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Introduction 

The Special Compensation Fund (SCF) assessment funds Minnesota's workers' compensation programs. Most of the assessment dollars go to funding the supplementary and second-injury benefit programs. The assessment also pays the operating expenses of the workers' compensation divisions of the Department of Labor and Industry, the Office of Administrative Hearings and the Workers' Compensation Court of Appeals.

As a result of legislation by the 2002 Minnesota Legislature, the assessment process has changed. Companies are no longer required to report semi-annually. The report is now being done on an annual basis. The report form is mailed to companies at least 45 days before the due date of April 1.

The Special Compensation Fund assessment is now directly invoiced by the Minnesota Department of Labor and Industry. The first half of the assessment is invoiced by June 30 of each year, and is due Aug. 1 of that year. The second billing is due Feb. 1 of the following year, and is mailed approximately 30 days before the due date.

The 2019 SCF assessment continues the downward trend. The 2019 assessment of $68.1 million is $1.9 million less that the 2018 assessment of $70 million. During the past 10 years, the annual funding requirement has dropped $22.9 million. The 2009 assessment was $91 million versus $68.1 million for the 2019 assessment.

The estimated state-fiscal-year 2020 funding requirement for the Special Compensation Fund was determined to be $68.1 million. The liability was divided between the insurers and self-insurers by the ratio of their 2018 indemnity payments to the total indemnity reported by both groups.

  2018 indemnity Ratio  2020 funding
liabilities
2018 DSR
pure premium 
Insurers $368,982,893 77.76% $52,953,065 $829,147,309
Self-insurers $105,545,542 22.24% $15,146,935  
Total $474,528,435 100.00% $68,100,000 $829,147,309

Insurer premium surcharge rate

The insurer premium surcharge rate applied for the purpose of determining the Special Compensation Fund assessment is 6.39 percent. The rate was determined by dividing the insurer portion of the Special Compensation Fund state-fiscal-year 2020 liability ($52,953,065), by the 2018 designated statistical reporting pure premium reported by all insurers to the Minnesota Workers' Compensation Insurers Association ($829,147,309).

The amount each insurer is assessed is determined by multiplying 6.39% by the designated statistical reporting (DSR) pure premium for calendar-year 2018. The total amount assessed is divided into two invoices, the first due Aug. 1, 2019, and the second due Feb. 1, 2020.

Self-insured assessment rate

The imputed self-insured assessment rate is 14.35 percent. It was determined by dividing the self-insured portion of the Special Compensation Fund state-fiscal-year 2020 liability ($15,146,935) by the total 2018 indemnity reported by the self-insured employers ($105,545,543).

The insurer portion of the 2019 assessment will be adjusted for actual 2019 data reported by the Minnesota Workers' Compensation Insurers Association. As a result of 2014 amendments to Minnesota Statutes 176.129, subd. 2a, the current assessment is considered to be an estimate based on the prior year's data. The reconciliation and final determination (true-up) for insurers will be completed by December 2020. See 2014 Minnesota Laws Chapter 182.

The amount each self-insurer is assessed is determined by multiplying 14.35% by the indemnities self-reported to DLI for calendar-year 2018. The amount assessed is divided into two invoices, the first due Aug. 1, 2019, and the second due Feb. 1, 2020.

Further information

If you need further information, send a message to dli.assessment@state.mn.us.