PROPOSED RULES
LABOR AND INDUSTRIES
Original Notice.
Preproposal statement of inquiry was filed as WSR 10-10-106.
Title of Rule and Other Identifying Information: WAC 296-15-225 Self-insurance second injury fund assessment.
Chapter 296-15 WAC governs employers who are permitted to self-insure their workers' compensation obligation pursuant to Title 51 RCW. The department is proposing a change to WAC 296-15-225, which provides the calculations used to determine the individual self-insured employer's second injury fund experience rating and assessment rate.
Hearing Location(s): Department of Labor and Industries, Room S119, 7273 Linderson Way S.W., Tumwater, WA 98501-5414, on September 8, 2010, at 1:30 p.m.
Date of Intended Adoption: October 5, 2010.
Submit Written Comments to: Margaret Conley, P.O. Box 44890, Olympia, WA 98504-4890, e-mail Mcgm235@Lni.wa.gov, fax (360) 902-6977, by September 8, 2010, 5:00 p.m.
Assistance for Persons with Disabilities: Contact Margaret Conley by August 25, 2010, TTY (800) 833-6388 or (360) 902-6723.
Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: This proposal will modify WAC 296-15-225 Self-insurance second injury fund assessment. The current rule indicates that the department will experience rate fifty percent of the second injury fund assessment charged against individual self-insured employers. The modification will require the department to experience rate one hundred percent of the second injury fund assessment. The change will affect the final assessment rate for each self-insurer, but it will not affect how their experience rating is calculated, or the overall amount collected from all self-insured employers for the second injury fund.
Reasons Supporting Proposal: The Washington Self-Insurers Association supports this change.
Statutory Authority for Adoption: RCW 51.44.040.
Statute Being Implemented: RCW 51.44.040.
Rule is not necessitated by federal law, federal or state court decision.
Name of Proponent: Department of labor and industries, governmental.
Name of Agency Personnel Responsible for Drafting, Implementation and Enforcement: AnnaLisa Gellermann, 243 Israel Road S.E., Tumwater, WA 98501, (360) 902-6907.
No small business economic impact statement has been prepared under chapter 19.85 RCW. Chapter 296-15 WAC applies only to businesses that are certified to self-insure in Washington state. Per RCW 19.85.020(1), a business must have fifty or fewer employees to qualify as a small business under the Regulatory Fairness Act. The department reviewed the number of worker hours reported by each employer currently certified to self-insure, and no self-insured business has fewer than fifty employees. Therefore, no small business economic impact statement is required.
A cost-benefit analysis is not required under RCW 34.05.328. WAC 296-15-225 describes a new method of calculating individual employers' contributions to the preexisting self-insurance second injury fund assessment. Under the new methods an employer's assessment for the second injury fund might increase, decrease or stay the same. The rule does not change the methods of calculating the total amount of the assessment required to sustain the self-insured second injury fund. Therefore, this rule change does not represent an increased cost to the business community as a whole.
August 4, 2010
Judy Schurke
Director
OTS-3282.3
AMENDATORY SECTION(Amending WSR 09-13-018, filed 6/5/09,
effective 7/6/09)
WAC 296-15-225
Self-insurance second injury fund
assessment.
(1) The second injury fund assessment is based on
anticipated second injury fund costs. The fund is used to
relieve employers' costs related to pensions that result from
the combined effects of the industrial injury and another
prior injury, preferred worker claims, and job modifications.
((Fifty percent of all self-insurers' second injury fund
assessment rate is based on the self-insurers' estimated
expenditures from the second injury fund. The other fifty
percent is)) The second injury fund assessment is experience
rated based on ((each self-insured employer's)) a
self-insurer's actual ((expenditures from the fund)) usage of
the second injury fund in the previous three fiscal years. See RCW 51.44.040 for more information about experience
rating. The department may estimate claims cost data when
actual data from an employer has yet to be provided.
The department determines a self-insurer's second injury
fund assessment rate annually for each fiscal year. The
((second injury fund)) assessment is paid by active and
inactive self-insurers quarterly at the same time a
self-insurer submits its quarterly report.
(2) Self-insurers' relief from and contributions to the second injury fund will be recorded in an account separate from the state fund account. The self-insurers' second injury fund must maintain a two hundred thousand dollar minimum balance.
(3) ((The second injury fund assessment rate is
determined annually for each fiscal year.)) The department
uses the following process to determine the second injury fund
assessment.
Definitions:
"A" = Individual self-insurer's total second injury fund costs (usage) for the previous three fiscal years.
"B" = All self-insurer's total second injury costs (usage) for the previous three fiscal years.
"C" = Individual self-insurer's claim costs for the previous three fiscal years.
"D" = Total self-insured claim costs for the previous three fiscal years.
"E" = Individual self-insurer's experience factor.
"F" = Individual self-insurer's claim costs for the previous fiscal year.
"G" = Total self-insured claim costs for the previous fiscal year.
(a) ((Each self-insurer uses one of two rates for the
fifty percent of the second injury fund assessment rate that
is based on total estimated expenditures.
(i) The base second injury fund assessment rate is based
on fifty percent of)) The department calculates the
preliminary base rate necessary to ensure collection of
adequate funds. The preliminary base rate is the estimated
usage of the second injury costs for the coming fiscal year
divided by the total estimated claims costs. ((This)) The
preliminary base rate is ((used by any self-insured employer))
assessed to self-insurers certified after the fiscal year used
for calculation.
(((ii))) (b) The department calculates the preliminary
adjusted ((second injury fund assessment)) rate ((includes the
base rate with adjustments)), by adjusting the preliminary
base rate for over or under collections from prior periods. This rate is ((used by any self-insured employer)) assessed to
any self-insurer certified during or prior to the fiscal year
used for calculation((. This rate is also used by)), and to
any self-insurer who has voluntarily surrendered its
self-insurance certificate.
(((b) The second fifty percent of the second injury fund
assessment is experience rated for each self-insurer based on
each self-insurer's actual use of the second injury fund in
the previous three fiscal years.
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the self-insurer's experience rate |
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(i) The department calculates the self-insurer's second injury fund usage share by dividing the self-insurer's total second injury fund costs (usage) for the previous three fiscal years by the total second injury fund costs (usage) for all self-insurers in the previous three fiscal years.
Second injury fund usage share = A/B
(ii) The department calculates the self-insurer's claims
cost usage share by dividing a self-insurer's claim costs over
the previous three fiscal years by the total claim costs for
all self-insurers in the previous three fiscal years.
Claims cost usage share = C/D
(iii) The department calculates the self-insurer's
experience factor by adding the second injury fund usage share
to the claim cost usage share and dividing by 2, then dividing
this total by the claims cost usage share.
Self-insurer's experience factor (E) = [((A/B) + (C/D))/2] /
(C/D)
(d) The department calculates the weighted average factor
to determine what adjustments to the preliminary base and
adjusted rates may be necessary because of prior over or under
collection for the fund. The weighted average factor is the
sum for all self-insurer's of each self-insurer's experience
factor multiplied by their self-insured claim cost for the
previous fiscal year, divided by the total self-insured claim
costs for the previous fiscal year.
Weighted average factor = [(E x F) sum all self-insurers] / G
(e) The department determines the final base rate and the
final adjusted rate for the fiscal year by dividing the
preliminary base rate and the preliminary adjusted rate ((a)
and (b) of this subsection) by the weighted average factor.
(f) The department determines the second injury fund assessment rate for each self-insurer by multiplying the self-insurer's experience factor by either the final base rate or the final adjusted rate.
(g) The total ((second injury fund)) assessment due each
quarter is calculated by multiplying the self-insurer's
((final combined)) second injury fund assessment rate by the
self-insurer's total claims costs during that quarter.
[Statutory Authority: RCW 51.14.077, 51.14.150, 51.14.160, 51.44.040, 51.44.070, and 51.44.150. 09-13-018, § 296-15-225, filed 6/5/09, effective 7/6/09.]
Reviser's note: The brackets and enclosed material in the text of the above section occurred in the copy filed by the agency and appear in the Register pursuant to the requirements of RCW 34.08.040.