Assessments for Individually Self-Insured Employers
The Division requires the payment of assessments for Individual Self-Insured Employers (ISI) on a quarterly basis. The Assessments Unit imputes an annual premium for each ISI which is the same premium that the ISI would have paid had they purchased insurance in Florida’s voluntary workers’ compensation market. This annual premium is used to determine the assessments for each ISI. The ISI will receive their annual premium calculation worksheet along with four quarterly assessment installment invoices. The Division follows the NCCI Premium Algorithm.
Computation of Gross Premiums for the Current/Preceding Year
Gross premiums for the preceding/current year shall be determined as the product of the company’s reported payroll for each payroll classification identified on the Self-Insurer Payroll Report, times the premium rates applicable to each job classification. Premium rates are approved by the Department of Financial Services and published by the National Council of Compensation Insurance (NCCI) https://www.ncci.com/pages/default.aspx.
Payroll classification categories are defined in the SCOPES Manual of Basic Manual Classifications (SCOPES Manual) prepared by the NCCI. When the SCOPES Manual is updated, revisions to existing job classifications and additional job classification categories will be integrated into the computation of net premiums.
The NCCI’s Experience Rating Manual, Basic Plan Manual and SCOPES Manual are incorporated into the calculation of each individual self-insurer's net premiums assessed under Sections 440.49(9) and 440.51 Florida Statutes. Future modifications and updates to these manual are automatically integrated in to these calculations.
If the self-insurer has initiated a Drug Free Workplace Program that meets statutory requirements, the company’s gross premiums may be reduced by 5% for the Drug Free Work Place Program. In order to obtain the credits against gross premiums for each year, the self-insurer shall submit a self-certification that the drug-free program is being maintained according as required by Florida Statutes, by completing the form required by Florida Administrative Code Rule 69L –5: Rules For Self-Insurers Under the Workers’ Compensation Act. Self-certification must be renewed each year. The 5% premium credit will be applied pro-rata as of the date the Department received the required certification, to the end of the year for which assessments are being calculated.
Once F.A.C. Rule 69L-5 has been finalized, self-insurers maintaining a Safety Program that meets statutory requirements, may be eligible for a 2% reduction to gross premiums. In order to obtain the credits against gross premiums for each year, the self-insurer shall submit a self-certification that the workplace safety program is maintained as required by Florida Statutes, by completing the forms required by Florida Administrative Code Rule 69L –5: Rules For Self-Insurers Under the Workers’ Compensation Act. Self-certification must be renewed each year. The 2% premium credit will be applied pro-rata as of the date the Department received the required certification, to the end of the year for which assessments are being calculated.
If the self-insurer submits self-certification for both the Drug Free Workplace Credit and the Safety Program Credit, the applicable 5% and 2% discounts will be applied on a linear basis. This means the 2% Safety Program Credit will be applied to premium previously adjusted, for the 5% Drug Free Workplace Credit.
This adjusted gross premium is multiplied by an Experience Modification Factor utilizing the actual experience of the individual self-insurer, in the payment of compensation benefits, and expected losses based upon average losses reflected in the NCCI manual rating of the classification codes reflected in the employer’s business. If the individual self-insurer has submitted certification of a Drug Free Workplace Program and/or a Safety Program, expected losses used in the calculation of the Experience Modification Factor are decreased by the policy credit percentage (attributable to these two premium credits). The Experience Modification Factor formula is published in the NCCI Experience Rating Plan Manual: Special State Rules.
The Florida Contracting Classification Premium Adjustment Program provides for an additional premium adjustment for those employers whose Payroll Report contains one or more contracting classification codes. In order to receive this credit, the self-insurer must submit total payroll and hours worked for the third calendar quarter of the preceding calendar year, on the form published by the NCCI. The Florida Contracting Classification Premium Adjustment Program premium credit will be applied only if the Self-Insurer submits the required information within three years after the end of an assessment period. The credit amount is calculated, by the Division of Workers’ Compensation, in accordance with guidelines published in the NCCI Basic Manual State Special Rating Plans and Programs.
Additional premium adjustments include standard discounts, an expense constant, a construction credit and the premium surcharge required by the Terrorism Risk Insurance Reauthorization Act.
The resulting net premiums will be multiplied by the Workers’ Compensation Administration and Special Disability Trust Fund assessments rates that applied on the preceding/current year’s anniversary rating date. These assessments shall be the basis for the comparison to the amounts the self-insurer had already paid, in advance, for the preceding/current year, to determine whether the self-insurer overpaid, or underpaid, that year’s assessments.
If the Self-Insurer has overpaid its assessments for the previous year, advanced assessments for the upcoming year will be reduced (by the amount of this overpayment).
If the Self-Insurer has underpaid its assessments for the previous year, advanced assessments for the upcoming year will be increased (by the amount of this underpayment).
Computation of Net Premiums to be Assessed for the Upcoming Year
Estimated net premiums for the upcoming year shall be determined using the payroll data from the preceding year’s Form SI-5, the employer’s experience rating factor applicable to the upcoming year, and the manual rates applicable to the employer’s job classifications for the upcoming year. The premium computational methodology is identical except for the fact that some components will have a difference value due to the change in time period.
The advanced assessments owed for the advanced year is equal to the product of the imputed net premiums, and the Workers’ Compensation Administration and Special Disability Trust Fund assessment rates in effect on the experience rating anniversary date. This assessment is usually completed 30-60 days after the experience rating date, depending upon the time the Self-Insurer Payroll Report is received.
The total annual assessments owed by the self-insurer for the upcoming year, is equal to the sum of the preceding/current year’s under (or over) payment of assessments, and the advanced estimate of the upcoming year’s assessments. (During the first year of self-insurance, total annual assessments will not include the component identified as an overpayment, or an underpayment, for the preceding year.)
Self-Insurer Quarterly Assessment Invoices
The Self-Insurer Assessment Computation Sheet illustrates both the preceding/current year and the advanced year’s self-insurer assessment computations. A copy of this form will be mailed to the self-insurer, along with a copy of each of the four Self-Insurer Quarterly Assessment Invoices.
Payment of the assessment amount illustrated on each of the Self-Insurer Assessment Invoices, must be submitted within 30 days after the date the company has received notification or, if later, 30-days after the end of the assessment quarter. The company shall return a copy of the Self-Insurer Quarterly Assessment Invoice at the time the quarterly assessment payment is remitted.
Penalty Assessment for Late Payment of Workers’ Compensation Administration Trust Fund
If the self-insurer does not submit payment of the total assessment due by the due date, the company shall be assessed a civil penalty equal to ten percent (10%) of the unpaid Workers’ Compensation Administration assessment. The late payment penalty is due at the same time as the unpaid assessment, and may be assessed for each additional 30-day period the self-insurer’s assessment payment is late.
No penalty assessed by this section shall be waived unless the self-insurer demonstrates that circumstances entirely beyond its control were responsible for the late payment of assessments. Protests of penalties due under this section shall be made pursuant to Section 440.021 Florida Statutes.
The Division is in the process of adding ISI to the START system which will be available in the Spring of 2016. To view a copy of the Assessment Calculation Self-Insured sheet click here. ISI calculation worksheet (coming soon)