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ARIZONA STATE SENATE
Fifty-Fourth Legislature, Second Regular Session
self-insured employers; deviation continuation
Purpose
Continues the 10 percent deviation rate for calculating taxes or assessments paid by self‑insured employers through calendar year 2022.
Background
Arizona employers must secure workers' compensation to their employees by one of two potential methods. An employer may insure and keep insured the payment of workers' compensation with an insurance carrier authorized by the Director of the Arizona Department of Insurance to write workers' compensation insurance in Arizona. Alternatively, an employer may furnish to the Industrial Commission of Arizona (ICA) satisfactory proof of financial ability to pay the compensation directly or through a workers' compensation pool approved by the ICA as prescribed by statute. The employer may satisfy this requirement by furnishing satisfactory proof of membership in an ICA-approved workers' compensation pool to the ICA. The ICA may require a deposit or any other security from the employer for the payment of compensation liabilities in an amount fixed by the ICA, but not less than $100,000 for workers' compensation liabilities. If the employer does not fully comply, the ICA may revoke the authority of the employer to pay compensation directly.
A tax is levied on workers’ compensation premiums paid by employers to insurance carriers. Every self-insured employer, including workers’ compensation pools, must remit an annual tax not to exceed three percent of the premiums that would have been paid by the employer if the employer was fully covered by a workers’ compensation insurance carrier (A.R.S. § 23-961). Laws 2014, Chapter 35 continued the deviation from this tax rate at 10 percent for any self-insured employer through 2020. For calendar year 2019, this tax is comprised of a 1.75 percent assessment that is paid to the Administrative Fund and used for expenses of the ICA (ICA).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
1. Continues, through calendar year 2022, the 10 percent deviation rate for calculating any tax or assessment paid by a self‑insured employer.
2. Makes a technical change.
3. Becomes effective on the general effective date.
Prepared by Senate Research
February 3, 2020
MG/AB/gs