Medical-Only vs. Lost-Time Claims and Your Mod
Same injury, same dollar payout, different box on the form. Medical-only or lost-time, the carrier's choice quietly decides how much each claim costs your premium for the next three years.
Workers' comp claims get coded as medical-only or lost-time when reported to NCCI. Medical-only claims receive a roughly 70% discount in the mod formula; lost-time claims don't. The dividing line is whether the employee missed work beyond the state waiting period, which is a factual question that adjusters sometimes get wrong on the unit statistical report.
When a carrier reports a workers' comp claim to NCCI (the National Council on Compensation Insurance), they pick one of two boxes: medical-only or lost-time. That single choice has outsized impact on the mod calculation. A medical-only claim gets roughly a 70% discount. A lost-time claim doesn't.
Same injury, same dollar payout, different box on the form. Your premium can move thousands of dollars depending on which one is checked.
What the formula does with each type
NCCI's experience rating plan splits claims by injury type before applying the rest of the mod math. Medical-only claims (Injury Type 6 in NCCI's coding system) trigger what's called the Experience Rating Adjustment, or ERA. The ERA applies a roughly 70% discount to the primary portion of the claim, meaning only about 30% of the dollars enter the formula at full weight.
Lost-time claims (Injury Types 1 through 5: temporary total, temporary partial, permanent partial, permanent total, and fatality) don't get the ERA discount. The full primary-portion value enters the formula.
Two practical consequences follow. The type code dominates the dollar impact of a small claim more than any other single variable on the worksheet. And the dividing line between the two types is a factual question, not a judgment call: did the employee miss time beyond the state waiting period, which runs three to seven days depending on state.
A worked example
Consider a $30,000 claim. The split point in most NCCI states sits at $26,000, so the entire primary portion of this claim is in play (with a small excess piece).
Coded as medical-only, the ERA discount applies. Roughly $7,800 of the claim's primary portion enters the mod calculation, and the excess portion above the split point counts at its discounted weight on top of that.
Coded as lost-time, no ERA discount. The full $26,000 primary portion enters the formula, plus the excess.
The mod-weighted difference on that one claim, depending on state and weighting factors, runs $18,000 to $22,000. For a contractor in a 1.05 mod range, that single coding decision can move the mod by three to five points. On a $200,000 base premium, that's $6,000 to $10,000 a year, for three years, until the claim ages out.
Why miscoding happens
The choice between medical-only and lost-time isn't decided by the contractor. It's decided by the carrier's claims adjuster based on what they see in the file when they classify the claim.
The dividing question is operational: did the employee miss enough work to trigger indemnity (wage replacement) payments? If yes, lost-time. If no, medical-only. In practice, several things push claims into the wrong bucket.
Adjusters work from claim notes that may not include the final return-to-work date. A claim reserved during the first week, before the employee returned, may get coded lost-time and never revisited even when the employee returned to work within the waiting period. Carriers vary in their default conventions; some treat any claim with even one indemnity check as lost-time, regardless of whether that check should have been issued. State waiting-period rules differ, and carriers operating across multiple states sometimes apply the wrong threshold. Light-duty or modified-duty time isn't always recognized as a return to work for coding purposes.
None of these are bad-faith errors. They're operational defaults that produce a steady stream of miscoded claims.
Why the contractor never sees the issue
The injury type code doesn't appear on the policy. It sits on the unit statistical report the carrier sends to NCCI. Contractors who don't request their experience rating worksheet never see it. Contractors who do see the injury type column but rarely know what to compare it against.
The reconciliation that would catch the error requires both the worksheet and the carrier's loss runs, plus the ability to match those records against the underlying claim history. That comparison doesn't happen in the normal course of a policy lifecycle.
When a miscoding gets corrected
When a miscoded claim is identified and corrected, the carrier resubmits the unit statistical report to NCCI with the right injury type. NCCI recalculates the mod for every affected policy year. The contractor's carrier then reissues premium based on the corrected mod, generating a refund for the difference.
The correction itself isn't typically adversarial. The data field either matches the underlying claim facts or it doesn't. Processing usually takes 30 to 60 days from filing to corrected worksheet. The refund follows on the carrier's premium reissue schedule, generally within 90 to 120 days of the corrected mod.
What an audit would check
An audit cross-references injury type coding on the worksheet against the actual claim record: return-to-work timing relative to the state waiting period, indemnity payment activity, and the final medical-only or lost-time determination after the claim closed. The reconciliation requires the worksheet, the carrier's loss runs, and knowledge of the relevant state waiting-period rule. In our reviews of Southeast contractor worksheets over the past few years, miscoded injury types appear with high enough frequency that we treat them as a default check rather than an exception.
A correctly coded worksheet doesn't change a contractor's actual safety record, but it can substantially change the mod. Send us your NCCI worksheet and we'll review it for free.