Subchapter C. SELF-INSURING GUARANTY FUND
Sec.
125.201. Purpose.
125.202. Definitions.
125.203. Default.
125.204. Procedures following default.
125.205. Allocation of security.
125.206. Payments to claimants.
125.207. Assessment of new individual self-insurer.
125.208. Assessment of new group self-insurance fund.
125.209. Assessment of new member of group self-insurance fund.
125.210. Assessment of existing self-insurer.
125.211. Objections to assessments.
125.212. Calculation of outstanding liability.§ 125.201. Purpose.
This subchapter is promulgated under sections 435 and 908 of the act (77 P. S. § § 991 and 1037.8) to provide regulatory guidelines for uniform and orderly administration of the guaranty fund.
§ 125.202. Definitions.
The following words and terms, when used in this subchapter, have the following meanings, unless the context clearly indicates otherwise:
Act—The Workers’ Compensation Act (77 P. S. § § 1—1038.2).
Basis of premium—The basis for the computation of an employer’s workers’ compensation insurance premium, such as employe remuneration paid by the employer.
Bureau—The Bureau of Workers’ Compensation of the Department.
Compensation——Compensation as defined in section 901 of the act (77 P. S. § 1037.1).
Custodial accounts—The two distinct and separate accounts of the guaranty fund established under section 902(c) of the act (77 P. S. § 1037.2(c)). One account is to be used exclusively to pay benefits arising from defaulting individual self-insurers and one account is to be used exclusively to pay benefits arising from defaulting group self-insurance funds.
Default—The failure of a self-insurer to pay compensation due to the self-insurer’s financial inability or the self-insurer filing for bankruptcy or being declared bankrupt or insolvent.
Department—The Department of Labor and Industry of the Commonwealth.
Employer—An employer as defined in section 901 of the act.
Guaranty fund—The guaranty fund as defined in section 901 of the act.
Manual premium—The sum of an employer’s basis of premium for each classification for the 12-month period immediately prior to the effective date of its individual self-insurance status under section 305 of the act (77 P. S. § 501) or of its membership in a group self-insurance fund under Article VIII of the act (77 P. S. § § 1036.1—1036.18) multiplied by the applicable SWIF rate in effect at the time of the issuance of the insurance policy immediately prior to the employer’s individual self-insurance status or its membership in a group self-insurance fund.
Modified manual premium—An employer’s manual premium multiplied by its experience modification factor for the insurance policy immediately prior to the employer’s individual self-insurance status or its membership in a group self-insurance fund, before adjustments or discounts.
New group self-insurance fund—A group self-insurance fund initiating operation under the act.
New individual self-insurer—An employer operating as a self-insurer under its first permit, including an employer operating as a self-insurer under its first permit following the lapse of a previous period of self-insurance.
Occupational Disease Act—The Pennsylvania Occupational Disease Act (77 P. S. § § 1201—1603).
Runoff group self-insurance fund—A group self-insurance fund which voluntarily terminated the permit issued to it under Article VIII of the act or a group self-insurance fund whose permit was revoked by the Bureau.
Runoff individual self-insurer—An employer that had been a self-insurer under section 305 of the act (77 P. S. § 501) and section 305 of the Occupational Disease Act (77 P. S. § 1405) but no longer maintains a current permit.
Security—Security as defined in section 901 of the act.
Self-insurer—A self-insurer as defined in section 901 of the act, including a runoff individual self-insurer and a runoff group self-insurance fund.
Self-insurer accounts—Individual segregated subaccounts of the custodial accounts for the deposit of funds received from security demanded under section 904(d)(2)(ii) of the act (77 P. S. § 1037.4(d)(2)(ii)).
SWIF—The State Workers’ Insurance Fund.
SWIF rate—The amount per unit of exposure which SWIF charges for insurance, calculated by multiplying the lost cost charge for a classification by the SWIF lost cost multiplier.
Source The provisions of this § 125.202 amended October 23, 1998, effective October 24, 1998, apply to applicants, self-insurers, runoff self-insurers, group self-insurance funds and runoff funds, 28 Pa.B. 5459. Immediately preceding text appears at serial pages (201172) to (201173).
Cross References This section cited in 34 Pa. Code § 125.10 (relating to funding by public employers).
§ 125.203. Default.
(a) Upon receipt of information that a self-insurer has failed to pay compensation due under the act or the Occupational Disease Act, the Bureau will investigate whether the failure to pay compensation has occurred and, if it has, determine the reason for that failure.
(b) If the Bureau determines that the failure to pay compensation may be due to the self-insurer’s financial inability to pay compensation, the Bureau will notify the self-insurer of its determination and direct the compensation to be paid within 15 days of the receipt of the notice.
(c) If the self-insurer fails to pay the compensation as directed within 15 days, the Bureau will declare the self-insurer in default. The Bureau also may at any time declare a self-insurer to be in default if the self-insurer fails to pay compensation due to a filing for bankruptcy or being declared bankrupt or insolvent.
§ 125.204. Procedures following default.
(a) After the Bureau declares a default, it will determine whether the liabilities of the self-insurer exceed or are less than the self-insurer’s security.
(b) If the defaulting self-insurer’s liabilities are less than the security, the Bureau will notify the custodian of the security that it shall utilize the security to cure the default. The Bureau will monitor payments made by the custodian of the security to ensure that compensation is paid as due under the act or the Occupational Disease Act.
(c) If at any time the defaulting self-insurer’s liabilities exceed or can reasonably be expected to exceed the security, the Bureau will order payment of the security into a self-insurer account within the appropriate custodial account. The funds deposited into each self-insurer account and the interest thereon will be used solely for the payment of compensation or costs associated therewith to employes of the defaulting self-insurer providing the security.
(d) After the assets of a self-insurer account have been exhausted, compensation shall be paid from funds obtained through assessments made and collected under section 907 of the act (77 P. S. § 1037.7) and related provisions of this subchapter and interest thereon.
§ 125.205. Allocation of security.
When a security instrument posted by a self-insurer applies to claims resulting from injuries and exposures occurring both prior to and on or after the establishment of the guaranty fund, the Bureau may order payment of a portion of the security into a self-insurer account under section 904 (d)(2)(ii) of the act (77 P. S. § 1037.4(d)(2)(ii)) for the payment of compensation on claims resulting from injuries and exposures occurring on or after the establishment of the guaranty fund. The portion of the security retained by the custodian of the security shall be used for the payment of compensation on claims resulting from injuries and exposures occurring prior to the establishment of the guaranty fund.
§ 125.206. Payments to claimants.
When payment of compensation is ordered by the Bureau from the guaranty fund relating to a defaulting self-insurer, compensation in arrears to the claimants will be paid within 15 days of the issuance of the order. After the initial payment of compensation, compensation will be paid in the same manner as the defaulting self-insurer would be required to make those payments under the act or the Occupational Disease Act.
§ 125.207. Assessment of new individual self-insurer.
As a condition for the issuance of a permit to operate as an individual self-insurer under section 305 of the act (77 P. S. § 501), an applicant shall submit to the Bureau the calculation of its modified manual premium on a form prescribed by the Bureau. Following the receipt of the calculation form and the commencement of the applicant’s self-insurance status, the Bureau will issue a notice to the new self-insurer assessing it for the guaranty fund based on 1/2% of its modified manual premium. The new self-insurer shall pay the assessment in the time prescribed by the Bureau.
§ 125.208. Assessment of new group self-insurance fund.
As a condition for the issuance of a permit to operate as a group self-insurance fund under Article VIII of the act (77 P. S. § § 1036.1—1036.18), an applicant shall submit to the Bureau the calculation of each member’s modified manual premium on a form prescribed by the Bureau. Following the receipt of the calculation forms and the commencement of the applicant’s group self-insurance status, the Bureau will issue a notice to the new group self-insurance fund assessing it for the guaranty fund based on 1/2% of the total of its members’ modified manual premiums. The new group self-insurance fund shall pay the assessment within 30 days of the receipt of the assessment.
§ 125.209. Assessment of new members of group self-insurance fund.
As an existing group self-insurance fund adds new members, it shall submit the form prescribed by the Bureau calculating each new member’s modified manual premium. Following the receipt of the calculation form, the Bureau will issue to the group self-insurance fund a notice assessing it for the guaranty fund based on 1/2% centum of the total of its new members’ modified manual premiums. The group self-insurance fund shall pay the assessment within 30 days of the receipt of the assessment.
§ 125.210. Assessment of existing self-insurer.
(a) If the liabilities of the guaranty fund exceed its assets, including funds deposited into the guaranty fund under section 906(a)(1) of the act (77 P. S. § 1037.6(a)(1)), the Bureau may assess self-insurers for the additional amount needed to satisfy the liabilities under section 907(b)(1) of the act (77 P. S. § 1037.7(b)(1)).
(b) The Bureau will give notice to each self-insurer of the amount assessed against the self-insurer under this section. Payment of the assessment shall be made within 30 days of the receipt of the assessment.
(c) Assessment of a self-insurer under section 907 (b)(1) of the act shall be determined as follows: the amount of compensation paid by the self-insurer during the preceding calendar year multiplied by the quotient resulting from dividing the amount determined by the Bureau to carry out the requirements of Article IX of the act (77 P. S. § § 1037.1—1037.8) by the total amount of compensation paid by all self-insurers during the preceding calendar year. The amount of compensation paid by the self-insurer and the total amount of compensation paid by self-insurers shall be obtained from the annual reports filed with the Bureau under sections 445 and 446(e) of the act (77 P. S. § § 1000.1 and 1000.2(e)).
(d) A self-insurer will not be assessed in any one calendar year more than 1% of the compensation paid by that self-insurer during the previous calendar year.
§ 125.211. Objections to assessment.
Within 15 days after the receipt of an assessment notice issued against a self-insurer under Article IX of the act (77 P. S. § § 1037.1—1037.8), the self-insurer may file objections with the Bureau if it believes the assessment is excessive, erroneous, unlawful or invalid. The objector shall state in detail the grounds for the objections. The Bureau, after notice to the objector, will hold a hearing upon the objections. After the hearing, the Bureau will record its findings on the objections and will transmit to the objector, by registered mail, notice of the amount, if any, charged against it in accordance with the findings. That amount shall be paid by the objector within 10 days after receipt of notice of the findings unless the objector initiates an action in the appropriate court within 10 days after receipt of the Bureau’s notice to restrain the collection or payment of the assessment.
§ 125.212. Calculation of outstanding liability.
The Bureau may retain the services of a casualty actuary to project the outstanding liability of the guaranty fund. Fees for actuarial services shall be an expense of the guaranty fund.
No part of the information on this site may be reproduced for profit or sold for profit.
This material has been drawn directly from the official Pennsylvania Code full text database. Due to the limitations of HTML or differences in display capabilities of different browsers, this version may differ slightly from the official printed version.
