Relates to active self-insurers

BILL NUMBER:S2818

Title of bill

An act to amend the workers' compensation law, in relation to active self-insurers

Purpose

This bill will make necessary technical changes to the workers' compensation law to ensure that employers that were members of a group self-insured trust but elected to secure alternative workers' compensation coverage are not subject to the cost of double assessments imposed by the workers compensation board.

Statement in support

Employers in New York State are required to obtain workers' compensation coverage. An employer may purchase this coverage through group self-insured trusts (GSIT), which can provide significant benefits including lower premiums and dividends, through commercial insurance carriers or through the state "insurance fund. The workers' compensation board is authorized to impose assessments on coverage providers to pay the cost of the boards operation and oversight, and to finance several board "special funds."

This legislation eliminates these workers' compensation board assessments, other than those imposed specifically for self insurance, for inactive group self insurers.

In doing so, it assures that employers - typically small business and health/human service providers - that once had coverage through a now inactive self insured group are not subject to double payment of these WCB assessments.

Under 2008 amendments to the workers' compensation law, and the board's implementation of those amendments, an inactive self-insured group could be subject to general WCB assessments for up to twenty-five years after the group stopped providing compensation coverage.

Even those groups that were fully reserved - with assets sufficient to cover indemnity and medical claims - when they voluntarily terminated comp coverage do not have enough resources to.continue to pay these assessments. Under current law, these inactive groups would be expected to track down its former member employers, and these employers would be expected to pay these additional assessments - even though the cost of these assessments are already included in their current workers' compensations insurance payments to their current carrier.

Estimates are that these "double payments" imposed on employers could be much as $200 million in aggregate over the next two decades.

This legislation apportions the cost of these WCB assessments equitably across all employers required to obtain workers' compensation coverage, so that each employer will pay their share of these assessments once through their current coverage provider.

Legislative history

This is a new bill.

Fiscal impact

None.

Effective date

January 1, 2012