Calif. Releases 2005 User Funding/Fraud/Uninsured Employer & Subsequent Injury Fund Rates

The California Department of Industrial Relations (DIR) has issued 2005 assessment rates for User Funding, Anti-Fraud Programs, the Uninsured Employer Benefit Trust Fund and the Subsequent Injury Benefit Trust Fund. State law requires insurers to collect money from employers to cover 100 percent of the Division of Workers’ Compensation budget, fund the Department of Insurance and local District Attorney workers’ comp antifraud efforts, pay benefits to injured workers whose employers were uninsured, and to provide for those who suffer from previous and serious permanent disabilities and impairments.

DIR announced this week that insurers must apply the following rates against policyholders’ estimated annual “assessable premium” for policies incepting Jan. 1, 2005 through Dec. 31, 2005:

2005 User Funding Assessment (per Labor Code § 62.5): .004809
2005 Uninsured Employers Benefit Trust Fund Assessment (per Labor Code § 62.5): .000691
2005 Subsequent Injuries Benefits Trust Fund Assessment (per Labor Code § 62.5): .000259
2005 Anti-Fraud Surcharge (per Labor Code § 62.6): .000500

Assessable premium is the amount charged after all rating adjustments (experience rating, schedule rating, premium discounts, expense constants, retrospective rating, etc.) except for adjustments resulting from application of deductible plans or return of policyholder dividends.

State law also requires self-insured employers to pay a portion of these assessments. For 2005, self-insured employers should apply the following rates against the total amount of workers’ compensation indemnity paid and reported on their Self-Insurer’s Annual Report:

2005 User Funding Rate (per Labor Code § 62.5): .021993
2005 Uninsured Employers Benefit Trust Fund Assessment (per Labor Code § 62.5): .002696
2005 Subsequent Injuries Benefits Trust Fund Assessment (per Labor Code § 62.5): .001099
2005 Anti-Fraud Surcharge (per Labor Code § 62.6): .003662

Insurers must advance the money to the state on behalf of policyholders, then recoup the funds via workers’ comp policy surcharges and assessments. DIR notes that the first installment is due to the state on or before Jan. 1, 2005, with the balance due on or before April 1, 2005. The state is mailing letters and invoices to insurers and self-insured employers this week showing their share of the assessments and surcharges. Anyone with questions should call DIR Staff Services Manager Amadeo Urbano at (415) 703-4657 or DWC analyst Naomi Carter at (415) 703-4652.