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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 07/01/2022 |
Effective 07/01/2023 |
|
$ 500 |
2.0% |
1.5% |
|
$ 1,000 |
3.6% |
2.5% |
|
$ 2,000 |
5.9% |
3.8% |
|
$ 2,500 |
6.9% |
4.4% |
|
$ 5,000 |
11.2% |
6.7% |
(For 7/01/2023 refer to Circular Letter #2413 dated April 6, 2023 and Circular Letter #2415 dated April 6, 2023. For 7/01/2022 refer to Circular Letter #2398 dated April 22, 2022 and Circular Letter #2400
dated April 22, 2022. )
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. 07/01/22 |
eff. 07/01/23 |
|
0 to $75,000 |
$2,500 |
$10,000 |
6.8% |
4.3% |
|
$75,001 to $100,000 |
$2,500 |
$10,000 |
6.4% |
4.2% |
|
$100,001 to $125,000 |
$2,500 |
$10,000 |
6.0% |
4.1% |
|
$125,001 to $150,000 |
$2,500 |
$10,000 |
5.5% |
4.0% |
|
$150,001 to $200,000 |
$2,500 |
$10,000 |
4.9% |
3.8% |
|
over $200,000 |
$2,500 |
5% of Basis for the Aggregate Limit** |
4.5% |
3.5% |
* 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 7/01/2023 refer to Circular Letter #2413 dated April 6, 2023 and Circular Letter #2415 dated April 6, 2023. For 7/01/2022 refer to Circular Letter #2398 dated April 22, 2022 and Circular Letter #2400 dated April 22, 2022. )
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
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