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Extension of 90 Day Rule on Assessments

 WCB Extends for 90 Days Emergency Rule on Assessments:

By Peter Mantius, Northern Bureau Chief

 

 

The state Workers’ Compensation Board has extended for 90 days an emergency rule established last October to streamline the way it collects its administrative fees and special fund assessments.

 

In response to requirements in the Business Relief Act that was part of Gov. Andrew Cuomo’s 2013- 2014 budget, the board is in the process of switching from a complex system of collecting assessments from insurers to a simpler program of billing employers directly.

 

The original Oct. 17, 2013, order acknowledged that the transition period could take a while. During that period, most employers will pay the assessments to their insurers, who will pass them on to the board. Employers that self-insure individually will pay assessments directly to the board.

 

Rachel McEneny, a spokeswoman for the board, said the 90-day extension that began Jan. 17 was a necessary legal step in carrying out the plan.

 

"This regulation is a continuation of the original regulation, which expired after 90 days," she said.

 

"It is identical to the first. It is necessary to have a regulation in place to bill assessments. This regulation serves that purpose."

 

Paul Jahn, executive director of the New York State Workers’ Compensation Policy Institute, said the board’s transition "appears to be working out exactly as planned.

 

"There were (unrelated) pharmaceutical rules that were renewed every 90 days for two years," Jahn said. "It’s not unprecedented."

 

Monte Elmer, chief executive officer of the New York State Compensation Insurance Rating Board, agreed that extending the emergency rule for 90 days simply gives the board more time to make sure insurance carriers and employers know what they’re expected to do under the new assessment system.

 

The assessments cover the administrative costs of running the board, as well as claims from the state Special Disability Fund and the Reopened Case Fund.

 

The Business Relief Act required the board to set a statewide assessment rate by Nov. 1 each year to cover the following year.

 

When it announced plans for its new assessment collection system in October, it set the 2014 rate at 13.8% of premium.

 

That was a sharp drop from the old rate of 18.8%, which was the highest in the nation, according to the Workers’ Compensation Policy Institute. The next highest state assessment rate was Minnesota’s 8.3%.

 

The 2014 statewide rate was determined by dividing total estimated annual expenses that the assessments cover − $893 million − by total estimated statewide standard premiums − $6.4 billion.

 

The board said the 2014 assessment rate will save employers $300 million a year.

 

"The total projected need for 2014 of $893 million is significantly less than the average amounts billed for assessments for the past three years or more than $1 billion," said a regulatory impact statement filed with the original emergency rule.

 

Cuomo’s legislation and the board’s rules to implement it were designed to address glaring inefficiencies in the old assessment system.

 

"Currently," the regulatory impact statement said, "a disconnect exists between the amounts that carriers collect from policyholders and the amounts that the WCB bills those carriers.

 

"The new rule will result in the WCB no longer issuing assessment bills and instead promulgating a rate that will fund the required programs. Carriers will collect the amount driven by the rate from their policyholders and remit that amount to the board. Eventually, the employers will remit to the board directly."

 

The "disconnect" referred to in the regulatory impact statement meant insurers could either profit from the assessment process or suffer losses from it, Jahn said.

 

"Assessments were billed prospectively" and may have been either high or low, he said.

 

WCB Chairman Robert Beloten described the old system as "overly complicated, cumbersome and expensive." He said it charged employers differently depending on whether they insured with private coverage, the State Insurance Fund or by self-insuring.

 

Each insurance carrier, the State Insurance Fund, private and public self-insurer received as many as 23 invoices a year from the WCB.

 

The regulatory impact statement described the old system as "administratively onerous and [lacking] transparency for both the WCB and the various players. The new process will result in more verification and audit of the data submitted."

 

To read the new emergency rule and the regulatory impact statement, go to page 26 of the NYS Register for Feb. 5 here.

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