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Employee Benefits Required By Law Essay Research (стр. 3 из 3)

Under most state and private insurance plans, the employer and the employee

gain by maintaining good safety records.

Disability payments from other sources

do not affect your Social Security disability benefits. But, if the disability

payment is workers? compensation or another public disability payment,

your Social Security benefits may be reduced. After the reduction, your

total public disability benefits should not exceed eighty percent of your

average current earnings before you became disabled. These include your

combined family Social Security benefits, your workers? compensation payment

and any other public disability payment you receive. The workers? compensation

payment and another type of public disability payment are kinds of payments

that affect your Social Security disability benefits. Workers? compensation

payment is one that is made to a worker because of a job-related injury

and illness. It may be paid by federal or state workers? compensation agencies,

employers or insurance companies on behalf of employers. Public disability

payments that may affect your Social Security benefits are those paid under

a federal, state or local government law or plan that pays for conditions

that are not job-related. They differ from workers? compensation because

the disability that the worker has may not be job related. Examples are

civil service disability benefits, military disability benefits, state

temporary disability benefits and state or local government retirement

benefits that are based on disability.

The higher costs of providing workers’

compensation benefits in risky occupations may lead employers to improve

safety in order to lower their insurance costs. The 75th anniversary of

the Federal Employees’ Compensation Act (FECA) is an opportune time to

reflect on broad policy issues of no-fault work injury liability statutes.

Policy discussions regarding occupational safety and health usually are

divided into two distinct parts with government standards established under

the Occupational Safety and Health Administration (OSHA) as the regulatory

device for encouraging prevention and workers’ compensation considered

as the program for providing benefits to disabled workers. The much debated

standards approach established under the Occupational Safety and Health

Act draws attention to the role of workers’ compensation as apart of the

policy mix for improving the health and safety of employees. General issues

of safety and health and their effect on employers and employees are first

considered in this article. Then the mechanics of determining workers’

compensation benefits in the private sector and how this process relates

to employer prevention incentives are briefly reviewed. Evidence on the

effect of workers’ compensation on safety and health is also discussed.

Finally, the specific arrangements by which Federal agencies are charged

for the work injury liabilities of their employees are compared with arrangements

used in the private sector to determine whether the Federal arrangements

are consistent with the objective of encouraging prevention of injury and

illness.

All workers’ compensation systems in the

United States require employers to guarantee that compensation to injured

workers will be paid. Some large employers may self-insure but most employers

meet this obligation by purchasing insurance. Several States offer workers’

compensation insurance in competition with commercial carriers, while other

States have a monopoly insurance fund. The largest source of workers’ compensation,

however, is insurance purchased from private companies. Workers’ compensation

insurance rates are based on the riskiness of the firm’s industrial classification

within each State. Approximately 600 groupings are used to determine the

firm’s “manual” rate, which is stated as a percent of payroll. If a firm

is large enough, the manual rate will begin to be adjusted by the experience

of the individual firm. The larger the firm’s payroll, the larger will

be the degree of this experience rating. In a typically risky industry,

firms with approximately 1,800 employees will have premiums based on their

own experience. It is obvious from this cursory review of the rate-setting

procedure, that the system is quite subtle in its attention to the accident

and disease experience of the individual firm. Within the workers’ compensation

community, experience rating is often viewed as a matter of equity–firms

with poor claims experience are charged a premium that reflects poor performance

and firms with good experience are charged less.

However, the potential for using this scheme

to regulate behavior is also apparent. Considering the significance of

occupational safety and health as a regulatory concern, it is somewhat

surprising that so few studies have examined experience rating. It is a

complex area to study, largely because of the complicating factor of the

employee’s response to higher benefits. A straightforward prediction about

the effect of experience rating on employers is that higher statutory benefit

levels should encourage more prevention. Benefit levels vary across States

and are regularly increased within States. However, higher benefit levels

are associated with higher reported levels of accidents. Higher levels

of benefits apparently encourage employees to report accidents. It is very

difficult to remove this employee effect from any effect higher benefits

might have on the employer. More attention should be paid to how liability

arrangements can be improved to create a better workplace environment.

Suggestions have been made to allow, or even require, all employers to

self-insure deductibles for workers’ compensation, and thus sharpen the

immediate reward for reduced injuries and disease. Other possibilities

for refining the incentives of the experience-rating system are to simplify

the relationships between experience and premiums. The current formula

is a complex array of actuarially important factors that are beyond the

comprehension of most safety and health professionals. Perhaps some elements

of the relationship between experience and premiums could be simplified

so as to make the reward for improved safety and health more apparent to

decision makers. The use of claims experience from the first 3 of the last

4 years is another reason that the linkage between experience and premiums

is more obtuse than is desirable.

A final suggestion for improvement in the

experience-rating scheme concerns the workers’ compensation rate regulation

system used in most States. Workers’ compensation rates are still heavily

regulated in most States, and although there are several mechanisms through

which competition can manifest itself, pricing is not explicitly and visibly

competitive in most States. This results in a marketplace that is not as

effective as one would expect under open competition–and this lack of

creative tension is manifested, in part, by producing few new ideas in

experience rating. Regulated rates also often subvert the potential of

experience rating by holding rates below the level established by the benefit

levels and claims. In an effort to please worker groups, State legislators

frequently set higher benefit levels, but then seek to appease employers

by keeping rates below the level implied by those benefits. This eventually

results in rates that make many employers unprofitable customers for insurers,

which leads to employers being unable to obtain voluntary insurance. Because

employers are legally obligated to have insurance, they are forced into

assigned risk pools. Assigned risk pools, with rates that do not fully

reflect benefit levels and claims experience, further diffuse the relationship

between experience and premiums, and thus distort the incentives of workers’

compensation.

Federal employee work injury and disease

benefits are paid by the employing agency through regular payroll funding

during the 45-day period of pay continuation and then through an annual

bill that accounts for benefits paid to the agency’s work- disabled employees.

This is essentially self-insurance, with extended claims administered through

the Office of Workers’ Compensation Programs, the Department of Labor agency

responsible for administering FECA. This arrangement avoids the imperfections

of the experience-rating system, because employers are fully rewarded or

penalized for their claims experience. Although employers pay the full

amount due, there are some problems. For example, it is not clear that

anyone at the “insurer’s” level is inclined to encourage disabled employees

to return to work. Another potential problem is that agencies must deal

only with the one authorized “insurer.” In most private insurance markets,

the amount of prevention services is used as a device to attract and retain

customers. It is not clear whether the Office of Workers ‘Compensation

Programs has any incentive to offer these key services. Occupational health

and safety is as important a regulatory issue today as it was in the early

20th century, when it was at the vanguard of government intervention in

the labor market. We should clearly be using all available devices for

improving the operation of the labor market. Because employees will be

compensated for their occupational injuries, it is necessary to take full

advantage of the financing of that compensation system in order to create

incentives for prevention. The financing arrangements now in use are quite

strong, but reinforcing prevention incentives has never been viewed as

their primary purpose. Recognition of this preventive incentive role and

attention to its improvement will serve to improve the occupational health

and safety of American workers.