Workers’ Comp Surcharge Cost Burden to N.Y. Employers: Study

The assessment surcharge added to workers’ compensation costs for New York employers is increasingly becoming a burden for businesses, according to a new study.

In New York State, the assessment surcharge is currently 20.2 percent — which is more than double that of the second most expensive state in the nation (8.9 percent in Minnesota). It is also nearly five times greater than the 4.2 percent average assessment levied by states. Currently, 32 states impose such assessments.

These assessments are essentially a tax on workers’ compensation premiums and are used by state governments to fund the system, according to the study from The Workers’ Compensation Policy Institute.

Over the last two years, New York State increased this tax by 10.4 percent and 27.5 percent respectively. While states are free to choose various methods for funding their individual workers’ comp systems, the most common method is to impose an assessment or tax on premiums paid by employers, the study noted.

In New York’s surcharge, 10.1 percent on premium is assessed to fund the “Special Disability Fund.” This accounts for half of New York’s assessment charges, the study stated.

The second largest assessment, 5.7 percent of premium, is used to fund the “Reopened Case Fund” — this fund assists with claims that have been closed but later reopen. The third largest assessment, 3.2 percent of premium, is the cost that employers pay for the state to administer the Workers’ Compensation Board. The study said New York’s administrative costs are quite high and, in fact, exceed the total cost of assessments in all the comparable states except Connecticut.

The study is available online at The Workers’ Compensation Policy Institute’s website.