Workers’ Compensation reform to produce savings for New Yorkers
The passage of a Senate-led Workers’ Compensation Reform package is expected to produce hundreds of millions of dollars in employer savings across New York while also improving protections for injured workers, according to state Sen. Chris Jacobs.
“The tremendous burden that New York’s Workers’ Compensation system has placed on businesses, local governments and not-for-profits has been a roadblock to growing our economy and put our region and our state at a huge competitive disadvantage,” Jacobs said in a release. “These reforms will make Buffalo and Western New York a more attractive place to do business and help keep the revitalization of our regional economy going forward.”
“New York’s high Workers’ Compensation costs are challenging employers’ ability to compete, reward employees and create jobs,” said Dottie Gallagher Cohen, president and CEO of the Buffalo Niagara Partnership. “Achieving meaningful Workers’ Compensation reform and real costs savings for employers was one of our top budget priorities this year.”
Gallagher-Cohen thanked Jacobs and his Senate Republican Conference colleagues for pushing so hard on the issue, but she noted that more must be done to reduce program costs while providing the care and compensation injured workers deserve.
“High Workers’ Compensation costs serve as a significant drag on the upstate economy. They are a hidden tax on every employer — large companies, small businesses, not-for-profits, schools and local governments — contributing to upstate job loss, population decline and our high local taxes,” said Greg Biryla, executive director of Unshackle Upstate.
According to Biryla, the recently enacted state budget reforms the state’s Workers’ Compensation system, brings it in line with modern medical science and delivers savings to employers across the state. The press release from Jacobs’ office said there are four components to the Workers’ Compensation
Reform package approved in the state budget:
Reforming Temporary Benefit Timeframes — A new general rule instituting 2.5 years for an employee to claim temporary benefits. This change alone is expected to reduce employer contributions approximately $350 million each year.
New Medical Impairment Guidelines for Scheduled Loss of Use Awards — The Workers’ Compensation Board is being required to issue new medical impairment guidelines by the end of this year to reflect advances in modern medicine that produce better patient outcomes. These new guidelines are also expected to save employers hundreds of millions of dollars annually.
Creation of a Prescription Drug Formulary — Doctors will be able to consult a new, comprehensive list of high-quality, cost-effective medications pre-approved for injured workers. This will include non-preferred drugs that can be prescribed with prior approval to ensure injured workers get the most appropriate care.
Rebates for Current Year’s Premiums — Because employers are already paying premiums based on 2017 estimates, year-end rebates will be issued once administrators calculate final year-end savings.
“The issue of Compensation costs doesn’t affect just the private sector; it means high costs for government funded as well that receive taxpayer dollars,” Kevin Horrigan, associate vice president of People Inc., said in the release. “We care for thousands of people that cal needs. This new reform will ensure our staff are still protected while saving Workers’ Compensation costs to our agency and nonprofits like ours.”
Workers’ Compensation costs in New York State approach $10 billion annually. The approximate savings from the reforms enacted in the budget are estimated to reduce those costs by roughly $700 million, which in turn would translate into a potential savings of 7 percent annually for employers across the state, according to the release.
At the same time, the safety net for seriously injured workers who qualify to apply for extended permanent benefits will include workers determined to be more than 75 percent injured.
Also, a new “Safety Valve” will allow workers who can demonstrate continued need for temporary benefits beyond the 2.5-year rule to apply to the state Workers’ Compensation Board for an extension.
“Reforming the system is a critical element of making our state more affordable for all public and private employers,” Jacobs said. “The reforms now enacted are a good start, and prove that we can reduce the costs of overly burdensome mandates while improving the outcomes and services being delivered to injured workers.”