lower the costs you'll pay for workers' compensation insurance.
Insurance premiums can be a significant overhead cost. A favorable EMR Rate can reduce these costs, which directly impacts your bottom line. A smart approach to handling safety procedures and claims can save you cash.
How to Calculate EMR Rate
Formula
[\text{EMR} = \frac{\text{Payroll Classification} / 100}{\text{Class Rate}}]
Where:
- Payroll Classification is the classification of the payroll figure for the employees
- Class Rate is the rate assigned to that payroll classification in terms of risk
Calculation Example
- Determine the payroll classification: 800
- Find the class rate: 0.65
- Calculate the EMR Rate:
[\text{EMR} = \frac{800 / 100}{0.65} = \frac{8}{0.65} \approx 12.31]
The EMR Rate is approximately 12.31.
Pro Tip
Knowing your EMR Rate isn't just about crunching numbers. High rates can signal to insurance companies that managing risk is an area needing improvement. Lowering your EMR Rate often involves enhancing workplace safety and reducing workplace injuries.
Quick Recap
- Determine Your Payroll Classification: The gross payroll classified according to job tasks
- Find Out the Class Rate: Usually provided by your insurance company
- Apply the Formula: Divide payroll classification by 100, then divide by class rate