SB 272: "An Act eliminating certain taxes under AS 21.09 on premiums from the sale of workers' compensation insurance; relating to the establishment, assessment, collection, and accounting for service fees for state administration of workers' compensation and worker safety programs; establishing civil penalties and sanctions for late payment or nonpayment of the service fee; and providing for an effective date."
00SENATE BILL NO. 272 01 "An Act eliminating certain taxes under AS 21.09 on premiums from the sale of 02 workers' compensation insurance; relating to the establishment, assessment, 03 collection, and accounting for service fees for state administration of workers' 04 compensation and worker safety programs; establishing civil penalties and sanctions 05 for late payment or nonpayment of the service fee; and providing for an effective 06 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 upon 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. 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 that 05 deductions from premium taxes or other taxes otherwise payable allowed on accounts 06 of real estate or personal property taxes paid shall be taken into consideration by the 07 director in determining the propriety and extent of retaliatory action under this section; 08 [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, as defined under AS 21, providing 18 workers' compensation insurance and each employer who is self-insured or uninsured 19 for purposes of AS 23.30 in this state shall pay an annual service fee to the department 20 for the administrative expenses of the state for workers' safety programs under 21 AS 18.60 and the workers' compensation program under AS 23.30. Except as 22 provided in (b) of this section, the fee shall be paid each year to the department at the 23 time that the annual report is required to be filed under AS 23.30.155(m) or (n). The 24 service fee is the following percent of all payments reported to the Alaska Workers' 25 Compensation Board under AS 23.30.155(m) or (n): 26 (1) for payment due in 2001, 3.3 percent; 27 (2) for payment due in 2002, 3.1 percent; 28 (3) for payment due in 2003, 2.9 percent; 29 (4) for payment due in 2004 and subsequent years, 2.6 percent. 30 (b) An insurer or an employer who is required to pay an annual service fee 31 under (a) of this section may elect to pay in yearly increments over a five-year period
01 the portion of the service fee due under (a) of this section as a result of a settlement 02 of over $50,000 approved under AS 23.30.012. An election under this subsection must 03 be made in the first year that a service fee would be due as a result of the settlement. 04 The insurer or the employer shall notify the department of an election under this 05 subsection. If an election is made, payment of each yearly increment that is due shall 06 be made at the time the annual report is required to be filed under AS 23.30.155(m) 07 or (n). 08 (c) Payment of the annual service fee under this section shall be made in the 09 manner and by the method specified by the department. 10 (d) If an insurer or employer who is required to pay an annual service fee 11 under this section does not pay the required amount of the service fee by the time 12 specified in this section, the insurer or employer shall pay a civil penalty of $100 for 13 the first day the payment is late, and $10 a day for each additional day the payment 14 is late. The civil penalty under this subsection is in addition to any civil penalties 15 imposed for late filings of reports under AS 23.30.155(m). 16 (e) Annual service fees and civil penalties collected under this section shall be 17 deposited in the workers' safety and compensation administration account in the state 18 treasury. Under AS 37.05.146(b), those service fees and civil penalties shall be 19 accounted for separately, and appropriations from the account are not made from the 20 unrestricted general fund. The legislature may appropriate money from the account 21 for expenditures by the department for necessary costs incurred by the department in 22 the administration of the workers' safety programs contained in AS 18.60 and of the 23 Alaska Workers' Compensation Act contained in AS 23.30. Nothing in this subsection 24 creates a dedicated fund or dedicates the money in the account for a specific purpose. 25 Money deposited in the account does not lapse at the end of a fiscal year unless 26 otherwise provided by an appropriation. 27 (e) The department may adopt regulations to implement and interpret this 28 section. 29 (f) Notwithstanding AS 21.76.020(a), a joint insurance arrangement established 30 under AS 21.76 is subject to the provisions of this section and regulations adopted 31 under this section and, if self-insured, shall pay the annual service fee on behalf of its
01 members. 02 * Sec. 7. AS 23.30.090 is amended to read: 03 Sec. 23.30.090. Self-insurance certificates. If an employer has complied with 04 the provisions of this chapter relating to self-insurance and has paid annual service 05 fees assessed under AS 23.05.067 , the board shall issue the employer a certificate 06 which shall remain in force for a period fixed by the board. The board may, upon at 07 least 10 days' notice and a hearing, revoke a self-insurance certificate upon satisfactory 08 proof that an employer is no longer entitled to it. After revocation the board may 09 grant a new certificate to an employer, upon the employer's petition and satisfactory 10 proof of the employer's financial ability as provided in this chapter. An employer 11 authorized as a self-insurer shall provide claims facilities through its own staffed 12 adjusting facilities located within the state, or independent, licensed, resident adjusters 13 with power to effect settlement within the state. 14 * Sec. 8. AS 37.05.146(b)(4) is amended by adding a new subparagraph to read: 15 (X) workers' safety and compensation administration account 16 (AS 23.05.067); 17 * Sec. 9. The uncodified law of the State of Alaska is amended by adding a new section 18 to read: 19 TRANSITION: PHASE-IN OF FEES FOR EMPLOYERS WHO ARE SELF- 20 INSURED UNDER AS 23.30.090. Notwithstanding the amount of the annual service fee set 21 by AS 23.05.067(a) and (b), enacted by sec. 6 of this Act, the state, a political subdivision of 22 the state, a joint insurance arrangement authorized under AS 21.76, and other employers who 23 are self-insured under AS 23.30.090 shall instead pay an annual service fee of the following 24 amounts in the following years: 25 (1) for payment due in 2001, 25 percent of the amount calculated for the 26 service fee under AS 23.05.067; 27 (2) for payment due in 2002, 50 percent of the amount calculated for the 28 service fee under AS 23.05.067; 29 (3) for payment due in 2003, 75 percent of the amount calculated for the 30 service fee under AS 23.05.067; and 31 (4) for payment due in 2004 and subsequent years, 100 percent of the amount
01 calculated for the service fee under AS 23.05.067. 02 * Sec. 10. The uncodified law of the State of Alaska is amended by adding a new section 03 to read: 04 TRANSITION: REGULATIONS. The director of the division of insurance in the 05 Department of Community and Economic Development, and the Department of Labor and 06 Workforce Development, may proceed to adopt regulations necessary to implement or interpret 07 this Act. Regulations to implement or interpret a provision of this Act take effect under 08 AS 44.62 (Administrative Procedure Act), but not before the effective date of secs. 1 - 9 of 09 this Act. 10 * Sec. 11. Section 10 of this Act takes effect immediately under AS 01.10.070(c). 11 * Sec. 12. Except as provided in sec. 11 of this Act, this Act takes effect January 1, 2001.