Workers’ comp admin fees to increase dramatically

By CMTA Staff

Capitol Update, Dec. 4, 2009 Share this on FacebookTweet thisEmail this to a friend

Last week, employers received their annual fee assessment to fund the Department of Industrial Relations (DIR) operations for workers’ compensation. Employers were hit with a significant fee increase due to a combination of increased operational costs and a new requirement to partially fund Occupational Safety and Health (Cal-OSHA) operations.  These assessments were calculated to generate a total of $233.3 million for 2010.

The State’s ongoing budget crisis has placed new emphasis on shifting the funding of state operations through employer fee assessments.  Over the past 6 years, the Division of Workers’ Compensation (DWC), which operates under DIR, has transitioned into a 100% user funded operation.  Now in addition to funding DWC, the total assessment includes $88.9 million to be used to fund Cal-OSHA enforcement and compliance.

Self-insured employers are responsible for about 19% of the total fee assessment which is about $44.4 million.  They alone will see their assessment increase from an average of $2.92 per $100 of indemnity paid to $5.30, an 81.5% increase.

The DWC collects fees from employer-paid premiums assessed by insurance companies and self-insured employers based on paid indemnity. The State sends invoices to insurance companies which then assess their policyholders based on their calculated premiums.

Here's a look at DWC’s assessments for self-insured companies this year and next:

    •  In 2009, the Workers' Compensation Administration Revolving Fund was calculated against indemnity paid of 0.016569 which generated $27,501,429. For 2010, the factor for insured companies increases to 0.027736, and is expected to generate $44,443,885.
    •  Uninsured Employers Benefit Trust Fund had a 2009 factor of 0.002029, which generated $3,368,064. The 2010 factor is 0.002345 which is expected to generate $3,757,139.
    •  Subsequent Injuries Benefits Trust Fund had a 2009 factor of 0.001019, which generated $1,690,856. The 2010 factor is 0.001414, which is expected to generate $2,266,291.
    •  Workers' Compensation Fraud Account had a 2009 factor of 0.006267, which generated $10,401,501. The 2010 factor is 0.006057 which is expected to generate $9,705,632.
    •  Occupational Safety and Health Fund had a 2009 factor of 0.003353, which generated $5,564,760. The 2010 factor is 0.009488 which is expected to generate $15,203,776.


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