Albany, NY – Governor Andrew M. Cuomo recently detailed the $1.2 billion in savings to employers that will occur as a result of the sweeping reforms to the state’s Workers’ Compensation and Unemployment Insurance systems that were included in the recently passed state budget.
“For too many years, businesses in New York struggled under the burdensome requirements and costs of our state’s unemployment insurance and workers’ compensation systems,” Governor Cuomo said. “Two years ago we pledged to reopen New York’s doors to business and transform our economic climate to make our state friendlier to job creators and reduce the unnecessary bureaucracy and burdens facing businesses. While there is still work to be done, the sweeping reforms to the workers’ comp and unemployment insurance system included in the 2013-14 budget are a major victory for our state’s businesses large and small, and will save our job creators more than one billion dollars.”
Workers’ Compensation Reform: $800 Million in Savings to Businesses while Increasing Benefits for Workers:
Reforms to the workers’ compensation law will cut costs for employers, increase the minimum benefit to workers, and overhaul the way the workers’ compensation system is managed. The reforms will bring immediate savings to businesses by:
- Providing Relief for Self-Insured Businesses: The state will create one method for collecting annual assessments from employers, thereby saving self-insured employers an estimated $500 million dollars. This change will eliminate an overly complicated and bureaucratic system that was not only expensive for the state but also for employers. The new system will achieve administrative efficiencies and provide predictability to employers.
- Closing the Fund for Reopened Cases: Previous law allowed payments in certain old and re-opened claims to be made out of a special fund known as the Fund for Reopened Cases. The Governor’s reforms close this fund, eliminating the need for New York businesses to make payments into a fund that is unnecessary.
- Increasing competitiveness in the workers’ compensation insurance market: The Governor’s reforms include a series of measures to increase competitiveness in the workers’ compensation marketplace that will help to drive down costs and provide relief to businesses.
- Resolving Defaulted Group Trust Crisis: Providing a path to resolution for companies involved in the Group Self Insurance Trust crisis will provide relief for 10,000 businesses across New York State, who are currently saddled with an estimated $850 million in liabilities. The crisis resulted from deceptive business practices among several insurance entities that offered low-cost premiums to companies, yet failed to maintain adequate funds for workers’ comp benefits. When the fraud was discovered and it became clear the trusts were insolvent, thousands of New York’s businesses were socked with high and often unmanageable costs. The Governor’s reforms created a bonding program that will assist the self-insured employers resolve their liabilities.
- Increasing Benefits for Workers: The Governor’s reforms assist the state’s most vulnerable injured workers, increasing the minimum benefit from $100 to $150.
The savings as a result of this reform to self-insured businesses, by region, are outlined below:
|Central New York||$25,788,853|
|New York City||$258,378,618|
|Western New York||$30,340,462|
These changes will reduce annual workers’ compensation assessments on New York businesses by $300 million. The savings, detailed by region, are outlined below:
|Region||Percent of savings||Savings|
|Central New York||2.8%||$8,257,898|
|New York City||57.4%||$172,109,053|
|Western New York||4.8%||$14,503,218|
|Source: New York State Department of Labor, Quarterly Census of Employment and Wage, 2011 Average Annual Data|
In addition, this summer the Workers’ Compensation Board will begin accepting injury reports electronically from insurers using a national standard. This will cut paper-handling costs, greatly improve system oversight and guarantee benefits are paid timely to injured workers. As a result of the Governor’s reforms, New York is reforming the electronic filing process and leveraging technology to implement an aggressive agenda of structural change in the workers’ compensation system.
Source: NY Governor’s Office