New York's workers' compensation premiums will not increase next year.

The state Insurance Department announced that decision late July 15. But assessments, a tax on premiums that all employers must pay, will increase 6 percent this year.

Business Council President Daniel B. Walsh said New York's business community will remain focused on achieving essential cost-cutting reforms.

"Our priority remains reforms to reduce costs," Walsh said. "Constraining growth in costs is a start, but reducing those costs is essential. We know what reforms will do that, and now the Legislature must enact them.

"We call on the state Legislature to act immediately to enact the kinds of sensible reforms that have been proposed by Governor Pataki, Senator Thomas Libous, and Assemblyman Robin Schimminger," he added.

The National Council on Compensation Insurance (NCCI) in September 2003 estimated that the average cost of a workers' comp case in New York was $11,793, 72 percent above the national average. New York's costs are above average mainly because the state offers lifetime benefits in cases in which benefits are not "scheduled" in state statute. These cases account for 14 percent of claims, but more than 77 percent of all compensated injuries.

In testimony at a state Insurance Department hearing June 30 on workers' compensation premiums in New York State, The Business Council said the threat of another hike in employers' costs strengthened the already powerful case for workers' compensation reform.

"Until we reform the system itself by easing the fiscal burden on the employers of the state, we will find ourselves here year after year addressing the issue of the rates," The Council's testimony said.

The testimony highlighted the key reforms New York must enact to being reducing its costs:

Enacting objective medical guidelines. Forty-six other states require the use of objective medical guidelines to fairly evaluate workers' injuries and illnesses. New York has such guidelines, but does not require their use. It should enact such a requirement.

Curtailing lifetime benefits. Most workers' comp costs in New York State stem from cases in which benefits are not specified in statute. These cases account for only 14 percent of cases in New York, but account for 77 percent of all costs in the system.

"The vast majority of states recognize that certain durational limits should apply to permanent partial classifications," the testimony said. "In fact, there are 41 states that have placed limits on their duration of benefits." New York could follow their lead and cut costs, even while preserving a generous benefit, she added.

Limiting scheduled "loss of use" awards. Current state law allows workers to collect the full benefits under "scheduled lack of use awards" even if they return to work early. Allowing workers to collect both comp benefits and pay simultaneously like this unfairly burdens employers, the testimony said. New York should reform the system to allow workers to collect half of the unused scheduled benefits if they return to work before the scheduled benefits are due to expire.

Enacting pension offsets. Many employers across the state report that some workers make comp claims shortly before retiring, apparently in an effect to collect benefits after they retire as a kind of supplemental pension system, the testimony said.

New York should credit 50 percent of a recipient's old-age Social Security benefits and a recipient's employer-funded pension plan toward any and all compensation awards, Kirwan said.

Reducing the assessment formula. The Governor's program bill takes steps to lower at least part of the assessment that employers pay. His proposal would lower the assessment formula for the Second Injury fund, one of the special funds that the assessment supports, from 150 percent to 125 percent. The Business Council strongly favors a reduction in assessments, which contributed significantly to the burden of comp costs.

Two key reform bills (S.5230-Libous/A.8862-Schimminger and S.6841/A.10975, which is the Governor's program bill) contain most of these reforms.

The state Insurance Department has the authority to review proposed increases in premiums, and its announcement today came after three hearings on the proposal and the department's review of it. But the department has no authority to review proposed changes in assessments, so proposed changes are automatically enacted.

The assessment rate is now 14.3 percent of premiums. It will go up to 15.1 percent. Assessments, which are a key part of the burden of workers' compensation costs in New York State, support the operational expenses of New York's Workers' Compensation Board (WCB) and various special funds supported by New York's workers' comp system.

Last year, the assessment rate increased 10 percent, from 13 to 14.3 percent.