CSHB 378(L&C): "An Act eliminating certain taxes under AS 21.09 on premiums from the sale of workers' compensation insurance; relating to the establishment of, assessment of, collection of, and accounting for service fees for state administration of workers' compensation and workers' safety programs; establishing civil penalties and sanctions for late payment or nonpayment of the service fee; and providing for an effective date."
00CS FOR HOUSE BILL NO. 378(L&C) 01 "An Act eliminating certain taxes under AS 21.09 on premiums from the sale of 02 workers' compensation insurance; relating to the establishment of, assessment of, 03 collection of, and accounting for service fees for state administration of workers' 04 compensation and workers' safety programs; establishing civil penalties and 05 sanctions for late payment or nonpayment of the service fee; and providing for 06 an effective date." 07 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 08 * Section 1. AS 21.09.150(a) is amended to read: 09 (a) The director may suspend or revoke an insurer's certificate of authority if, 10 after a hearing, the director finds that the insurer has violated a lawful order of the 11 director or a provision of this title other than those for which suspension or revocation 12 is mandatory or has not paid any annual service fees assessed under AS 23.05.067 . 13 * Sec. 2. AS 21.09.210(b) is amended to read: 14 (b) Each insurer, and each formerly authorized insurer with respect to
01 premiums received while an authorized insurer in this state, shall pay a tax on the total 02 direct premium income received during the year ending on the preceding December 31 03 and paid for the insurance of property or risks resident or located in the state, other 04 than wet marine and transportation insurance or workers' compensation insurance , 05 after deducting from the total direct premium income the applicable cancellations, 06 returned premiums, the unabsorbed portion of any deposit premium, all policy 07 dividends, unabsorbed premiums refunded to policyholders, refunds, savings, savings 08 coupons, and other similar returns paid or credited to policyholders with respect to 09 their policies. Deductions may not be made of cash surrender value of policies. 10 Considerations received on annuity contracts are not included in the direct premium 11 income and are not subject to tax. The tax shall be paid to the director at least 12 annually but not more often than once each quarter on the dates specified by the 13 director. The method of payment must be by the electronic or other payment method 14 specified by the director. Except as provided under (m) of this section, the tax is 15 computed at the rate of 16 (1) for domestic and foreign insurers, except hospital and medical 17 service corporations, 2.7 percent; 18 (2) for hospital and medical service corporations, six percent of their 19 gross premiums less claims paid. 20 * Sec. 3. AS 21.09.210(e) is amended to read: 21 (e) Payment to the director by an insurer of the tax upon its premiums required 22 by this section shall be in lieu of all other taxes imposed by the state upon premiums, 23 franchise, privilege, or other taxes measured by income of the insurer commencing 24 with the taxable year beginning January 1, 1967. Payment by an insurer of the 25 annual service fee under AS 23.05.067 shall be in lieu of all taxes imposed by the 26 state on workers' compensation premiums, franchise, privilege, or other taxes 27 measured by the workers' compensation income of the insurer. 28 * Sec. 4. AS 21.09.210(n) is amended by adding a new paragraph to read: 29 (2) "workers' compensation insurance" has the meaning given in 30 AS 21.12.070(a)(3). 31 * Sec. 5. AS 21.09.270(b) is amended to read:
01 (b) This section does not apply to 02 (1) personal income taxes, or to ad valorem taxes on real or personal 03 property or to special purpose obligations or assessments imposed by another state in 04 connection with particular kinds of insurance other than property insurance , [;] except 05 that deductions from premium taxes or other taxes otherwise payable allowed on 06 accounts of real estate or personal property taxes paid shall be taken into consideration 07 by the director in determining the propriety and extent of retaliatory action under this 08 section; [OR] 09 (2) a health care insurer who issues health care insurance to the state, 10 a municipality, a city or borough school district, a regional educational attendance area, 11 the University of Alaska, or a community college operated by the University of 12 Alaska; in this paragraph, "health care insurer" has the meaning given in 13 AS 21.54.500 ; or 14 (3) the annual service fees assessed under AS 23.05.067 . 15 * Sec. 6. AS 23.05 is amended by adding a new section to read: 16 Sec. 23.05.067. Service fees for administration of workers' safety and 17 compensation programs. (a) Each insurer providing workers' compensation 18 insurance and each employer who is self-insured or uninsured for purposes of 19 AS 23.30 in this state shall pay an annual service fee to the department for the 20 administrative expenses of the state for workers' safety programs under AS 18.60 and 21 the workers' compensation program under AS 23.30. Except as provided in (b) of this 22 section, the fee shall be paid each year to the department at the time that the annual 23 report is required to be filed under AS 23.30.155(m) or (n). The service fee is 2.6 24 percent of all payments reported to the Alaska Workers' Compensation Board under 25 AS 23.30.155(m) or (n). 26 (b) An insurer or an employer who is required to pay an annual service fee 27 under (a) of this section may elect to pay in yearly increments over a five-year period 28 the portion of the service fee due under (a) of this section as a result of a settlement 29 of over $50,000 approved under AS 23.30.012. An election under this subsection must 30 be made in the first year that a service fee would be due as a result of the settlement. 31 The insurer or the employer shall notify the department of an election under this
01 subsection. If an election is made, payment of each yearly increment that is due shall 02 be made at the time the annual report is required to be filed under AS 23.30.155(m) 03 or (n). 04 (c) Payment of the annual service fee under this section shall be made in the 05 manner and by the method specified by the department. 06 (d) If an insurer or employer who is required to pay an annual service fee 07 under this section does not pay the required amount of the service fee by the time 08 specified in this section, the insurer or employer shall pay a civil penalty of $100 for 09 the first day the payment is late and $10 a day for each additional day the payment is 10 late. The civil penalty under this subsection is in addition to any civil penalties 11 imposed for late filings of reports under AS 23.30.155(m). 12 (e) Annual service fees and civil penalties collected under this section shall be 13 deposited in the workers' safety and compensation administration account in the state 14 treasury. Under AS 37.05.146(b), the service fees and civil penalties shall be 15 accounted for separately, and appropriations from the account are not made from the 16 unrestricted general fund. The legislature may appropriate money from the account 17 for expenditures by the department for necessary costs incurred by the department in 18 the administration of the workers' safety programs contained in AS 18.60 and of the 19 Alaska Workers' Compensation Act contained in AS 23.30. Nothing in this subsection 20 creates a dedicated fund or dedicates the money in the account for a specific purpose. 21 Money deposited in the account does not lapse at the end of a fiscal year unless 22 otherwise provided by an appropriation. 23 (f) The department may adopt regulations to implement and interpret this 24 section. 25 (g) Notwithstanding AS 21.76.020(a), a joint insurance arrangement established 26 under AS 21.76 is subject to the provisions of this section and regulations adopted 27 under this section and, if self-insured, shall pay the annual service fee on behalf of its 28 members. 29 (h) The department shall grant a credit against the service fee imposed under 30 (a) of this section to an employer if (1) the employer applies to the department for the 31 credit on a form prescribed by the department; (2) the employer provides proof that
01 the employer has paid a premium tax imposed under AS 21.09.210 on an insurance 02 policy; and (3) workers' compensation claims have been paid under the insurance 03 policy described in (2) of this subsection and the claims are subject to the service fee 04 imposed under (a) of this section. The credit allowed under this subsection is equal 05 to the amount of the premium tax paid by the employer under the insurance policy, 06 may not exceed the service fee imposed under (a) of this section, and only applies to 07 premium taxes paid by the employer on or after January 1, 2000. 08 (i) In this section, "insurer" has the meaning given in AS 21.90.900. 09 * Sec. 7. AS 23.30.015(e) is amended to read: 10 (e) An amount recovered by the employer under an assignment, whether by 11 action or compromise, shall be distributed as follows: 12 (1) the employer shall retain an amount equal to 13 (A) the expenses incurred by the employer with [IN] respect to 14 the action or compromise, including a reasonable attorney fee determined by 15 the board; 16 (B) the cost of all benefits actually furnished by the employer 17 under this chapter; 18 (C) all amounts paid as compensation and second-injury fund 19 payments , and all service fees paid under AS 23.05.067 ; 20 (D) the present value of all amounts payable later as 21 compensation , [(PRESENT VALUE TO BE] computed from a schedule 22 prepared by the board ; [),] and the present value of the cost of all benefits to 23 be furnished later under AS 23.30.095 [(] as estimated by the board ; [),] the 24 amounts so computed and estimated to be retained by the employer as a trust 25 fund to pay compensation and the cost of benefits as they become due and to 26 pay any finally remaining excess sum to the person entitled to compensation 27 or to the representative; and 28 (2) the employer shall pay any excess to the person entitled to 29 compensation or to the representative of that person. 30 * Sec. 8. AS 23.30.090 is amended to read: 31 Sec. 23.30.090. Self-insurance certificates. If an employer has complied with
01 the provisions of this chapter relating to self-insurance and has paid annual service 02 fees assessed under AS 23.05.067 , the board shall issue the employer a certificate that 03 [WHICH] shall remain in force for a period fixed by the board. The board may, upon 04 at least 10 days' notice and a hearing, revoke a self-insurance certificate upon 05 satisfactory proof that an employer is no longer entitled to it. After revocation , the 06 board may grant a new certificate to an employer, upon the employer's petition and 07 satisfactory proof of the employer's financial ability as provided in this chapter. An 08 employer authorized as a self-insurer shall provide claims facilities through its own 09 staffed adjusting facilities located within the state, or independent, licensed, resident 10 adjusters with power to effect settlement within the state. 11 * Sec. 9. AS 37.05.146(b)(4) is amended by adding a new subparagraph to read: 12 (X) workers' safety and compensation administration account 13 (AS 23.05.067); 14 * Sec. 10. The uncodified law of the State of Alaska is amended by adding a new section 15 to read: 16 TRANSITION: PHASE-IN OF FEES FOR EMPLOYERS. (a) Notwithstanding the 17 amount of the annual service fee set by AS 23.05.067(a), enacted by sec. 6 of this Act, the 18 annual service fee equals the following percentages of all payments reported to the Alaska 19 Workers' Compensation Board under AS 23.30.155(m) and (n): 20 (1) for payment due in 2001, 3.3 percent; 21 (2) for payment due in 2002, 3.1 percent; 22 (3) for payment due in 2001, 2.9 percent. 23 (b) Notwithstanding the amount of the annual service fee set by AS 23.05.067(a) and 24 (b), enacted by sec. 6 of this Act, the state, a political subdivision of the state, a joint 25 insurance arrangement authorized under AS 21.76, and other employers who are self-insured 26 under AS 23.30.090 shall instead pay an annual service fee of the following amounts in the 27 following years: 28 (1) for payment due in 2001, 25 percent of the amount calculated for the 29 service fee under AS 23.05.067; 30 (2) for payment due in 2002, 50 percent of the amount calculated for the 31 service fee under AS 23.05.067;
01 (3) for payment due in 2003, 75 percent of the amount calculated for the 02 service fee under AS 23.05.067; and 03 (4) for payment due in 2004 and subsequent years, 100 percent of the amount 04 calculated for the service fee under AS 23.05.067. 05 * Sec. 11. The uncodified law of the State of Alaska is amended by adding a new section 06 to read: 07 TRANSITION: REGULATIONS. The director of the division of insurance in the 08 Department of Community and Economic Development, and the Department of Labor and 09 Workforce Development, may proceed to adopt regulations necessary to implement or interpret 10 this Act. Regulations to implement or interpret a provision of this Act take effect under 11 AS 44.62 (Administrative Procedure Act), but not before the effective date of secs. 1 - 9 of 12 this Act. 13 * Sec. 12. The uncodified law of the State of Alaska is amended by adding a new section 14 to read: 15 TRANSITION: COLLECTION AND REFUND OF PREMIUM TAX. 16 Notwithstanding AS 21.09.210, the director of the division of insurance shall 17 (1) beginning July 1, 2000, cease collecting quarterly premium taxes on 18 workers' compensation insurance; and 19 (2) subject to appropriation, refund premium taxes collected for workers' 20 compensation insurance under AS 21.09.210 if the refund is required as a result of the 21 application of the provisions of this Act. 22 * Sec. 13. Sections 11 and 12 of this Act take effect immediately under AS 01.10.070(c). 23 * Sec. 14. Except as provided in sec. 13 of this Act, this Act takes effect January 1, 2001.