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H.B. 14 Enrolled

    

SELF INSURED PREMIUM ASSESSMENT

    
1997 GENERAL SESSION

    
STATE OF UTAH

    
Sponsor: Gerry A. Adair

    AN ACT RELATING TO LABOR; AMENDING PROVISION ON ASSESSMENT PAID BY
    EMPLOYERS WHO PAY WORKERS' COMPENSATION DIRECTLY; MAKING
    TECHNICAL CORRECTIONS; PROVIDING FOR RETROSPECTIVE OPERATION;
    AND PROVIDING AN EFFECTIVE DATE.
    This act affects sections of Utah Code Annotated 1953 as follows:
    AMENDS:
         35-1-53 (Renumbered 07/01/97), as last amended by Chapter 205, Laws of Utah 1995
         35A-3-202 (Effective 07/01/97), as renumbered and amended by Chapter 240, Laws of
    Utah 1996
    Be it enacted by the Legislature of the state of Utah:
        Section 1. Section 35-1-53 is amended to read:
         35-1-53 (Renumbered 07/01/97). Assessment on employers and counties, cities,
     towns, or school districts paying compensation direct.
        (1) (a) An employer, including a county, city, town, or school district, who by authority
    of the [commission] Industrial Commission under Section 35-1-46 is authorized to pay
    compensation direct shall pay annually, on or before March 31, an assessment [of the same
    percentage as required by law to be paid by an insurance company upon its premiums, based upon
    an amount equivalent to premiums, that would be paid by the employer, if insured in the Workers'
    Compensation Fund of Utah; the assessment is] in accordance with this section and rules made by
    the Industrial Commission under this section.
        (b) The assessment required by Subsection (1)(a) is to be [computed and] collected by the
    State Tax Commission and paid by [it] the State Tax Commission into the state treasury as
    provided in Subsection 59-9-101(2).
        (c) The assessment under Subsection (1)(a) shall be based on a total calculated premium
    multiplied by the premium assessment rate established pursuant to Subsection 59-9-101(2).

        (d) The total calculated premium, for purposes of calculating the assessment under
    Subsection (1)(a), shall be calculated by:
        (i) multiplying the total of the standard premium for each class code calculated in Subsection
    (1)(e) by the employer's experience modification factor; and
        (ii) multiplying the total under Subsection (1)(d)(i) by a safety factor determined under
    Subsection (1)(g).
        (e) A standard premium shall be calculated by:
        (i) multiplying the prospective loss cost for the year being considered, as filed with the
    insurance department pursuant to Section 31A-19-414, for each applicable class code by 1.10 to
    determine the manual rate for each class code; and
        (ii) multiplying the manual rate for each class code under Subsection (1)(e)(i) by each $100
    of the employer's covered payroll for each class code.
        (f) (i) Each employer paying compensation direct shall annually obtain the experience
    modification factor required in Subsection (1)(d)(i) by using the rate service organization designated
    by the insurance commissioner in Subsection 31A-19-407(3).
        (ii) If an employer's experience modification factor under Subsection (1)(f)(i) is less than
    0.50, the employer shall use an experience modification factor of 0.50 in determining the total
    calculated premium.
        (g) To provide incentive for improved safety, the safety factor required in Subsection
    (1)(d)(ii) shall be determined based on the employer's experience modification factor as follows:
            EXPERIENCE
            MODIFICATION FACTOR        SAFETY FACTOR
        Less than or equal to 0.90    0.56
        Greater than 0.90 but less than or equal to 1.00    0.78
        Greater than 1.00 but less than or equal to 1.10    1.00
        Greater than 1.10 but less than or equal to 1.20    1.22
        Greater than 1.20        1.44
        (h) (i) A premium or premium assessment modification other than a premium or premium

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    assessment modification under this section may not be allowed.
        (ii) If an employer paying compensation direct fails to obtain an experience modification
    factor as required in Subsection (1)(f)(i) within the reasonable time period established by rule by the
    State Tax Commission, the State Tax Commission shall use an experience modification factor of
    2.00 and a safety factor of 2.00 to calculate the total calculated premium for purposes of determining
    the assessment.
        (iii) Prior to calculating the total calculated premium under Subsection (1)(h)(ii), the State
    Tax Commission shall provide the employer with written notice that failure to obtain an experience
    modification factor within a reasonable time period, as established by rule by the State Tax
    Commission:
        (A) shall result in the State Tax Commission using an experience modification factor of 2.00
    and a safety factor of 2.00 in calculating the total calculated premium for purposes of determining
    the assessment; and
        (B) may result in the Industrial Commission revoking the employer's right to pay
    compensation direct.
        (i) The Industrial Commission may immediately revoke an employer's certificate issued
    under Section 35-1-46 that permits the employer to pay compensation direct if the State Tax
    Commission assigns an experience modification factor and a safety factor under Subsection (1)(h)
    because the employer failed to obtain an experience modification factor.
        [(b) An] (2) Notwithstanding the annual payment requirement in Subsection (1)(a), an
    employer whose total assessment obligation under Subsection (1) for the preceding year was $10,000
    or more shall pay the assessment in quarterly installments in the same manner provided in Section
    59-9-104 and subject to the same penalty provided in Section 59-9-104 for not paying or
    underpaying an installment.
        [(2)] (3) The State Tax Commission shall have access to all the records of [the office of] the
    Industrial Commission for the purpose of [computing] auditing and collecting any amounts described
    in this section.
        (4) (a) A review of appropriate use of job class assignment and calculation methodology may

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    be conducted as directed by the Industrial Commission at any reasonable time as a condition of the
    employer's certification of paying compensation direct.
        (b) The State Tax Commission shall make any records necessary for the review available
    to the Industrial Commission.
        (c) The Industrial Commission shall make the results of any review available to the State
    Tax Commission.
        Section 2. Section 35A-3-202 is amended to read:
         35A-3-202 (Effective 07/01/97). Assessment on employers and counties, cities, towns,
     or school districts paying compensation direct.
        (1) (a) An employer, including a county, city, town, or school district, who by authority of
    the department under Section 35A-3-201 is authorized to pay compensation direct shall pay
    annually, on or before March 31, an assessment [of the same percentage as required by law to be
    paid by an insurance company upon its premiums, based upon an amount equivalent to premiums,
    that would be paid by the employer, if insured in the Workers' Compensation Fund of Utah] in
    accordance with this section and rules made by the department under this section.
        (b) The assessment required by Subsection (1)(a) is to be [computed and] collected by the
    State Tax Commission and paid by the State Tax Commission into the state treasury as provided in
    Subsection 59-9-101(2).
        (c) The assessment under Subsection (1)(a) shall be based on a total calculated premium
    multiplied by the premium assessment rate established pursuant to Subsection 59-9-101(2).
        (d) The total calculated premium, for purposes of calculating the assessment under
    Subsection (1)(a), shall be calculated by:
        (i) multiplying the total of the standard premium for each class code calculated in Subsection
    (1)(e) by the employer's experience modification factor; and
        (ii) multiplying the total under Subsection (1)(d)(i) by a safety factor determined under
    Subsection (1)(g).
        (e) A standard premium shall be calculated by:
        (i) multiplying the prospective loss cost for the year being considered, as filed with the

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    insurance department pursuant to Section 31A-19-414, for each applicable class code by 1.10 to
    determine the manual rate for each class code; and
        (ii) multiplying the manual rate for each class code under Subsection (1)(e)(i) by each $100
    of the employer's covered payroll for each class code.
        (f) (i) Each employer paying compensation direct shall annually obtain the experience
    modification factor required in Subsection (1)(d)(i) by using the rate service organization designated
    by the insurance commissioner in Subsection 31A-19-407(3).
        (ii) If an employer's experience modification factor under Subsection (1)(f)(i) is less than
    0.50, the employer shall use an experience modification factor of 0.50 in determining the total
    calculated premium.
        (g) To provide incentive for improved safety, the safety factor required in Subsection
    (1)(d)(ii) shall be determined based on the employer's experience modification factor as follows:
            EXPERIENCE
            MODIFICATION FACTOR        SAFETY FACTOR
        Less than or equal to 0.90    0.56
        Greater than 0.90 but less than or equal to 1.00    0.78
        Greater than 1.00 but less than or equal to 1.10    1.00
        Greater than 1.10 but less than or equal to 1.20    1.22
        Greater than 1.20        1.44
        (h) (i) A premium or premium assessment modification other than a premium or premium
    assessment modification under this section may not be allowed.
        (ii) If an employer paying compensation direct fails to obtain an experience modification
    factor as required in Subsection (1)(f)(i) within the reasonable time period established by rule by the
    State Tax Commission, the State Tax Commission shall use an experience modification factor of
    2.00 and a safety factor of 2.00 to calculate the total calculated premium for purposes of determining
    the assessment.
        (iii) Prior to calculating the total calculated premium under Subsection (1)(h)(ii), the State
    Tax Commission shall provide the employer with written notice that failure to obtain an experience

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    modification factor within a reasonable time period, as established by rule by the State Tax
    Commission:
        (A) shall result in the State Tax Commission using an experience modification factor of 2.00
    and a safety factor of 2.00 in calculating the total calculated premium for purposes of determining
    the assessment; and
        (B) may result in the department revoking the employer's right to pay compensation direct.
        (i) The department may immediately revoke an employer's certificate issued under Section
    35A-3-201 that permits the employer to pay compensation direct if the State Tax Commission
    assigns an experience modification factor and a safety factor under Subsection (1)(h) because the
    employer failed to obtain an experience modification factor.
        [(c) An] (2) Notwithstanding the annual payment requirement in Subsection (1)(a), an
    employer whose total assessment obligation under Subsection (1)(a) for the preceding year was
    $10,000 or more shall pay the assessment in quarterly installments in the same manner provided in
    Section 59-9-104 and subject to the same penalty provided in Section 59-9-104 for not paying or
    underpaying an installment.
        [(2)] (3) The State Tax Commission shall have access to all the records of [the office of] the
    department for the purpose of [computing] auditing and collecting any amounts described in this
    section.
        (4) (a) A review of appropriate use of job class assignment and calculation methodology may
    be conducted as directed by the department at any reasonable time as a condition of the employer's
    certification of paying compensation direct.
        (b) The State Tax Commission shall make any records necessary for the review available
    to the department.
        (c) The department shall make the results of any review available to the State Tax
    Commission.
        Section 3. Retrospective operation.
        This act has retrospective operation to January 1, 1997.
        Section 4. Effective date.

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        (1) If approved by two-thirds of all the members elected to each house, the amendments to
    Section 35-1-53 in this act take effect upon approval by the governor, or the day following the
    constitutional time limit of Utah Constitution Article VII, Section 8, without the governor's
    signature, or in the case of a veto, the date of veto override.
        (2) The amendments to Section 35A-3-202 in this act take effect on July 1, 1997.

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