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Deductible Programs

 Deductible Programs include Small Deductible Programs, Medium Deductible Programs and Large Deductible Programs.

Small and Medium Deductible Programs:

In accordance with the statute, the Division of Insurance has approved two separate and distinct deductible programs, one without an aggregate limit which includes small and medium deductibles; and one with an aggregate limit which includes a medium deductible. An insured may elect either program, or neither of them. If the insured wishes to elect either of these deductible programs, the insured must make the election before the effective date of the policy, otherwise before the next renewal of the policy. These programs are not available to insureds with retrospectively rated policies.


MASSACHUSETTS BENEFITS DEDUCTIBLE PROGRAM

Chapter 398 of the Acts of 1991, amending Section 25A of Chapter 152 of the Massachusetts General Laws, which became law on December 23, 1991, and which was implemented by Regulation 211 CMR 113.00 (now incorporated into Regulation 211 CMR 115.00), requires the Massachusetts Workers' Compensation Assigned Risk Pool and insurers to offer medical and indemnity benefits deductibles to insureds with workers' compensation policies, which provide coverage in Massachusetts. Effective January 1, 1993 the Commissioner of Insurance approved the Massachusetts Benefits Deductible Program.
(Refer to Circular Letter #1624 dated February 3, 1993.)

This Program is intended for insureds who have the financial ability to handle some of the losses they incur. This Program will allow these insureds to establish an amount of loss they can absorb and to purchase insurance only for losses above that predetermined deductible amount.

Medical and indemnity deductibles of $500, $1,000, $2,000, and $2,500 shall be offered to every employer. The deductible shall apply separately to each claim for bodily injury by accident or disease. In addition, an insurer or the Pool, at its option, may offer to any employer providing collateral deemed adequate by such insurer, a medical and indemnity benefits deductible of $5,000. This deductible does not apply to claims for employers' liability.

In order to maintain the integrity in Experience Rating and Ratemaking databases, the entire cost of all claims shall be included in the experience data used to determine the experience modification of the insured regardless of the requirement that reimbursement must be made for the deductible amount on any claim.

The Table of Medical and Indemnity Deductible Amounts and corresponding Premium Reduction Percentages is from the Miscellaneous Values section of the Massachusetts Rate Pages.

Until January 1, 2008, the premium reduction for benefits deductible coverage is obtained by applying the appropriate premium reduction percentage to the policy's Standard Premium. The premium credit amount under this Program is reported under the statistical class code 9663.

Effective January 1, 2008, the premium reduction for benefits deductible coverage is obtained by applying the appropriate premium reduction percentage to the policy's Manual Premium for assigned risk policies, or to the policy's Adjusted Manual Premium for voluntary policies. The premium credit amount under this Program is reported under the statistical class code 9664. Refer to the Massachusetts Voluntary Market Premium Algorithm, Appendix E, or the Residual Market Premium Algorithm, Appendix F.

Coverage under this Program is to be effected by the attachment of the Massachusetts Benefits Deductible Endorsement (WC200602) to the Standard Workers' Compensation and Employers Liability Insurance Policy.

For more information on this Program, refer to the Massachusetts Workers' Compensation and Employers Liability Manual, Part One, Special Programs, Massachusetts Benefits Deductible Program.

BENEFITS DEDUCTIBLE COVERAGE PROGRAM
Medical and Indemnity Deductible Amounts Premium Reduction Percentage
Effective 07/01/2016 Effective 07/01/2018
$    500 1.9% 2.0%
$ 1,000 3.1% 3.2%
$ 2,000 4.7% 4.9%
$ 2,500 5.4% 5.6%
$ 5,000 7.9% 8.3%

(For 7/01/2018 refer to Circular Letter #2328 dated March 3, 2018 and Circular Letter #2330 dated March 26, 2018. For 7/01/2016 refer to Circular Letter #2279 dated April 20, 2016 and Circular Letter #2281 dated April 21, 2016.)

Additional References:

Circular Letter #2033 dated September 29, 2006 - Massachusetts Workers' Compensation Voluntary Market and Residual Market Policy Premium Algorithms
Circular letter #1842 dated March 27, 2000 - Revisions to the Massachusetts Workers' Compensation Unit Statistical Plan
Circular Letter #1627 dated February 23, 1993 - Massachusetts Benefits Deductible Program Effective January 1, 1993


MASSACHUSETTS BENEFITS CLAIM AND AGGREGATE DEDUCTIBLE PROGRAM

Section 25A of Chapter 152 of the Massachusetts General Laws requires the Massachusetts Workers' Compensation Assigned Risk Pool and voluntary market insurers to offer medical and indemnity claim and aggregate deductibles to insureds with workers' compensation policies, which provide coverage in Massachusetts. Effective January 1, 1997 the Commissioner of Insurance approved the Massachusetts Benefits Claim and Aggregate Deductible Program.
(Refer to Circular Letter #1761 dated September 18, 1996.)

This Program is intended for insureds who, while not qualified as self-insurers, nevertheless have the financial ability to handle some of the losses that they incur, subject to an aggregate amount. This Program will allow these insureds to elect an amount of loss per claim and an overall aggregate amount of all losses they can absorb and purchase insurance only for losses above those predetermined amounts. The amount of premium credit will vary by size of risk.

A medical and indemnity claim deductible of $2,500 and aggregate deductible amount of $10,000 shall be offered to every employer with estimated annual standard premium not in excess of $200,000. Every employer with estimated annual standard premium in excess of $200,000 shall be offered a medical and indemnity claim deductible of $2,500 and an aggregate deductible amount of 5% of estimated annual standard premium. The $2,500 claim deductible amount shall apply separately to each claim for bodily injury by accident or disease, subject to the aggregate deductible amount. The aggregate deductible amount is the most that the policyholder must reimburse the insurer for the sum of all medical and indemnity benefits compensable under law for each policy period.

In order to maintain the integrity in Experience Rating and Ratemaking databases, the entire cost of all claims shall be included in the experience data used to determine the experience modification of the insured regardless of the requirement that reimbursement must be made for the deductible amount on any claim.

The Basis for the Aggregate Limit, Claim Deductible and Aggregate Deductible Amounts, and corresponding Premium Reduction Percentages are from the Miscellaneous Values section of the Massachusetts Rate Pages.

Until January 1, 2008:

  • The premium reduction for claim / aggregate deductible coverage is obtained by applying the appropriate premium reduction percentage to the insured's Estimated Annual Standard Premium, i.e., after the application of any experience rating or merit rating modification.

  • The Aggregate Deductible Amount and corresponding Premium Reduction Credit do not change according to the level of final premium calculated at time of audit.

  • The premium credit amount under this Program is reported under the statistical class code 9663.

Effective January 1, 2008:

  • Use the "Basis for the Aggregate Limit" to determine the premium reduction percentage. The premium reduction for claim/aggregate deductible coverage is obtained by applying the appropriate premium reduction percentage to the policy's Manual Premium for assigned risk policies, or to the policy's Adjusted Manual Premium for voluntary policies.

  • Impact of Premium Audit:

    • If Adjusted Manual Premium increases as a consequence of an audit, recalculate the "Basis for the Aggregate Limit" using the new adjusted manual premium. Use the revised "Basis for the Aggregate Limit" to determine the applicable aggregate limit and the applicable deductible premium credit factor.

    • If the Adjusted Manual Premium decreases as a consequence of an audit, no adjustment is made to the values determined at policy inception for the aggregate limit and the deductible premium credit factor.

  • The premium credit amount under this Program is reported under the statistical class code 9664.

Refer to Massachusetts Voluntary Market Premium Algorithm, Appendix E, or the Residual Market Premium Algorithm, Appendix F.

Coverage under this Program is to be effected by the attachment of the Massachusetts Benefits Claim and Aggregate Deductible Endorsement (WC200603) to the Standard Workers' Compensation and Employers Liability Insurance Policy.

For a description of Basis for the Aggregate Limit and for more information on this Program, refer to the Massachusetts Workers' Compensation and Employers Liability Manual, Part One, Special Programs, Massachusetts Benefits Claim and Aggregate Deductible Program.

BENEFITS CLAIM AND AGGREGATE DEDUCTIBLE PROGRAM
Basis for the Aggregate Limit* Claim Deductible Amount Aggregate
Deductible
Amount
Premium Reduction Percentage Premium Reduction Percentage
eff. 07/01/16 eff. 07/01/18
0 to $75,000 $2,500 $10,000 5.3% 5.5%
  $75,001 to $100,000 $2,500 $10,000 5.2% 5.4%
$100,001 to $125,000 $2,500 $10,000 5.1% 5.3%
$125,001 to $150,000 $2,500 $10,000 5.0% 5.2%
$150,001 to $200,000 $2,500 $10,000 4.8% 5.0%
over $200,000 $2,500 5% of Basis for the Aggregate Limit** 4.5% 4.7%
* Prior to January 1, 2008 use the Estimated Annual Standard Premium to determine the premium reduction percentage.
** Prior to January 1, 2008 use an Aggregate Deductible Amount of 5% of the Estimated Annual Standard Premium for premiums over $200,000.

(For 7/01/2018 refer to Circular Letter #2328 dated March 23, 2018 and Circular Letter #2330 dated March 26, 2018. For 7/01/2016 refer to Circular Letter #2279 dated April 20, 2016 and Circular Letter #2281 dated April 21, 2016.)

Additional References:

Circular Letter #2033 dated September 29, 2006 - Massachusetts Workers' Compensation Voluntary Market and Residual Market Policy Premium Algorithms
Circular letter #1842 dated March 27, 2000 - Revisions to the Massachusetts Workers' Compensation Unit Statistical Plan
Circular Letter #1770 dated November 26, 1996 - Statistical Reporting of Massachusetts Benefits Claim and Aggregate Deductible Program

Large Deductible Programs

Insurers must file with the Commissioner of Insurance for permission to write large deductible policies.

According to 211 CMR 115.00, Requirements Applicable to Workers' Compensation Insurance Deductible Plans:

"The purpose of 211 CMR 115.00 is to regulate the conditions under which insurers offer workers' compensation insurance deductible plans in the Commonwealth."

Large deductible programs, filed with and approved by the Commissioner, are:

  • not subject to experience rating,

  • reported under the statistical class code 9663 (reduction in premium prior to reimbursements),

  • not included in Standard Premium.

Refer to the Massachusetts Voluntary Market Premium Algorithm, Appendix E.

Additional References:

Circular Letter #2044 dated February 14, 2007 - Massachusetts Voluntary Premium Algorithm Corrections
Circular Letter #2037 dated November 20, 2006 - Revision to Massachusetts Workers' - 11/20/2006
Circular Letter #2033 dated September 29, 2006 - Massachusetts Workers' Compensation Voluntary Market and Residual Market Policy Premium Algorithms
Circular Letter #1920 dated April 29, 2003 - Requirements Applicable to Workers' Compensation Deductible Policies
Circular Letter #1814 dated April 8, 1999 - Large Deductible Policies by Class
Circular Letter #1736 dated January 29, 1996 - Large Deductible Policies by Class
Circular Letter #1655 dated October 14, 1993
Circular Letter #1649 dated September 1, 1993 - The Application of Qualified Loss Management Credits to Employers on Large Deductible Programs

 
















Program Overview

 

The Workers' Compensation Rating and Inspection Bureau of Massachusetts
101 Arch Street, 5th Floor
Boston, MA 02110