WORKERS COMPENSATION ASSESSMENT MECHANISM STATUS UPDATE Adrian - - PowerPoint PPT Presentation

WORKERS’ COMPENSATION ASSESSMENT MECHANISM STATUS UPDATE

Adrian anne e McLean ean and Stacey ey Schwar arz Employ ployment Relation

• ns Divis

ision ion August 23, 23, 2017 2017

1

OVE OVERVI VIEW

• LMA

MAC’s d decis ision t to s sup upport SB SB 259 259

• Ass

ssessment E Expe pendi ditures vs. CP

• vs. CPI
• Assessment Rates and A

Assessment Proc rocess o

• verv

rview

• Projecte

ted B d Budgets ts

2

LM LMAC AC D DEC ECIS ISION T TO SUP UPPORT S SB2 B259

• Sup

Supported 5% 5% cap ap for A Admin in A Assessment an and 2% 2% for Saf Safety Assessment

• Passed at 4% and 2%
• Saf

Safety A Assessment e ensures f fun undin ing f g for DL DLI t to p provid ide e essential ial services ces

• Reduce incident rate
• Promotes LMAC’s mission
• Se

Secur ure f fun undin ing f g for all all costs o

• f DL

DLI ad admin inis isterin ing t g the WC Act

3

FUNCTI NCTION ONS COVE COVERED B BY ADM DMIN IN A ASSESSME MENT

• Adminis

inistratio ion o n of Wo f Workers’ Compensatio ion n Act

• Da

Data Ma Mana nagement nt Unit nit

• U&T G

Guid ideline ines/Me Medical Fee S e Schedule

• Medical

al D Direct ctor an and I IMR Proc Process

• Me

Media iatio ion

• Atto

ttorney F y Fee ee Regu Regulati tion

• Settl

ttleme ment A t Approval

• SA

SAW/RTW

• 5-Year Me

Medic ical l Bene nefit fit Closur ure/R /Reopen ening P Process

• Ext

xtra Territo torial A Agr greements

• Pla

lan 1 n 1 and nd P Pla lan 2 n 2 Regula lation

• Professional E

Employer r Organiz nizatio ion a n and nd Ma Mana naged Care Re Regu gulati tion

• Workers

rs’ C ’ Compensation Court urt

4

FUNCTI NCTION ONS COVE COVERED B BY SAFETY A ASSESSMENT

• Educ

ucation an and Out utreac ach

• Saf

Safety F Fest

• Public

ublic E Emplo loyer C Complia liance

• Public

ublic E Emplo loyer C Consult ltat ation

• OSH

SHA 10 10 hr Certif ific icatio ions f for Yo Young W g Workers

• St

Stat ate Mat Match o

• f Priv

ivate E Employer C Consult ltation

• Min

Mine Tr Train ainin ing an and I Inspection

• R&

R&A St Stat ate Mat Match f for B BLS A Annual al Sur Survey o

• n w

work in injur ury an and illn illness

5

WC ASSE ASSESSM SSMENT E EXPENDITURES VS VS CP CPI A ANNUAL G GRO ROWTH

6

ASSE ASSESSM SSMENT C CALC ALCULAT ATION – FI FIRST S STEPS EPS

Bu Budget

• Legislatively approved budget for Work Comp and Safety Functions

Pa Paid Ben enefit efits A Availa ilable fo e for Asses essmen ent

• Medical Benefits paid in preceding Calendar Year plu

lus

• Indemnity Benefits paid in preceding Calendar Year min

inus

• Medical Benefits in excess of $200,000 on any one claim (excluded from

calculation) Pl Plan n 2 and nd Pl Plan n 3 Pr Premi mium

• Total earned premium from preceding Calendar Year

Amount o

• f

f Asses essmen ent and Surcharge e paid id in in prev evio ious F Fis iscal Y l Yea ear

• Look-back?

7

PAID B BENEFITS S AVAI AILAB ABLE F FOR A ASSE SSESSM SSMENT

2012 214,350,640 2013 209,426,757 2014 208,847,027 2015 218,634,569 2016 217,941,765

8

TOT OTAL M MONTA ONTANA WOR WORK COMP K COMP PREMIU MIUM

AS R REPORTED TO T THE DEPARTMENT NT

$- $50,000,000 $100,000,000 $150,000,000 $200,000,000 $250,000,000 $300,000,000 $350,000,000 $400,000,000 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Fiscal Year 9

PL PLAN 2 2 AND PL D PLAN 3 3 PR PREM EMIUM

AS R REPORTED TO T THE DEPARTMENT NT

10

THE AS HE ASSES ESSMENT C CALC ALCUL ULATIO ION

General

• Admin. Assessment / Surcharge

Plan 1 (Self-Insured) QER

• Proj. Assess before adjustments

5,649,980 Compensation 15,878,984 Assessment Rate 2.59% Medical 26,531,726

• Adj. Plan Assess (lookbacks etc)

5,357,265 Medical > 200K 4,035,393 Plan 2 (Private Insured) QER

• Admin. Prior Year Lookback

Compensation 29,013,863 Plan 1(Self-Insured) Medical 50,536,870 Plan 2 and Plan 3 (New) (292,715) Medical > 200K 4,042,814 Plan 3 (State - Old Fund) Plan 3 (State - Old Fund) QER Compensation 1,411,196

Safety Assessment / Surcharge

Medical 6,814,851

• Proj. Assess before adjustments

2,353,438 Medical > 200K 4,370,854 Assessment Rate 1.10% Plan 3 (State - New) QER

• Adj. Plan Assess (lookbacks etc)

2,353,438 Compensation 36,619,090 Medical 80,693,979 Safety Prior Year Lookback Medical > 200K 17,109,734 Plan 1(Self-Insured) Plan 2 and Plan 3 (New) Plan 3 (State - Old Fund) Premiums for Plan 2 111,755,764 Premiums for Plan 3 177,245,314

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AD ADMIN IN AS ASSES ESSMEN ENT CALC ALCULATION

Calculated Assessment

Amount for Assessment % Share Plan Assessment 4% Assessment Plan 1 38,375,317 18% 994,852 1,535,013 Plan 2 75,507,920 34% 1,957,487 3,020,317 Plan 3 - Old 3,855,193 2% 99,943 154,208 Plan 3 - New 100,203,335 46% 2,597,698 4,008,133 Totals 217,941,765 100% 5,649,980 8,717,671

Math Check Good Job

Assessment Calculation

Plan Assessment Adjustments Adj Plan Assessment Assessment Rate Plan 1 994,852 994,852 2.5924% Plan 3 - Old 99,943 99,943 2.5924% Totals 1,094,795 1,094,795 The rate for Plan 1 is 2.5924% which is <= 4% per statute. The rate for Plan 3-Old is 2.5924% which is <= 4% per statute.

Assessment Surcharge Calculation

Plan Assessment Prior Year Adjustment Adj Plan Assessment Surcharge Rate Plan 2 1,957,487 Plan 3 - New 2,597,698 Totals 4,555,185 (292,715) 4,262,470 1.4749% The Surcharge Rate for Plan 2 & Plan 3-New is 1.4749% The Plan Assessment is 2.5924% which is <= 4% per statute. The Adj Plan Assessment Rate is 2.4258% 12

SAF AFET ETY AS ASSES ESSMEN ENT CALC ALCULATION

Calculated Assessment

Amount for Assessment % Share Plan Assessment 2% Assessment Plan 1 38,375,317 18% 421,857 767,506 Plan 2 75,507,920 35% 830,053 1,510,158 Plan 3 - New 100,203,335 47% 1,101,528 2,004,067 Totals 214,086,572 100% 2,353,438 4,281,731

Math Check Good Job

Assessment Calculation

Plan Assessment Adjustments Adj Plan Assessment Assessment Rate Plan 1 421,857 421,857 1.0993% Totals 421,857 421,857 The rate for Plan 1 is 1.0993% which is <= 2% per statute.

Assessment Surcharge Calculation

Plan Assessment Prior Year Adjustment Adj Plan Assessment Surcharge Rate Plan 2 830,053 Plan 3 - New 1,101,528 Totals 1,931,581 1,931,581 0.6684% The Surcharge Rate for Plan 2 & Plan 3-New is 0.6684% The Plan Assessment is 1.0993% which is <= 2% per statute. The Adj Plan Assessment Rate is 1.0993%

13

FY 2016 2016-FY 2 2018 A 18 ASSESSME MENT NT RAT ATES ES

Assessment Rate History FY Admin Rate Plan 1 Admin Rate Plan 3-0 Safety Rate Plan 1 SIF Assess Rate Admin Surcharge Safety Surcharge SIF Surcharge SAWRTW Surcharge 2009 0.029033 0.002542 0.011836 0.001240 2010 0.027650 0.027285 0.002874 0.015281 0.001734 2011 0.030000 0.030000 0.004359 0.019177 0.002840 2012 0.030000 0.030000 0.001481 0.020775 0.001248 0.00082 2013 0.030000 0.030000 0.002029 0.018901 0.000512 2014 0.030000 0.030000 0.003431 0.019328 0.003427 2015 0.030000 0.030000 0.006061 0.018369 0.004596 2016 0.035048 0.035048 0.003485 0.019775 0.002084 2017 0.027098 0.027098 0.011448 0.009895 0.015592 0.007156 0.006186

2018 0.025924 0.025924 0.010993 0.005705 0.014749 0.006684 0.002701

14

WORK WORK COMP MP & S & SAF AFET ETY FUN UNDS BUD BUDGET ET

• Hearings Bureau is no longer covered by the Workers Compensation fund because

the work performed by the Hearings Bureau was determined to be UEF work not Workers Compensation.

Work Comp & Safety Fund FY17 Budget FY18 Budget FY19 Budget ERD Functions excl. Safety $5,155,363 $4,902,240 $4,911,046 Workers ’ Compensation Court $762,235 $747,740 $751,462 Subtotal Work Comp $5,917,598 $5,649,980 $5,662,508 Safety Functions $2,332,840 $2,241,437 $2,245,609 R&A $117,896 $112,001 $112,001 Subtotal Safety $2,450,736 $2,353,438 $2,357,610 Total $8,368,334 $8,003,418 $8,020,118

15

SAF AFET ETY BUD BUDGET ET BR BREAK EAK-OUT UT

• The Safety bureau also receives funding for Private and Public Consultation

($452,700) and Mine Inspection & Training ($Variable) from federal grant

• In FY 2017 R&A’s portion of the budget was added to the safety assessment

State Safety Budget FY17 Budget FY18 Budget FY19 Budget

Mine Inspection & Training $313,870 $301,570 $302,130 Outreach (Employer, Employee and Student Education & Training) $388,330 $373,115 $373,809 Private and Public Consultation $432,560 $415,610 $416,385 Public Employer Compliance $809,490 $777,770 $779,220 Safety Culture $272,400 $261,730 $262,215 Safety Fest $116,190 $111,642 $111,850 Subtotal ERD State Safety $2,332,840 $2,241,437 $2,245,609 R&A $117,896 $112,001 $112,001 Total State Safety $2,450,736 $2,353,438 $2,357,610

16

• ERD currently uses 61.57% of the total possible assessment available if ERD was

to assess up to the 6% cap

17

Wo Work Co Comp Fu Fund FY18 B 18 Budget t % o

• f T

Total P Possible e Ass ssessm ssment To Total Po Possible Ass ssessm ssment ERD Functions excl. Safety $4,902,240 61.57% $7,962,372 Workers ’ Compensation Court $747,740 61.57% $1,214,502 Subtotal Work Comp Budget $5,649,980 61.57% $9,176,874 Safety Functions $2,241,437 61.57% $3,640,612 R&A $112,001 61.57% $181,916 Subtotal Safety Budget $2,353,438 61.57% $3,822,528 To Total Assessme ment B Budget get $8, 8,003, 003,418 18 61.57% $12, 12,999, 999,402 02

WOR WORK K COMP COMP & SAFETY TY FUN UNDS S SPENDING ING COMP COMPARED TO TO TOT TOTAL POS OSSIB IBLE A ASSESSME MENT

ASSESSME MENT M MECHAN HANISM ISM UPD PDATE SUM SUMMARY

• Safety assessment

nt ensures fund nding ng s so the he Depa partment of

• f Labo

bor ca can implement nt necessary programs i in a n an n attem attempt t to to red educe th the e in incide cidence ce rate ate in Montan tana

• Exce

xcept for

• r spike

pikes in in 2010 and 2011, WC WC expe xpendit itur ures generally ly follow

• llow CPI
• Assessment

t an and Su Surcharge rates ates ar are e af affecte ted by to total tal b ben enefits ts pai aid, p prem emium earned by in insur urance ce ca carrie iers, amount of

• f assessment colle

collect cted d in in pr prior ior year and d ERD budg udget

• FY 18 budg

udget pr proj

• ject

cts tha hat ERD cur currently us uses 61.57% of

• f the

he tot

• tal

l pos possibl ible as asses essment av t avail ilable

Quest stion

• ns?

18