Current through Register Vol. 54, No. 44, November 2, 2024
(a) A
self-insured public employer shall establish and maintain a dedicated asset
account to provide a source of funds for the payment of benefits and other
obligations and expenses relating to its self-insurance program. This section
does not apply to a runoff self-insured public employer whose average annual
payout of benefits on self-insurance claims over its last 3 completed fiscal
years, net of workers' compensation excess insurance recoveries, is less than
the current Statewide average weekly wage multiplied by 100.
(b) For a new self-insured public employer
and for an active self-insured public employer that has been self-insured for
less than 3 consecutive years, the required asset level of the dedicated asset
account established under subsection (a) is calculated as follows:
(1) An amount greater than or equal to 20% of
the public employer's modified manual premium calculated in accordance with
§
125.202 (relating to definitions)
or the minimum funding amount, whichever is greater.
(2) Discounted by the percentage outlined
under §
125.9(l)
(relating to security requirements) for the self-insurer's highest current
long-term credit or debt rating, if any.
(3) The dedicated asset account must equal
the above prescribed asset level no later than 30 days before the effective
date of the public employer's initial permit and may not be reduced below this
asset level for the first 3 years of self-insurance.
(c) For an active self-insured public
employer that has been self-insured for more than 3 consecutive years but less
than 7 consecutive years, the required asset level of the dedicated asset
account established under subsection (a) is calculated as follows:
(1) An amount greater than or equal to the
greater of the following:
(i) The
self-insurer's greatest annual fiscal year payout of benefits since its initial
approval to self-insure, net of workers' compensation excess insurance
recoveries, plus 20% of that annual payment amount.
(ii) The minimum funding amount.
(2) Discounted by the percentage
outlined under §
125.9(l) for the
self-insurer's highest current long-term credit or debt rating, if
any.
(3) The dedicated asset
account must be equal to or exceed the prescribed asset level 120 days before
the beginning of the self-insurer's next fiscal year or by a later date if
requested by the applicant and approved by the Bureau.
(4) Prior to issuing a permit under §
125.6(c)
(relating to decision on application), the Bureau will require that the asset
level of a self-insurer's dedicated asset account under paragraphs (1) and (2)
be based on an adjustment to the self-insurer's greatest annual benefit payout
amount to correct any material underpayment of benefits the Bureau believes is
the result of the self-insurer's failure to pay compensation for which it is
liable during the evaluation period.
(d) For an active self-insured public
employer that has been self-insured for 7 or more consecutive years, the
required asset level of the dedicated asset account established under
subsection (a) is calculated as follows:
(1)
An amount greater than or equal to the greater of the following:
(i) The self-insurer's average annual payout
of benefits over its three most recent completed fiscal years, net of workers'
compensation excess insurance recoveries, plus 20% of that average payment
amount.
(ii) The minimum funding
amount.
(2) Discounted by
the percentage outlined under §
125.9(l) for the
self-insurer's highest current long-term credit or debt rating, if
any.
(3) If the asset level of the
self-insurer's dedicated asset account is below the required level under
paragraphs (1) and (2) as of September 11, 2010, the required asset level of
the account established under subsection (a) is calculated as follows:
(i) The amount required to be in the
dedicated asset account under paragraphs (1) and (2) for the current
year.
(ii) Minus the difference
between the amount required to be in the dedicated asset account under
paragraphs (1) and (2) as of September 11, 2010, and the actual asset value of
the dedicated asset account as of September 11, 2010.
(4) The dedicated asset account must equal or
exceed the prescribed asset level 120 days before the beginning of the
self-insurer's next fiscal year or by a later date if requested by the
applicant and approved by the Bureau.
(5) Prior to issuing a permit under §
125.6(c), the
Bureau will require that the asset level of a self-insurer's dedicated asset
account under paragraphs (1) and (2) be based on an adjustment to the
self-insurer's average annual payout of benefits to correct any material
underpayment of benefits the Bureau believes is the result of the
self-insurer's failure to pay compensation for which it is liable during the
evaluation period.
(e)
For a runoff self-insured public employer, the asset level of the dedicated
asset account established under subsection (a) is that outlined under
subsection (d), except that the minimum funding amount does not
apply.
(f) If a self-insured public
employer does not possess an investment grade long-term credit or debt rating,
the Bureau may require that the asset level of its dedicated asset account
established under subsection (a) be greater than that outlined under subsection
(b), (c) or (d), in any amount which the Bureau determines will guaranty that
the self-insurer will have sufficient funding to meet its claims payments and
other obligations and expenses relating to its self-insurance program as they
come due over the self-insurer's next fiscal year.
The provisions of this §125.10 amended under sections
305(a) and 435(a) of the Workers' Compensation Act (77 P. S. §§
501 and
991(a)) and section 2205 of
The Administrative Code of 1929 (71 P. S. §
565).
This section cited in 34 Pa. Code §
125.6 (relating to decision on
application).
