7162, 7163, 7164, 7165

Sources of Revenue:

Special Fund

Legislation creates:

Neither Program nor Fund

Fiscal Note Summary

Effect this measure will have on costs and revenues of state government.

    HB 2445 would impact the future costs of the workers compensation Funds administered by the Offices of the Insurance Commissioner. The estimated liabilities of the Old Fund would be increased by 18.9%. Based on the June 30, 2012 actuarial report, the Old Fund liabilities were $1,701,639,000 (discounted at 5%). If enacted, HB 2445 would increase the estimated liabilities of the Old Fund to $1,901,804,000. The liabilities of the Self-insured Security Fund would also increase by 18.9%, from $6,814,000 to $7,183,000.
    The cost increase due to HB 2445 would be $200,534,000 for those two Funds.

Fiscal Note Detail

Effect of Proposal Fiscal Year
Fiscal Year
(Upon Full
1. Estmated Total Cost 0 0 200,534,000
Personal Services 0 0 0
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 200,534,000
2. Estimated Total Revenues 0 0 0

Explanation of above estimates (including long-range effect):

    HB 2445 would add a COLA to all PTD beneficiaries.
    The above estimated cost increase is long term in nature, as workers compensation liabilities are generally presented at the ultimate projected cost.
    Estimates were provided by the OIC's consulting actuarial firm, Pinnacle Actuarial Services. Pinnacle reviewed the annual CPI change from 2001 through 2012. The annual change ranged from a 0.4% decrease to a 3.8% increase. The indicated linear trend was 2.2%, which was selected by Pinnacle to apply annually to the PTD benefit level.
    Pinnacle used the discounted central estimates as presented in their 2012 reserve report and applied the percentage change that a COLA of 2.2% would indicate to adjust the discounted central reserve estimates. The results were an increase of 18.9% which equates to $200,534,000.


    As noted above, if enacted, HB 2445 would result in an increase of $200,534,000 to the liabilities for the PTD claims in the Old Fund and the Self-insured Security Fund.
    It should be noted, that HB 2445, applies a COLA to only PTD benefits. HB 2445 does not apply a COLA to dependent's benefits, so no estimate for that cost increase has been provided.
    It should be further noted that some additional fiscal impact to the other workers compensation related funds could occur if HB 2445 were enacted. Those funds include the Uninsured Employer's Fund, the Self-insured Guaranty Fund and the State Entities Workers Compensation Program Fund. However, as those funds do not currently have significant numbers of PTD beneficiaries, the impact is currently negligible but could increase over time.

    Person submitting Fiscal Note: Melinda Kiss
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