Current through Register Vol. XLII, No. 1, January 3, 2025
Section 85-24-8 - Credits8.1. Each client employer who participates in an approved loss management program for a three (3) year period and who achieves the necessary reductions in loss costs shall be entitled to a prospective credit to premium taxes.8.2. Start-up calculations. Prior to and as a condition of the start-up of a qualified loss management program on behalf of a client employer, the commission shall provide the following information to the loss management service provider and the client employer. 8.2.1. Baseline loss costs. The client employer's ultimate loss costs will be established for the three (3) most recent fiscal years, prior to the implementation of the employer's qualified loss management program, for which data is available. This is the baseline loss costs.8.2.2. A loss costs modification factor will be determined for the client employer by dividing the baseline loss costs by the base loss costs established from the most recent rating study. This is the baseline modification factor.8.2.3. Trended base loss costs shall be projected by the commission for the three (3) years covering the period of participation in the qualified loss management program. Trended base loss costs shall be based on anticipated changes in costs, inflation and benefit changes.8.3. Loss cost reductions. At the conclusion of each year of program participation, the commission will calculate the loss costs for that year. The loss costs will be compared to the baseline loss costs to determine the percentage reduction in loss costs for each period. 8.3.1. Communications. The commission shall communicate to the client employer and the loss management service provider the percentage of loss costs reductions and the amount of projected premium tax credit at the conclusion of each period. The commission shall make such entries in its books to show the amount of prospective credit (subject to subsequent year adjustments) achieved thus far.8.4. Amount of credit. The amount of prospective credit achieved by a client employer shall be based on the credit factor assigned its loss management service provider for each period and the percentage of its overall reduction in loss costs for the three (3) year period in accordance with the following table. Table 85-24A
% Overall Loss Costs | % Of Credit Factor Reductions | Allowed |
40% and more | Full credit factor allowed | |
30% to 40% | 80% | |
20% to 30% | 60% | |
10% to 20% | 40% | |
5% to 10% | 30% | |
Less than 5% | 0% | |
Example: A loss management service provider has been assigned a 10% credit factor for each year of the three year program period. The client employer achieves an overall three year percentage reduction in loss costs of 26%. The client employer is entitled to 60% of the loss management service provider's credit factor.
In other words, 60% of 10% = 6% (.6 x .1 = .06).
The client employer is entitled to a 6% (.06) credit for the first two years of the program and a 3% (.03) credit for the third year of the program. Note: The credit achieved in the third year of program participation is halved.
8.5. The maximum time a premium tax credit shall be allowed for any client employer is three (3) years.8.6. The prospective credit shall be calculated using the credit factor assigned to the loss management service provider for each of the three (3) years of participation. The credit calculated for the third year of program participation shall be halved.8.7. Changing loss management service providers. If a client employer's enrollment in an approved program terminates before such employer completes three (3) years of program participation and such employer subsequently becomes enrolled in another approved program, the employer's prior participation shall only be combined with the subsequent enrollment (1) if enrollment in the first program was for more than one year; (2) if enrollment in the first program resulted in a reduction in loss costs of at least 10% as calculated in accordance with the provisions of 8.4 (adjusted for any partial period in excess of one year participation); (3) if the employer subsequently enrolls in another approved program within thirty (30) days of such termination; and (4) if program participation terminates due to the fault of the qualified loss management service provider.8.8. Prospective credit. Except as follows, within ninety (90) days following the conclusion of the third year of program participation, the commission will refund to the client employer the amount of prospective credit achieved by the client employer.