Two SC Programs That Cut Your Premium and Most Businesses Miss
South Carolina offers two specific programs that can meaningfully reduce your workers' comp premium — and the majority of qualifying businesses are not using them. The Drug-Free Workplace program and the Contracting Classification Premium Adjustment Program (PAP) are both underutilized by SC employers, often because no one has explained them. This video covers both programs, what they require to qualify, and exactly how much they can save.
South Carolina's Drug-Free Workplace Act allows employers who maintain a qualified drug-free workplace program to receive a premium credit on their workers' comp policy of up to 7.5%. The program requirements are: a written drug testing policy distributed to all employees; testing procedures covering pre-employment, post-accident, reasonable suspicion, and random testing; a supervisor training component; and an Employee Assistance Program (EAP) or resource referral. Once your program meets the requirements, you notify your carrier or broker to apply the credit at renewal. The discount is applied before the e-mod calculation, meaning it stacks with your e-mod savings for a compounding effect. For a business paying $30,000 annually in workers' comp, a 7.5% credit saves $2,250 per year — for maintaining a drug testing policy you may already have in place.
The Premium Adjustment Program (PAP) is a South Carolina-specific program available to employers in contracting and similar industries. It adjusts the base rate applied to certain employee classifications based on the employer's actual hourly wage rate for those employees. In many industries, workers who earn higher hourly wages have lower injury rates and more experience — the PAP acknowledges this by crediting employers who pay higher wages with a rate reduction on the affected payroll. The program requires payroll data submitted at audit that documents the average hourly wage for each applicable class code. The adjustment can be material — sometimes 10% or more on the affected payroll. Not all carriers administer PAP correctly, and many employers never receive the credit because neither their broker nor their carrier flagged it.
The Drug-Free credit and PAP adjustment work independently and can both apply to the same policy. When combined with an improved e-mod, a schedule credit from a documented safety program, and appropriate class code assignments, the cumulative effect can be significant. A South Carolina business that implements all four levers — correct classification, improved e-mod, drug-free credit, and PAP where applicable — can potentially reduce their workers' comp premium by 20-35% compared to a business with none of these programs in place. The challenge is that each lever requires active management, documentation, and a broker who knows to apply for each credit. Standard market renewals often roll over without checking whether all available credits are being applied.
Develop and implement a written drug testing policy that meets SC Drug-Free Workplace Act requirements. Have it reviewed by legal counsel to ensure compliance. Conduct the required employee training and supervisor training. Notify your insurance broker that your program qualifies for the credit and request that it be applied at your next renewal. Keep documentation of your policy and training records.
No. PAP applies to specific NCCI class codes in the contracting and related industries where wage variation is recognized as a risk factor. Your broker or carrier can tell you whether any of your class codes are eligible for PAP. If your employees are paid higher than average hourly wages for your industry and class code, PAP may produce a meaningful credit.
Possibly. If your program has been in place and qualified but the credit was never applied, speak with your carrier about whether a mid-term endorsement or retroactive credit is available. At minimum, ensure the credit is applied at your next renewal. Some carriers will also review the prior year if the error was theirs.
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