More than three years into the pandemic, much has changed relative to the general US population and the workers compensation environment. The National Council on Compensation Insurance (NCCI) proposed two workers compensation insurance countrywide item filings, E-1410 and B-1447, on February 1, 2023. These filings propose an expiration date of June 30, 2023, for the special treatment of COVID-19 (coronavirus) reporting rules and claims.
For a better understanding of the proposed changes for Item B-1447, please review the Frequently Asked Questions (FAQs).
General FAQs
1. What is the change?
Item B-1447 establishes an expiration date of June 30, 2023, for:
- Statistical Code 0012—Paid Furloughed Employees
- The exclusion of payments to paid furloughed employees during federal, state, and/or local emergency orders, laws, or regulations issued due to the COVID-19 (coronavirus) pandemic from premium and experience rating calculations
- The final premium reporting rule exception for the COVID-19 (coronavirus) pandemic in NCCI’s
Statistical Plan
2. What policies are affected by these changes?
Statistical Code 0012—Paid Furloughed Employees and its associated rules, and the COVID-19 final premium rule exception, will be applicable for new, renewal, and in-force policies effective March 1, 2020, through June 30, 2023.
Code 0012—Paid Furloughed Employees and its associated rules, and the COVID-19 final premium rule exception, will not be applicable for new and renewal policies with effective dates on and after 12:01 a.m. on July 1, 2023. Policies in-force as of July 1, 2023, will continue to apply Code 0012 and the COVID-19 final premium rule exception until policy renewal.
3. Why is it being done now?
In response to the COVID-19 pandemic, NCCI manual rules and Code 0012 were established or revised for payments to paid furloughed employees. Since the start of the COVID-19 pandemic, many employers have established COVID-19 prevention programs that include a number of important steps to minimize COVID-19 exposure and infection in the workplace.
The payments to paid furloughed employees reported to Code 0012 have declined significantly over the last two years and are negligible in comparison to total reported payroll. Based on the negligible amount of payroll being assigned to Code 0012, NCCI determined that the code is no longer needed, and June 30, 2023 is an appropriate expiration date for Code 0012 and its associated rules.
NCCI also determined that the COVID-19 final premium reporting rule exception in the
Statistical Plan is no longer needed.
4. Where is this item being filed?
Item B-1447 is being filed in all NCCI states (includes AK, AL, AR, AZ, CO, CT, DC, FL, GA, HI, IA, ID, IL, KS, KY, LA, MD, ME, MO, MS, MT, NE, NH, NM, NV, OK, OR, RI, SC, SD, TN, TX, UT, VA, VT, and WV) and will be recommended to IN for its consideration. Refer to Item B-1447 for details on state applicability for each exhibit.
Code 0012 and associated NCCI manual rules are not applicable in OR.
5. Which NCCI manuals are impacted by Item B-1447?
The following
Basic Manual rules are impacted:
- Rules for excluding from payroll payments issued due to the COVID-19 (coronavirus) pandemic
- Rules for wages paid during idle time
- Rules for payments to paid furloughed employees during federal, state, and/or local emergency orders, laws, or regulations issued due to the COVID-19 (coronavirus) pandemic
The following
Statistical Plan rules are impacted:
- Exposure reporting rule for Code 0012—Paid Furloughed Employees
- Final premium reporting rule exception for COVID-19 (coronavirus) pandemic
- Loss reporting rule for Code 0012—Paid Furloughed Employees
- Effective and discontinuation dates for Code 0012—Paid Furloughed Employees
6. When will the proposed changes in Item B-1447 become effective?
The proposed changes will become effective for new and renewal policies with effective dates on and after July 1, 2023. The proposed changes do not apply to in-force policies.
7. Why does the effective date language differ in Item B-1447 and Item E-1410—Revisions to NCCI Manual Rules Related to the Inclusion of COVID-19 (Coronavirus) Claims in Experience Rating and Merit Rating?
Item E-1410 proposes revisions to the rules which:
- establish an end Accident Date of June 30, 2023, to Extraordinary Loss Event (ELE) Catastrophe Number 12 for the reporting of claims attributable to COVID-19, and
- include claims attributable to COVID-19 (coronavirus) with Accident Dates on and after July 1, 2023, in experience rating calculations and merit rating plans (where applicable).
It is important that revisions proposed in Item E-1410 apply consistently to all applicable policies—new, renewal, and in-force, so that claims attributable to COVID-19 are included in experience rating modifications and merit ratings, where applicable.
Payroll reported as paid furloughed payroll is less than 0.1% of total payroll. Because there is such limited payroll being reported to Code 0012—Paid Furloughed Employees, the proposed revisions in Item B-1447 will apply to new and renewal policies only.
For example, consider a policy that has an effective date of June 25, 2023:
- the proposed revisions in Item E-1410 apply to this policy because the effective date language specifies that the filing applies to any in-force policy in effect on and after July 1, 2023
- the proposed revisions in Item B-1447 do not apply to this policy until its next renewal because the effective date language specifies that the filing applies to new and renewal policies with effective dates on and after 12:01 a.m. on July 1, 2023
8. Does Item B-1447 apply to residual market policies in NCCI states?
Yes, the proposed changes in Item B-1447 apply to voluntary market policies in NCCI states and residual market policies in NCCI states where NCCI is the Plan Administrator.
9. Why is there an expiration date for the proposed rule revisions, and what would happen if the rules were maintained in case such rules are needed in the future?
The rules that were established as a result of emergency orders, laws, or regulations issued due to the COVID-19 (coronavirus) pandemic were intended to be temporary and are specific to the federal, state, and/or local emergency orders, laws, or regulations issued due to the COVID-19 (coronavirus) pandemic. The specificity to a particular event and defined terms must be evaluated independently to support the necessary workers compensation infrastructure.
Reporting FAQs
10. What will happen if Code 0012 is reported with a policy effective date of July 1, 2023, or subsequent?
An edit will apply to the exposure record for an invalid class code.
11. Without the COVID-19 final premium reporting rule exception, how do you report a policy when the exposures are still estimated?
When the exposure reported on the 1st report is based on estimated exposure, the estimated exposures per class code are reported, along with reporting a “Y” for the Estimated Audit Code—Policy Conditions.
Impact FAQs
12. What is the overall impact of Item B-1447?
As a result of this item, payroll may shift from Code 0012 to the applicable classification codes of exposure based on audited payroll. The overall premium impact on a statewide basis is anticipated to be negligible. The extent of the shift on individual classifications is unknown because it depends on the nature of individual employers' business practices. Premiums of individual employers may increase if payments are made to employees subject to
Basic Manual rule, Rules for wages paid during idle time.
