New Rules Clear Up Workers’ Comp, Medicare Conflicts

Medicare

A new law will make it easier for insurers to settle workers’ compensation claims with older workers who are enrolled in Medicare, in an attempt to resolve an issue that can sometimes drive up premiums for affected employers.

The law adds transparency by letting workers’ comp insurers inquire about whether Medicare may have been used to pay for any part of the claim. Often this is shrouded in secrecy, requiring the insurer to add reserves to the claim to pay for any potential demands from Medicare to recoup outlays it may have made for treatment of the worker.

Medicare is a secondary payer to workers’ compensation insurance plans, meaning that it should not be paying for past and future treatment that is compensable under workers’ compensation. If Medicare does pay for treatment that should have been paid by a workers’ compensation insurer, Medicare has a right to recover those payments from the insurance carrier.

Additionally, workers’ comp insurers are barred from shifting the burden of future medical-related payments to Medicare.

What changed

Prior to the legislation, signed into law on Dec. 11, 2020 by then-President Trump, workers’ compensation insurers were forced to rely on the injured workers to disclose whether they are enrolled in Medicare or a Medicare Advantage plan.

The insurers could not contact the Centers for Medicare and Medicaid Services directly to inquire if an older injured worker was enrolled in Medicare. That’s because privacy laws previously prevented Medicare from sharing the information with insurers.

This resulted in Medicare and Medicare Advantage health insurers filing for reimbursements after claims closed, while the workers’ compensation insurers had no idea how much they would have to pay.

And because of this quandary, the insurers would have to set aside reserves to reimburse Medicare just in case the injured worker first sought treatment using Medicare to pay for it.

The issue has led to a number of lawsuits around the country.

The results

It’s hoped that the new law will simplify the process because it requires the Centers for Medicare and Medicaid Services to disclose enrollee information to workers’ compensation and liability insurance companies upon request.

It gives insurers better information when the claim is being settled. Having Medicare coverage information in hand and being able to find out if they had any treatment under Medicare for the claim, should remove some of the uncertainty for insurers and in turn will benefit employers.

The carriers will be able to investigate any claims for reimbursement and make sure that they are resolved prior to finalizing the claims settlement.

The new law gives Medicare one year to update its information technology portals to allow insurers to inquire about claims that may have been covered by Medicare when their workers’ comp insurer should have paid it.

Don’t Make These Mistakes When Posting Cal/OSHA Form 300A

form 300A

Employers with 10 or more employees must post their completed Cal/OSHA Form 300A by Feb. 1 and keep it posted in their workplace until April 30.

The form must be posted where the company usually posts other employee notices, like minimum wage and workplace safety notices. Form 300A summarizes the total number of fatalities, missed workdays, job transfers or restrictions, and injuries and illnesses as recorded on Form 300.

The penalty for OSHA posting violations is $13,260.

The Summary (Form 300A) requires the following information from the Form 300 Log:

  • The total number of non-first-aid occupational injury and illness cases.
  • The total number of cases with days away from work and cases with job transfer or restriction, and total number of other recordable cases.
  • The cumulative total number of days from all injuries or illnesses including days away from work and job transfer restrictions.
  • The number of occupational injury/illness cases, including skin disorders, respiratory conditions, poisoning, hearing loss and all other illnesses.

Despite Form 300A being relatively simple, many employers make mistakes filling it out. Here are the most common errors:

Keeping one log for multiple locations — Employers are required to keep one Cal/OSHA 300 Log for each location where they have employees and that is in operation for a year or longer. The corresponding 300A form must also be posted at each location.

Improperly certifying the log — Under regulations, a company executive must certify the 300 Log and the 300A Annual Summary Form. An executive is defined as:

  • An owner of the company,
  • An officer of the corporation,
  • The highest-ranking company official working at the location, or
  • The immediate supervisor of the highest-ranking company official working at the location.

Listing all workers’ compensation cases Only the injuries listed under the regulations must be included in the log. Only those cases that involve one more of the following must be listed:

  • Death
  • Days away from work
  • Restricted work
  • Transfer to another job
  • Medical treatment beyond first aid
  • Loss of consciousness
  • Diagnosis by a physician or health care professional of a significant injury or illness.

Failing to record temp worker injuries — Regulations require that company employees and contract labor or temp worker injuries must be included in the Cal/OSHA 300 and Cal/OSHA 300A logs. The key is that the company must be in direct supervision of those workers. 

Failing to post the form when there were no recordable injuries or illnesses — This is one of the most common mistakes that employers make. They think since they had no workplace injuries that the form does not need to be posted. That would be incorrect.

The COVID-19 conundrum

Under federal OSHA guidance, a COVID-19 case should generally be confirmed through testing to be recordable.

It can be determined that the case is work-related if the person who tested positive had worked near other employees who also were infected by the coronavirus.

If there is not a known exposure that would trigger the presumption of work-relatedness, the employer must evaluate the employee’s work duties and environment to determine the likelihood that they were exposed during the course of their employment.

Current regulations require covered employers to record COVID-19 cases on their Cal/OSHA 300 Log if they are confirmed cases of COVID-19, according to Centers for Disease Control guidelines. A confirmed case:

  • Must be work-related, and
  • The illness must result in days away from work, restricted work, medical treatment or death.

EEOC Issues New COVID-19 Vaccination Guidelines for Employers

COVID-19 vaccine

The Equal Employment Opportunity Commission has affirmed that employers can mandate COVID-19 vaccines for employees, subject to some limitations.

The EEOC’s updated guidance offers direction regarding employer-mandated vaccinations, accommodations for employees who cannot be vaccinated due to a disability or sincerely held religious belief, and certain implications of pre-vaccination medical screening questions under the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act.

Asking a patient pre-screening questions is a routine part of a vaccination. These questions may constitute a “medical examination” as defined by the ADA. An employer must be able to show that the inquiries are “job-related and consistent with business necessity” and that an unvaccinated employee could pose a direct threat to the health of others in the workplace.

The guidance does make clear that the administration of a COVID-19 vaccination to an employee itself does not constitute a medical examination for the purposes of the ADA.

Urging employees to get the vaccine voluntarily or requiring them to submit proof that a non-contracted third party (physician, pharmacist, or public health center) administered it may be a better alternative with fewer legal complications.

Reasonable accommodations

Some employees may be unable to get the vaccine for health or disability reasons. Other employees may have sincere religious objections to getting inoculated. In both cases, employers must make reasonable accommodations for the employees. The law permits them to exclude these employees from the workplace only if no reasonable accommodation is possible.

Employers and employees might not agree on what “reasonable accommodation” means. For this reason, employers should consult with human resources experts and carry employment practices liability insurance. Expert advice will help avoid these kinds of conflicts, and the insurance will pay for legal defense and settlement of resulting employee lawsuits.

Requiring employees to get vaccinated will also have implications for the employer’s obligations under state workers’ compensation laws. On the positive side, a vaccinated workforce should reduce the employer’s exposure to claims that an employee got the virus on the job.

On the negative side, some employees may experience adverse side effects. Since the vaccine would be a job requirement, the employee could make a claim for workers’ comp benefits due to the adverse reaction. In addition, the employer may have to pay the worker for the time spent getting vaccinated and for the cost of the injection.

What you can do

Employers can protect themselves by following these guidelines:

  • Follow federal and local health guidelines for the vaccine.
  • Vary the requirements depending on work conditions and locations, such as requiring vaccines for those who regularly interact with the public but making them optional for remote workers.
  • Accommodate employees unable to get the vaccine or resistant to it, to the extent you reasonably can without endangering other employees or the public.
  • Apply the requirements consistently to all employees.

No one wants to catch or spread this virus. Employers can help halt the spread by thoughtfully addressing the issue of vaccinating employees.

COVID-19 Relief Bill Extends Unemployment Benefits, PPP and More

COVID-19 employee benefits

The $900 billion COVID-19 relief bill, passed by Congress and signed into law on Dec. 27, includes a number of provisions that affect employers and their workers in terms of paid sick leave and Emergency Family and Medical Leave Act provisions.

The legislation also boosts unemployment benefits to out-of-work Americans, as well as reopening and expanding the Paycheck Protection Program that was introduced in March as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

Paid sick leave and family medical leave

The new law has not extended the obligation for employers to provide paid emergency paid sick leave and expanded family and medical leave beyond Dec. 31, 2020, instead making it voluntary after that date.

From Jan. 1, employers can continue receiving tax credits if they provide emergency paid sick leave (EPSL) and emergency family medical leave (EFML) to employees for COVID-19-related purposes through March 31. Here are the caveats:

  • Tax credits will be available for leave granted to employees who did not already exhaust 80 hours of EPSL and 12 weeks of EFML. For example, if a worker who was entitled to 80 hours of EPSL last year used 50 of those hours, they’d have 30 hours left to use between Jan. 1 and March 31 this year.
  • Employers must protect the jobs of any employee that is granted EPSL and EFML.

Other provisions

The legislation extends some CARES Act unemployment programs:

Unemployment benefits ― The new law extends the Federal Pandemic Unemployment Compensation (FPUC) program supplement from December 26, 2020 to March 14. However, instead of receiving $600 a week under the original program, benefits will be $300 per week.

Gig worker unemployment benefits ― The law also extends the Pandemic Unemployment Assistance (PUA) program, which covers independent contractors and gig workers who would usually not be eligible for unemployment insurance payments.

This program (originally created by the CARES Act) is also extended to March 14, and then a three-week phase-out period begins and will run until April 5. The law increases the number of weeks independent contractors are eligible for these benefits to 50 from the original 39.

Extra weeks for those whose benefits ran out ― The Pandemic Emergency Unemployment Compensation (PEUC) program, which provides additional weeks of unemployment insurance benefits to individuals who use up all of their state unemployment benefits, will be extended until March 14.

The law also increases the number of benefit weeks to 24, from 13 under the original version of the program. After March 14, this program will be phased out over three weeks until April 5.

More money ― Taxpayers with annual incomes below $75,000 will receive a $600 check, plus another $600 per dependent child. Payments are phased out for people with incomes in excess of $75,000.

Paycheck Protection Program (PPP) part II ― The law also sets aside $284 billion for forgivable loans to struggling businesses as part of a second PPP. Companies that receive funds will have to use the money on payroll and other specific expenses if they want the loan to be forgiven.

Depending on the loan, employers will have either eight or 24 weeks after receiving the loan to spend it on approved expenses.

But PPP part 2 does have some additional prerequisites that differ from the original. It lowers the employee threshold for businesses to 300 employees or fewer (down from 500). Additionally, the maximum loan is now $2 million, compared to $10 million under the original PPP.

Qualifying expenses are also different in this version, which means any business thinking about applying needs to read all the fine print.

 

Why Every Business Needs Non-Owned Auto Coverage

Even businesses that own fleets of autos sometimes use vehicles that do not belong to them. Often, a business asks an employee to run an errand or visit a customer or vendor using that employee’s car.

The business may become legally liable for anything an employee acting on the business’s behalf does while behind the wheel. Lawsuits and accompanying legal costs may confront the business if he has an accident. Many business automobile insurance policies cover this situation, but they do not do so automatically.

The standard Insurance Services Office Business Auto Policy uses numbered symbols to identify covered autos for each coverage the business has purchased. The policy provides liability coverage for non-owned autos only if symbols 1 or 9 are shown on the information page:

Symbol 1 — Means “Any auto.”

Symbol 9 — Means “Non-owned autos.”

The policy defines non-owned autos as autos the insured business does not own, lease, hire, rent or borrow and that are used in the business.

The term includes autos owned by:

  • The business’s employees,
  • Partners (if the business is a partnership),
  • Members (if it is a limited liability company), or
  • Members of their households.

Coverage applies only if the vehicle is used in the business or in the policyholder’s personal affairs.

To illustrate, assume that a printing company needs an emergency replacement part that broke on one of its presses.

One of the workers drives his personal vehicle to a parts warehouse 30 miles away. On his way back with the part, he collides with another car.

If the repair shop’s auto insurance policy’s information page has either symbol 1 or 9 for liability coverage, it will cover this accident. It will pay for the shop’s legal defense costs and any resulting damages the shop is liable for, up to the amount of insurance purchased.

If the policy has another symbol, it will not cover an accident resulting from the use of the mechanic’s car.

Many types of businesses allow employees or partners to use their own vehicles for work purposes. Some examples:

  • Restaurants that deliver.
  • Businesses that do not provide company cars for salespersons.
  • Architects, attorneys, engineers, and other professionals who make site visits.
  • Any organization that sends employees to offsite meetings, errands or professional conferences.
  • Contractors who borrow trucks on job sites or who send employees to get tools.
  • Any organization that sends employees to the bank or post office.

It is possible that the employee’s personal auto insurance policy may provide some coverage for the employer in case of an accident. But the employer should not assume that this is guaranteed.

Also, many individuals purchase the minimum amounts of insurance required by state law, so any coverage the employer shares with the employee may be used up quickly and the employer would be liable for the rest. It’s also possible that the employee’s personal insurer will subrogate with the employer’s insurer to recoup any claims payments if the accident happened in the course of an employee’s job.

The takeaway

Almost every business has a situation where it asks someone to use a personal vehicle for business. If you are concerned that you may not be covered if an employee has an accident in their own car while on the clock, make sure the proper coverage is in place. An uninsured loss can be financially devastating, but it’s easily avoidable.

Top 10 Laws and Regulations Affecting Employers in 2021, Part II

Here is the second half of the top 10 laws and regulations affecting California employers in 2021, changes that organizations need to keep on their radar and prepare for.

6. Wildfire smoke safety regulations

With wildfires becoming the new normal in California, Cal/OSHA has set about working on permanent wildfire smoke regulations to protect outdoor workers when the air worsens during major events.

An emergency regulation is set to expire on Jan. 31, 2021, at which time Cal/OSHA hopes to introduce the permanent replacement that would require employers to protect their outdoor workers from smoke if the Air Quality Index (AQI) exceeds 150.

Workplace safety pros expect the permanent regs to mostly mirror the emergency rules that have been in place since August 2019.

The regulations apply when the AQI for airborne particulate matter 2.5 microns (PM2.5) or smaller is 151 or greater in an area where employees are working outdoors.

The permanent regulations are expected to cover training and methods for protecting workers (like moving them inside or providing N95 respirators during high-smoke conditions).

7. Rating Bureau’s new classification for telecommuters

California employers will get a new workers’ compensation class code to assign to employees who work from home, an outgrowth of the coronavirus pandemic which thrust so many people into working from home.

The new class code, (Clerical Telecommuter Employees ― N.O.C.), will apply to employees that work from home or “away from any location of their employer,” doing office clerical work.

This class code, available on policies effective Jan. 1, 2021 or later, is to be used for employees who would have been classified under class code 8810, Office Clerical employees, that are doing work at home 50% or more of the time.

8. Sick leave and kin care law

Under the current Labor Code, an employee is entitled to use up to half of their annual accrued sick leave to care for a family member, but not the full amount of sick leave they have.

AB 2017 amends Labor Code Section 233 to give employees the sole discretion to use as much of their sick leave as they want to care for a family member, with no approval from their employer required. The law takes effect. Jan. 1, 2021.

A “family member” is defined as the employee’s child, parent or guardian, spouse or domestic partner, grandparent, grandchild, or sibling.

9. Data protections strengthened further

California voters this year passed Prop. 24, which established a new law: the California Privacy Rights Act of 2020. The CPRA amends and strengthens the state’s current data protection privacy law, the California Consumer Privacy Act (CCPA), which governs how organizations have to protect personal data that they collect.

The CPRA gives additional rights to consumers and places additional obligations on businesses. It provides additional protection for sensitive personal information, expands the CCPA’s opt-out rights to include new types of information-sharing, and requires businesses to provide additional mechanisms for individuals to access, correct, or delete data, with a particular focus on information used by automated decision-making systems.

While the law doesn’t take full effect until Jan. 1, 2023, it has a 12-month look-back period. Privacy experts advise companies to start working on their data protection infrastructure in 2021 in order to be ready for this expansive new law.

10. State minimum wage increases

As of January 1, 2021, California’s minimum wage increases to $14 for employers with 26 or more employees, and to $13 for those with 25 or fewer employees. Local minimum wages may also increase. Check your local rules for other minimum wage requirements.

Top 10 Laws and Regulations Affecting Employers in 2021

Every year starts with a bevy of new laws and regulations affecting employers and businesses in California, and many of the new rules this time around are an outgrowth of the COVID-19 pandemic and its effects on workers.

Employers in California in the year ahead have a number of changes they have to contend with, some of which were enacted near the end of 2020 as emergency regulations or legislation.

In this issue, we’ll cover the first five of the top 10 rules and regulations affecting employers in 2021.

1. COVID-19 workers’ compensation rules

AB 1159, which took effect in September, is an expansive law requiring that workers’ compensation benefits be extended so that any employee who reports to a workplace and contracts COVID-19 is presumed to have contracted it at work, making them eligible for workers’ comp benefits.

But the law also imposes sweeping reporting rules for employers that have outbreaks in their workplaces (it’s considered an outbreak if 4% of an employer’s workers test positive for COVID-19). Under new rules by the Workers’ Compensation Insurance Rating Bureau, though, COVID-19 illness claims will not count against employers’ experience modifiers (X-Mods).

When reporting a COVID-19 claim to their insurance carrier, employers must provide the following information:

  • The date the worker tested positive,
  • The address of the worker’s place(s) of employment during the 14 days preceding the positive test, and
  • The highest number of employees who reported to work in the 45 days preceding the last day the employee worked in the workplace.

The above must be reported for each COVID-19 case in the workplace. The law sunsets on Jan. 1, 2023.

2. Cal/OSHA COVID-19 rules

Cal/OSHA in November enacted emergency regulations that impose strict rules on employers to implement safeguards in order to reduce the risk of COVID-19 spreading in the workplace.

The sweeping regulations extend the reach of protections to employer-provided housing and transportation, as well as imposing new reporting requirements on employers who have workers that contract the coronavirus. Yes, these are more reporting requirements on top of the ones for workers’ compensation cases.

The rules require employers to take a number of steps to ensure the safety of their workers, including creating a COVID-19 prevention plan, requiring masks, social distancing and other ways to reduce the likelihood of virus spread.

Also, employers must investigate coronavirus cases in their workplace. If they discover one of their staff has contracted COVID-19, they must notify all employees at a worksite who might have been exposed, within one day. Workers who may have been exposed must be offered COVID-19 testing at no cost. Employers must report coronavirus cases in their workplaces to local health authorities.

3. Cal/OSHA authority on stop-work orders

Before Cal/OSHA came out with its emergency COVID-19 regulations, Governor Gavin Newsom signed into law AB 685, which expands the agency’s authority to issue stop-work orders to workplaces it deems a COVID-19 “imminent hazard.”

But many in the regulated community say the new law is duplicative and conflicts with the emergency regulations, and that it will confuse employers as to their obligations.

The new law also requires employers to send notices to a number of parties (state agencies, local authorities, employees, contractors and more) if they have coronavirus infections in any of their facilities. All of these notices have a number of requirements that employers will need to follow to avoid penalties.

Notice to employees must include information regarding COVID-19-related benefits the employee may be eligible for under federal, state and local laws, such as:

  • Workers’ compensation benefits,
  • COVID-19-related leave,
  • Company sick leave,
  • State-mandated leave, and
  • Supplemental sick leave.

4. Expansion of California Family Rights Act

SB 1383, which takes effect Jan. 1, 2021, will expand the California Family Rights Act to cover even small employers ― those with five or more staff.

The CFRA, which requires covered employers to provide up to 12 weeks of unpaid leave a year for family and medical leave purposes, currently only applies to employers with 50 or more workers.

The new law also expands the scope of “family members” for whom employees can take leave to help care for them to include siblings, grandparents, grandchildren and domestic partners. Also, the law expands the definition of “child” to include all adult children (regardless of if they are dependents) and the children of a domestic partner.

5. Independent contractor law tweaked

AB 2257, which took effect in September 2020, revises the controversial AB 5 independent contractor law by adding a number of exceptions for certain classes of workers.

If you remember, AB 5 created a new standard for discerning what workers should be classified as employees or independent contractors and it swept up a number of professions in its net, causing some consternation and hand-wringing among both employers of those contractors and the independent contractors themselves.

The professions that are now exempt include:

  • Graphic designers
  • Web designers
  • Consultants
  • Freelance writers
  • Translators
  • Editors and content contributors.

New Law Imposes New COVID-19 Reporting Requirements

covid-19

California employers already have a lot to digest after Cal/OSHA issued sweeping new COVID-19 safety regulations in November.

Now they face additional requirements starting Jan. 1, 2021, thanks to a new law that expands notification requirements and gives Cal/OSHA the authority to issue stop-work orders on workplaces that have COVID-19 outbreaks. Here’s what you need to know to be prepared in case your workplace sees a flare-up.

California employers already have a lot to digest after Cal/OSHA issued sweeping new COVID-19 safety regulations in November. Now they face additional requirements starting Jan. 1, 2021, thanks to a new law.

AB 685 expands Cal/OSHA’s authority to issue stop-work orders to workplaces it deems a COVID-19 “imminent hazard.” It also requires employers to send notices to a number of parties (state agencies, local authorities, employees, contractors, and more) if the employer has coronavirus infections in any of its facilities.

The law, which takes effect on January 1, 2021, covers a lot of territory and employers need to understand their obligations if any of their employees test positive to avoid penalties, fines or possible legal action. Here are the main points to be aware of:

Employee notice requirements

The new law requires employers who learn of an employee’s COVID-19 infection to send out notifications to all employees and subcontracted workers who were on-site at the same time as the infected employee. An infected employee (or qualifying individual in the law) is defined as any person who has:

  • A laboratory-confirmed case of COVID-19,
  • A positive COVID-19 diagnosis from a licensed health care provider,
  • A COVID-19-related order to isolate provided by a public health official, or
  • Died due to COVID-19, determined by a county public health department.

The notice must provide information regarding COVID-19-related benefits the employees may be eligible for under federal, state, and local laws, such as:

  • Workers’ compensation benefits,
  • COVID-19-related leaves,
  • Company sick leave,
  • State-mandated leave, and
  • Supplemental sick leave.

The notification must also include the employer’s COVID-19 disinfection and safety plan.

Public health agency notification

The new law also requires that employers notify their local public health agency within 48 hours of learning of an “outbreak” among its workers. An outbreak is defined as: At least three probable or confirmed COVID-19 cases within a 14-day period at a worksite.

Notifications must include:

  • Information about the worksite – name of company, business address, and North American Industry Classification System (NAICS) industry code.
  • Names and occupations of workers with COVID-19.
  • Additional information requested by the local health department as part of their investigation.

If there are additional laboratory-confirmed COVID-19 cases at the workplace, the employer will once again need to send notice to the local health department.

Expanded Cal/OSHA authority

AB 685 grants Cal-OSHA authority to close workplaces that “constitute an imminent hazard to employees” due to COVID-19.

But the stop-work order must be limited to the immediate area in which an “imminent hazard exists.” Cal-OSHA is not authorized to bar entry to any areas outside the hazard area.

When issuing a stop-work order the agency must post a notice in the workplace. Entry will only be permitted for cleaning, disinfecting, and eliminating the danger.

The timeline for issuing serious citations is also greatly reduced. Typically, whenever Cal/OSHA plans to issue a serious citation it has to provide notice and give the employer 15 days to provide additional evidence to refute the need for a serious citation.

For COVID-19 serious citation, Cal/OSHA will not have to provide this notice, meaning that will not have 15 days to mount a defense.

Your to-do list

You should start drafting employee COVID-19 notices, particularly what would be boilerplate information, the preamble about the outbreak as well as benefits the employees can tap.

Also, you need to be prepared to notify public health authorities if you have an outbreak.

Finally, if you are being investigated for COVID-19-related safety violations, it would be wise to produce all backup documents to inspectors during the probe as you won’t have the usual 15 days to mount a defense if you are cited for a serious violation.

Commissioner Rejects Coronavirus Workers’ Comp Surcharges

workers' comp,

Despite the state’s rating agency asking for a 2.6% increase in workers’ compensation rates due to costs related to the coronavirus pandemic, California’s insurance commissioner has instead ordered that benchmark rates be cut 4.6%.

Besides the rate increase, the Workers’ Compensation Insurance Rating Bureau had recommended that all policies be subject to a COVID-19 surcharge that ranged from 1 cent per $100 of payroll for the least risky professions to 26 cents per $100 of payroll for the riskiest (such as health care workers).

Insurance Commissioner Ricardo Lara rejected that filing as well, saying both the request for rate hikes and the surcharges were not borne out by the claims statistics.

“The WCIRB’s thorough efforts to estimate COVID-19 costs are noted and appreciated but I am not persuaded that there is sufficient and reliable data upon which to base an adjustment for COVID-19 costs,” he said in a statement.

The Rating Bureau had made a big deal about the COVID-19 surcharges in anticipation of certain industries being adversely affected by high work-related coronavirus infections. However, overall workplace injuries in California have dropped precipitously since the start of the pandemic and all the fallout has put a major dent in economic activity.

The pandemic has led to an overall 20% decrease in workers’ compensation claims in the state, even though COVID-19 claims surged during the summer months.

Under California law, insurers are not allowed to count COVID-19 claims when calculating employers’ workers’ compensation experience modifiers (X-Mods). Another law extends a presumption that any worker who reports to a workplace and comes down with coronavirus will be eligible for workers’ comp benefits.

Commissioner Lara adopted an average advisory benchmark rate of $1.45 per $100 of employer payroll and adjusted the pure premium rates for individual classifications — excluding additional adjustments for COVID-19 — based on the benchmark rate effective Jan. 1, 2021. That’s compared with the $1.50 average benchmark rate as of Jan. 1, 2020.

The benchmark rate — or pure premium rate — is a base rate that insurers use to price policies. It excludes overhead and profits. The rate is advisory and final rates will vary based on each carrier’s specific rate filing and the individual employer’s claims experience.

Lara also said that if insurers want to include any additional COVID-19-related surcharges on their policies, they will need to clearly identify the adjustments in their rate filings with the Department of Insurance.

Additionally, while rejecting the COVID-19 surcharges, the commissioner’s proposed decision includes a Table of Recommended COVID-19 Additive Adjustment per $100 of Payroll that averages $0.05 per $100 of payroll.