Saturation and skin effects are two key factors which affect the simulation accuracy of three-phase induction motors. This paper introduces a methodology to decouple the rotor parameters to consider the saturation effect and skin effect independently. The skin-effect parameters are further modeled by a two-branch circuit with optimized sectioned-bar parameters. Then, a reduced order model (ROM) is developed based on the two-rotor-branch circuit to consider the skin effect in the time domain. All model parameters are identified by a two-stage algorithm based on FEA solutions in the frequency domain at various stator phase currents and rotor slips, using a locked rotor scheme with equivalent rotor conductivities. The first stage identifies both the decoupled saturation-effect parameters and skin-effect parameters, and the second stage identifies the two-rotor-branch parameters based on the optimal value of the rotor bar section ratio. The simulation results using the proposed model are compared with the transient FEA results and measured data.