Colorado businesses will save roughly $10 million a year if the state eliminates a 3 percent worker-compensation surcharge, says South Jeffco’s state senator.
Republican Sen. Mike Kopp, who is pushing the legislation, says the fee is unnecessary, and his bill to eliminate it cruised through the Senate and is now in the House.
Employers pay a 3 percent surcharge on their worker-compensation insurance premium, and that money goes into two funds: the subsequent injury fund and the major medical insurance fund. The funds come into play when a worker changes jobs and then claims an injury. If it's unclear which employer should be liable, the compensation comes from one of the two funds.
Both of the funds stopped adding beneficiaries 15 years ago, though there are still 700 people who draw benefits from those funds.
Kopp says businesses shouldn’t have to keep paying the surcharge.
“This fee generates real money,” Kopp said.
The funds held a combined $250 million when they were “raided” by the legislature in 2003, Kopp said. At the time, the funds were less than half a year away from collecting all the money needed to pay claims of the 700 remaining beneficiaries.
“It would have taken them into 2067,” Kopp said.
The surcharge on businesses built the balances back up to a combined $215 million, but the money was used to fund other needs again this year, Kopp said.
“Now that they’ve raided it again a second time, employers are paying three times now for the same benefits,” Kopp said.
“The bill is to cut off the funding source that grows the piggybank,” Kopp said. “It would force the legislature not to raid it.”
Kopp’s bill did go through some changes. His original intent was to keep the surcharge in place until the fund balances would cover the outstanding claims, which would take less than a year. At that point, the surcharge would disappear.
Kopp says it was clear the bill was not going to make it through the Senate like that. He amended it to a “pay-go system,” in which businesses pay the actual year-to-year obligations.
The bill’s House sponsor is Rep. Frank McNulty, R-Douglas County.