Just when employers begin to feel they are getting a handle on Patient Protection and Affordable Care Act (PPACA), an analysis by the National Council on Compensation Insurance, Inc. (NCCI) injects another consideration. This analysis, completed in March, concludes that decisions by employers on the implementation of the PPACA could affect Workers’ Compensation premiums.
The NCCI advisory states that since administrative options influence underwriters’ tabulation of policy holders’ payrolls and premiums, how employers comply with the law will have the potential to affect an employers’ Workers’ Compensation delineation. Employers’ total payroll is a major determinant of premium in NCCI-rated states. Any cash an employer gives to employees as part of their gross wages to buy their own insurance would be considered payroll.
In contrast, employers’ payments to group health plans would not be included as payroll when determining Workers’ Compensation premiums. Rebates employers receive from health insurers, which do not meet the premium percentage thresholds for spending on claims and quality improvements, will also be a factor. This is known as the Medical Loss Ratio (MLR).