Costs of workers’ comp to increase

Thursday, April 24, 2003 | 11:13 a.m.

CARSON CITY -- In addition to the potential for higher taxes, Nevada employers will be hit with double-digit increases in their industrial insurance premiums to cover workers injured on the job in the next year.

Bob Ostrovsky, a lobbyist for Employers Insurance Company of Nevada, which writes the most worker compensation policies, said Wednesday the company expects higher benefits for injured workers and bigger payments to health care officials.

Ostrovsky told the Assembly Ways and Means Committee that a bill that takes away a tax exemption for companies that write industrial insurance policies would translate into even higher rates for employers.

Ann Nelson, an executive for employers insurance, told the committee that passage of Assembly Bill 543 would mean that $3.5 million to $4 million would have to be added to employers' premiums.

Companies that write worker compensation policies must pay an assessment to the state Division of Industrial Relations, but they are able to offset that against the 3.5 percent state insurance premium tax.

Eliminating that exemption would mean at least an additional $12 million a year coming to the state treasury from the insurance premium tax, legislative fiscal analysts told the Assembly committee.

The industrial relations division regulates workers' compensation insurance to ensure injured workers receive their benefits, and it enforces federal and state health and safety standards in the workplace.

Outside the hearing, Ostrovsky said that benefits for a permanent partially disabled worker are expected to rise 3 percent to 4 percent.

The increase could come through legislation or regulation, he said.

Two bills are in the Legislature that would change the guidelines for rating compensation for permanent partially disabled workers.

If the bills fail, Ostrovsky said, the industrial relations division will adopt the so-called "Fifth Edition of the AMA Guides," which doctors use to rate injuries. That, too, would mean higher benefits for that group, he said.

"One way or another, we're going to the Fifth Edition," he said. "We know that's a 3 or 4 percent increase in cost to employers when we move to that.

"In addition to that, the medical fee schedule on which doctors are paid hasn't been raised in three years," he said. "There has been a number of hearings and committees at the DRI, and we're going to move the fee increase that the doctors clearly deserve."

That's going to raise the medical portion about 6 percent.

He said those two items will add 7 percent to 9 percent of workers compensation premiums. "Then you add any bills that pass for new benefits and I think a couple of them will become new law and that will drive us up a 10 percent increase in workers' compensation costs."

Roger Bremner, administrator of the industrial relations division, said he was waiting to see if the Legislature acted on approving the Fifth Edition before his agency would step in.

On increasing medical fees to those who treat injured workers, Bremner said preliminary results of a study recommends a 15 percent raise to doctors and others. He said medical costs are about 45 percent of what the insurance companies pay out in the injured workers program.

So he said a 15 percent increase would translate into a raise in premiums of 7 percent to 8 percent. He said he plans two more workshops and hopes to have the regulation adopted by the end of the year.

In addition to setting the base rate for medical fees, Bremner said the plan calls for a yearly adjustment of the fees based on the medical component of the consumer price index. The medical component is usually higher than the overall price index.