Workers' Compensation Coverage
Understanding Workers' Compensation Insurance
The New York State Workers' Compensation Board is classified as a Revenue Agency within state government, and does not receive any funding through general tax revenue. Therefore, the Workers' Compensation Board itself must fully recover all the costs it incurs in the delivery of its services through its own revenue sources.
By law, the recovery of the Board's administrative costs, which includes the cost of personnel, plant, supplies, travel, etc. is done through a series of general administrative assessments that are paid by insurance carriers and self-insured employers. Assessments also fund several other special programs that reimburse carriers or pay claimants under special circumstances, including the Special Disability Fund (also known as Second Injury Fund), Fund for Reopened Cases, Uninsured Employers Fund, and Special Fund for Disability Benefits. These other special program assessments are also paid by insurance carriers and self-insured employers. (WCL §108, §151, §214 and §228)
The workers' compensation assessments against carriers are passed on to employers through a surcharge on their annual premiums. This surcharge is based on a set percentage of premium and the percentage changes every year. As the losses and liabilities for these programs rise and fall, so does the assessment charged to insurance carriers and self-insured employers.
In addition, there are annual assessments against self-insured employers. The amount of each year's assessment is calculated by the Board using the employer's payroll multiplied by a class code rate promulgated by the Compensation Insurance Rating Board. (WCL §50 ) This is called a pure premium calculation.