COVID-19 and Workers Compensation: What You Need to Know - Frequently Asked Questions - UPDATE
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By NCCI Insights April 05, 2021
 

TOPIC/SUBJECT: FAQ Update

NCCI has received numerous questions in the last few weeks regarding COVID-19 and the impact it may have on the workers compensation industry.

These frequently asked questions (FAQs) are intended to be the start of a series of responses that will address questions NCCI receives. Please review NCCI’s Basic Manual for Workers Compensation and Employers Liability Insurance—2001 Edition (Basic Manual) and Statistical Plan for Workers Compensation and Employers Liability Insurance—2008 Edition for additional information applicable to the responses provided. In addition, some states may have exceptions to the national Basic Manual rules referenced in this article. Refer to the State Rule Exceptions section of NCCI’s Basic Manual to determine whether an exception exists.

These FAQs address the rules as filed in NCCI manuals and other potential issues related to NCCI’s role in the industry. Individual states approve, interpret, and enforce the rules contained in manuals and forms. Insurance carriers will need to confirm regulatory, legislative, and enforcement changes as a result of the COVID-19 event with the respective states.

If you have additional questions, please submit by clicking the questions or comments button. These FAQs will be updated as questions or new information warrant.

1. Is COVID-19 compensable under state workers compensation acts?Updated 6/22/20


The answer to that question is “maybe.” While workers compensation laws provide compensation for “occupational diseases” that arise out of and in the course of employment, many state statutes exclude “ordinary diseases of life” (e.g., the common cold or flu). There are occupational groups that arguably would have a higher probability for exposure such as healthcare workers. However, even in those cases, there may be uncertainty as to whether the disease is compensable.

As a reference tool, NCCI’s Compensability—Statutory Survey compiles statutory standards of compensability for states where NCCI is a rating or advisory organization.

2. Where can I find state-specific legislative activity related to COVID-19?Updated 4/30/20


States have responded to COVID-19 by issuing directives and proposing legislation impacting workers compensation. Some states have enacted legislation and issued executive orders that expand workers compensation coverage for certain workers, while other states are considering similar initiatives.

We are currently posting all regulatory and legislative activity to the COVID-19 Resource Center at ncci.com.

3. A business has suspended operations due to COVID-19, but continues to pay employees, although they are at home and not working. Is this payroll included in the premium and experience rating calculations for workers compensation?Updated 4/5/21


NCCI recognizes that the circumstances around COVID-19 are extraordinary and, as a result, submitted an expedited rule change (Item Filing B-1441) that addressed the question of payroll for employees who are being paid but are not working as it relates to the basis of premium and created a corresponding code 0012 for reporting these payments. These payments will not be used in the calculation of premium and experience ratings.

Since the COVID-19 pandemic is ongoing and the end date is unknown, NCCI submitted an amended filing and obtained approval from state regulators (Item Filing B-1443) that removed the expiration date of the changes established in Item B-1441. The changes in Item Filing B-1441 will continue to remain in effect and will not expire until determined at a later date as circumstances warrant and in consultation with state regulatory authorities. A future filing will be made to establish an expiration date for the changes in Item Filing B-1441 as determined and approved by the regulator.

4. An employer has limited operations due to COVID-19. As a result, some employees are placed into new roles for the duration of the pandemic. What classifications could be assigned to these employees?


As stated in Basic Manual Rule 1-A, subject to certain exceptions, it is the business of the employer within a state that is classified, not separate employments, occupations, or operations within the business. Therefore, the classification of the employees working in new roles might not change. However, there may be situations where a change in classification could occur, such as when:

  • The employer’s operations have changed to a different classification, or
  • An employee’s occupation for the employer has changed (similar to when an employee receives a job promotion) to a different classification that may be applied to the employer’s policy (e.g., an employee changes to a clerical position and Code 8810—Clerical Office Employees NOC may be applied to the policy).

In accordance with Basic Manual Rules 1-D-3 and 2-G, the employer would be responsible for maintaining separate payroll records for the change in operations or the wages earned for an employee whose occupation has changed. If these records are not maintained, then all payroll would be assigned to the highest rated applicable class code. See footnote. 1

1An example could be a retail store that remains open for delivery of goods but closes the showroom to consumers. Several of the retail showroom employees will work from home to assist with phone orders, customer service calls, and related clerical paperwork. These employees may be reassigned to Code 8871—Clerical Telecommuter Employees. In addition, this same employer has other showroom employees delivering goods to customers. These employees would be reassigned to Code 7380— Drivers, Chauffeurs, Messengers, and Their Helpers NOC—Commercial while they are in their new role as delivery drivers. In both situations, the employees’ original job descriptions were included in the applicable store code, but their new job descriptions place them in a new code. Once the employees return to their former roles after the pandemic has passed, their payroll would return to the store code that was assigned before the employer closed the showroom. In accordance with Basic Manual Rules 1-D-3 and 2-G, the employer would be responsible for maintaining properly segregated payroll records for the wages earned while the employees were in their new job descriptions. If these records are not maintained, then all payroll would be assigned to the highest rated applicable classification.

5. Does Basic Manual Rule 1-F Changes or Corrections in Classifications, provide guidance for employers impacted by COVID-19?


NCCI’s Basic Manual Rule 1-F-1 addresses changes or corrections in classifications due to changes in an employer’s operations. The temporary interruption or suspension of normal business activities caused by COVID-19 may qualify as a change in operations. For example, if an employer continues to pay its employees while they are working out of their homes (telecommuting) rather than an office, carriers may consider a change from the employer’s governing classification to Code 8810—Clerical Office Employees NOC or Code 8871—Clerical Telecommuter Employees, or other appropriate classifications based on the duties of the employees while normal business operations are interrupted or suspended. Once normal business operations resume, appropriate classifications should be applied.

Find the specific description of Code 8871 using NCCI’s Class Look Up tool. To access it, you need a user ID and password (at no charge). If you don’t have these, please contact our Customer Service Center at 800-622-4123 and select the Products and Services option.

6. What is the appropriate class code for specialty cleaning companies or contractors that are conducting cleaning/disinfecting to remove potential COVID-19 contamination?


NCCI’s Basic Manual Rule 1-D-2 states that if no basic classification clearly describes the business, the classification that most closely describes the business must be assigned.

In order to determine the appropriate classification, it is important to understand how the employer is conducting the cleaning operation. If the employer is simply going into a business and wiping down surfaces, Code 9014—Janitorial Services by Contractors—No Window Cleaning Above Ground Level and Drivers may be the appropriate classification. For example, Code 9014 typically applies for surface cleaning of minor mold spots or general cleaning where hazardous materials are not being removed.

If containment operations are being conducted using sheeting, air filtration equipment, along with personal protective equipment such as full body suits, respirators, etc., then this could be considered as hazardous material remediation and Code 5473—Asbestos Removal Operations—Contractor—NOC & Drivers may apply.

7. If an employer’s employees are working at home due to COVID-19, and they live in a monopolistic state (but normally work in an NCCI state), will its workers compensation policy in the NCCI state cover such exposure?


NCCI’s Basic Manual, Introduction—Application of Manual Rules, No. 9, provides that “interpretation of state or federal laws pertaining to coverage issues is not within the jurisdiction of NCCI.” Contact the monopolistic state(s) in question to obtain coverage requirements under its state workers compensation law.

8. Can NCCI provide guidance on how carriers should handle physical audits vs. virtual audits from a voluntary and residual market perspective?


NCCI offers the following guidance:
Voluntary Market—As compliance requirements vary by state, NCCI suggests that voluntary carriers consult the state regulators’ websites for bulletins or executive orders to determine if there are any exceptions to compliance requirements as a result of COVID-19 (e.g., virtual audit rather than a physical audit).

Residual Market Policies—For policies written through the Workers Compensation Insurance Plan (WCIP), if assigned carriers (servicing carriers and direct assignment carriers) are unable to complete physical audits due to travel restrictions or policyholder unavailability due to COVID-19, the assigned carriers should be flexible and document their files regarding any extensions provided or action taken. This process is important to ensure a complete record is available for auditors reviewing files against NCCI’s Assigned Carrier Performance Standards.

9. If an employer is unable to comply with completing an audit because of the COVID-19 situation, is the employer considered to be noncompliant and subject to the Audit Noncompliance Charge (ANC) as provided in Basic Manual Rule 3-A-13-b?


A carrier’s application of the ANC is not mandatory. Therefore, a carrier could opt not to apply the ANC to an employer’s policy in this situation.

10. Are there rules around cancellation/nonpayment addressed in NCCI’s Basic Manual?


Yes, NCCI’s Basic Manual Rule 3-A-3 addresses cancellation provisions. Some states may have exceptions for residual market policies. Refer to the State Rule Exceptions section of NCCI’s Basic Manual to determine whether an exception exists.

State statutes govern cancellation/nonpayment requirements. Various states are addressing, via executive order, bulletins, etc., cancellation and nonpayment requirements in light of COVID-19. Carriers should consult state regulators’ websites for further guidance.

11. Is there any guidance regarding data reporting and claims coding related to COVID-19?


Specific reporting requirements have been established for claims attributable to COVID-19 with accident dates of December 1, 2019, and subsequent. Extraordinary Loss Event (ELE) Code 12 (catastrophe number) and new code 83 for nature of injury and cause of injury will be required for the applicable data types.

Refer to the following circulars:

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12. Has Congress or the administration taken any specific actions to create a federal backstop for insured losses from the COVID-19 pandemic or future pandemics?Updated 4/5/21


On May 26, 2020, Representative Carolyn Maloney (D-NY) introduced the Pandemic Risk Insurance Act (PRIA). PRIA would cover a portion of certain, future insured pandemic losses and utilize framework similar to the Terrorism Risk Insurance Program (TRIP). To date, no action has been taken on the proposed legislation.

13. What are possible impacts on loss costs and rates?Updated 7/12/21


Please see the 2021-2022 Rate Filing Season: What You Need to Know.
Note that COVID-19 data has been removed from the data underlying the state loss cost and rate filings because the observed frequency and severity of direct compensable COVID-19 claims are not expected to be predictive of loss experience in the filing effective periods. Additionally, NCCI’s filings propose to include the recognition of future pandemics in the catastrophe provision. After analysis and consideration of the most recent data, and the assessment of COVID-19 impacts, NCCI has determined that its standard ratemaking procedures and methodologies remain appropriate. Consistent with past practice, NCCI will evaluate each state on its own and consider whether any departures from standard methodologies are warranted.

14. For audits that may not be able to be performed during the COVID-19 pandemic, are carriers able to report estimated audits?Updated 4/5/21


Yes, according to approved NCCI Item Filing B-1441, if final premium based on audited exposure cannot be reported due to federal, state, or local emergency orders issued due to the COVID-19 pandemic, the applicable exposure and premium may be reported in the class code(s) and the Estimated Audit Code as an “N”.

Since the COVID-19 pandemic is ongoing and the end date is unknown, NCCI submitted an amended filing and obtained approval from state regulators (Item Filing B-1443) that removed the expiration date of the changes established in Item B-1441. The changes in Item Filing B-1441 will continue to remain in effect and will not expire until further amended as circumstances warrant in consultation with state regulatory authorities. A future filing will be made to establish an expiration date for the changes in Item Filing B-1441, as determined and approved by the regulator.

15. Are there any considerations to adjust data reporting due dates or assessments from NCCI’s data quality programs?


Some data reporters may be affected by COVID-19 and may have already experienced impact to their operations that affect the timely reporting of quality data to NCCI. NCCI will consider relief from data reporting obligations or assessments on a case-by-case basis. For appeals on Financial Call assessments, refer to the Data Quality Guidebook Part 2-E-7. For any other appeals, contact NCCI’s Customer Service Center at 800-622-4123. Initial reporting of the Indemnity Data Call continues to be due by the end of Third Quarter 2020.

Refer to the following circulars:

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16. Will claims related to COVID-19 be excluded from experience rating?Updated 5/19/20


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NCCI filed a rule change (Item Filing E-1407) to exclude claims identified with Catastrophe Number 12 for consideration by state insurance regulators. Upon approval, claims attributable to the COVID-19 pandemic and reported to Catastrophe Number 12 will be excluded from experience rating calculations and merit rating plans (where applicable). Catastrophe Number 12 applies to claims with accident dates of December 1, 2019, and subsequent. At this time, no ending claim accident date has been established. Once established, claims occurring after the ending claim accident date must not be reported with Catastrophe Number 12. Such claims will be included in experience rating calculations and merit rating plans.

Pandemics have been rare and are generally considered catastrophes because of their scope and severity. The presence or absence of a pandemic in a recent historical period is not believed to be a reliable good predictor of whether one will return in a given future year, after the current one runs its course. Pandemics share this aspect with other catastrophic perils in the workers compensation line, such as terrorism and earthquakes, and each peril presents a unique catastrophic exposure. Those other catastrophes have a non-ratable provision outside of the manual loss costs and rates that represent the long-term average expected cost, and the claims arising from those events are excluded from experience rating.

17. Does the Families First Coronavirus Response Act address workers compensation, including the treatment of payroll? Will payments by employers for qualified paid sick leave and qualified family and medical leave expansion under the Act be used in the calculation of workers compensation premium?Updated 4/30/20


None of the provisions of the Families First Coronavirus Response Act (Act) expressly apply to workers compensation. The Act does not define payroll, and the treatment of payroll for purposes of workers compensation is not specifically addressed in the Act. As discussed more fully below, NCCI is proposing to exclude qualified sick leave and/or family and medical leave payments under the Act from the calculation of premium.

In March 2020, Congress passed the Act in response to the COVID-19 pandemic. In general, the Act expands food assistance, addresses unemployment benefits, and provides emergency paid sick leave, emergency expanded family and medical leave, and tax credits.

In general, the section in the Act on Emergency Family and Medical Leave Expansion (EFMLA) modifies and expands coverage under the existing Family and Medical Leave Act by requiring employers with fewer than 500 employees to provide paid leave to eligible employees for a qualifying need related to a public health emergency.

  • “Qualifying need related to a public health emergency” means an employee is unable to work (or telework) due to a need for leave to care for a son or daughter under 18 years of age of such employee if the school or place of care has been closed, or the child care provider of such son or daughter is unavailable, due to a public health emergency.
  • “Public health emergency” means an emergency with respect to COVID-19 declared by a federal, state, or local authority.

In general, the section in the Act on Emergency Paid Sick Leave (EPSLA) provides that an eligible employer will provide an employee with paid sick time if the employee is unable to work or telework for reasons stated in the Act such as:

  • The employee is subject to a federal, state, or local quarantine or isolation order related to COVID-19
  • The employee has been advised by a healthcare provider to self-quarantine due to concerns related to COVID-19 or is experiencing symptoms of COVID-19 and is seeking a medical diagnosis
  • The employee is caring for an individual who is subject to an order or has been advised to self-quarantine as described above

The Act also allows a tax credit (payroll credit) against the taxes imposed for Social Security and railroad retirement benefits for each calendar quarter in an amount equal to 100% of the qualified sick leave wages and qualified family leave wages paid by an employer pursuant to the Act, and the amount of the tax imposed for hospital insurance taxes or Medicare.

NCCI recognizes that circumstances around COVID-19 are extraordinary and that existing NCCI manual rules on payroll inclusion/exclusion do not directly contemplate pandemic-related situations. As such, Item Filing B-1441 addresses the treatment of payroll as the basis of premium for any qualified sick leave and/or family and medical leave wages paid by eligible employers as defined and/or provided under the Act.

If approved, this rule change will be added to Rule 2-F, Wages for Time Not Worked, in NCCI’s Basic Manual, and a corresponding statistical code 0012 is being created for reporting this payroll. These qualified sick leave and/or family and medical leave payments will not be used in the calculation of premium.

Please review the Families First Coronavirus Response Act.

Please review the US Department of Labor (DOL) Guidance related to the Act, in the form of FAQs.

18. Do carriers have the ability, under the current infrastructure, to adjust in force policies due to estimated changes in payrolls and classifications?


Carriers have the ability to change payrolls and classifications via midterm endorsements. Subject to individual state approved endorsements, WC 89 06 00 B—Policy Information Page Endorsement is an approved form that can be used to make adjustments to reflect a carrier’s changes. Alternatively, a corresponding carrier endorsement approved by the state can be used.

19. If an employer increases pay to working employees as an incentive to work during COVID-19, how is this handled for premium calculation purposes?


Increases in pay to working employees as an incentive to work during COVID-19 are included in payroll. Refer to Basic Manual Rule 2—Premium Basis and Payroll Allocation

20. Are employer payments to paid furloughed employees, as defined in NCCI’s Basic Manual, excluded from premium and experience rating calculations?Updated 4/5/21


Yes. Provided that the employer keeps separate, accurate, and verifiable records, employer payments to paid furloughed employees are excluded from premium and experience rating calculations and reported to Code 0012—Paid Furloughed Employees, regardless of how the employer characterizes such payments and subject to funding authorizations, as applicable. For example, this includes payments to paid furloughed employees that an employer may characterize as sick pay, vacation pay, or some other terminology. If funds received through governmental assistance programs or governmental loans are used by an employer, as authorized by law, regulation, or governmental entity to make payments to paid furloughed employees, such payments would likewise be reported to Code 0012 and excluded from premium and experience rating calculations.

It is important to note that employer payments to employees who are not paid furloughed employees for periods of sickness that are not related to the COVID-19 (coronavirus) pandemic would continue to be used in the calculation of premium in accordance with Basic Manual Rule 2-B-1. These payments should not be reported to Code 0012.

Since the COVID-19 pandemic is ongoing and the end date is unknown, NCCI submitted an amended filing and obtained approval from state regulators (Item Filing B-1443) that removed the expiration date of the changes established in Item Filing B-1441. The changes in Item Filing B-1441 will continue to remain in effect and will not expire until further amended as circumstances warrant in consultation with state regulatory authorities. A future filing will be made to establish an expiration date for the changes in Item Filing B-1441, as determined and approved by the regulator.

21. Should payments to paid furloughed employees be used to calculate the premium for the terrorism or catastrophe provisions?


No. Basic Manual Rule 3-A-24 states that premium for terrorism/catastrophe is calculated on the basis of total payroll according to Rule 2. NCCI Item Filing B-1441 established Basic Manual Rule 2-B-2-n, which provides that payments made by an employer to paid furloughed employees as a result of federal, state, and/or local emergency orders, laws, or regulations issued for the COVID-19 pandemic (and reported to Code 0012), are excluded from payroll.

22. What tools has NCCI developed that allow the public to explore scenarios related to COVID-19?New 4/5/21


In April 2020, NCCI published a COVID-19 Hypothetical Scenarios Tool and corresponding paper to assist in understanding the potential cost impact on workers compensation (WC) losses due to COVID-19. The tool has been further supported by an update in October 2020 to incorporate the potential for permanent disability outcomes within the calculation framework, as explained in the April paper. In addition, in November 2020, NCCI published “COVID-19 and Workers Compensation: Frequency Assumptions Update” as related to the various frequency-related assumptions discussed in the COVID-19 Hypothetical Scenarios Tool.

In December 2020, NCCI published the Quarterly Economics Briefing (QEB)Employment Scenarios Tool, which is available to the public and enables all users to explore employment scenarios as discussed in the Third Quarter 2020 QEB and takes a deeper dive into all states and industries of interest.

In March 2021, NCCI released the Medical Indicators and Trends Dashboard webinar and corresponding paper, which is available to the public and delivers medical data insight for analysis. This first edition of the dashboard allows users to analyze state-specific medical treatment results from the direct and indirect impacts of COVID-19, such as physician services, time to treatment, telemedicine, prescription drugs, and specific COVID-19 treated claim characteristics.

23. For states with an approved Contracting Classification Premium Adjustment Program (CCPAP), if an employer paid wages, but did not engage in contracting operations due to COVID-19 during the third calendar quarter used to determine the CCPAP credit, how will the credit be determined?New 4/5/21


For most states with an approved CCPAP, the CCPAP rules provide that if the employer did not engage in contracting operations for the complete third calendar quarter used to determine the CCPAP credit, then the last complete calendar quarter prior to the policy effective date may be used. If there was no complete calendar quarter of contracting operations prior to the policy effective date, then the first complete calendar quarter after policy inception will be used. Refer to the CCPAP rules in NCCI’s Basic Manual for any state exceptions.

24. The Workers Compensation Insurance Organizations (WCIO) has established new Nature of Injury Code 38 (adverse reaction to a vaccination or inoculation) to identify claims that result in adverse reactions to vaccinations for COVID-19 and other diseases. The WCIO has also expanded the definition of Cause of Injury Code 82 to include vaccinations. Will NCCI be proposing these changes for the reporting of Unit Statistical data, the Indemnity Data Call, and Detailed Claim Information (DCI)?New 4/5/21


NCCI is preparing national Item Filing U-1402 to revise NCCI’s Statistical Plan to align with the WCIO updates to the Nature of Injury and Cause of Injury codes. The filing will implement the code changes effective for claims with Accident Dates of December 1, 2020, and subsequent, that result in adverse reactions to vaccinations for COVID-19 and other diseases. The expanded definition to Cause of Injury Code 82 will also be proposed to extend to vaccinations. Claims attributed to a COVID-19 vaccination would be reported with new Nature of Injury Code 38 and the current Cause of Injury Code 83 (Pandemic) during the pandemic period. A circular will be released in the coming months to announce national Item Filing U-1402.

For Indemnity Data Call and DCI data reporting, new Nature of Injury Code 38 and updated description to Cause of Injury Code 82 are available now for claims with Accident Dates of December 1, 2020, and subsequent. For Unit Statistical data reporting, the code changes are contingent upon jurisdictional approval of NCCI’s national Item Filing U-1402.

​This article is provided solely as a reference tool to be used for informational purposes only. The information in this article shall not be construed or interpreted as providing legal or any other advice. Use of this article for any purpose other than as set forth herein is strictly prohibited.








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