Underfunded Second Injury Compensation Program in Jeopardy

On behalf of Brown & Crouppen, P.C. posted in Workers’ Compensation on Thursday, April 21, 2011

A fund for workers in Missouri whose injuries are aggravated on the job is in danger of running out of money within a few years, according to state officials. Some conservative lawmakers and business owners want the fund to go away completely, which could leave thousands of disabled workers without a source of income.

The program is called the Second Injury Fund. It is a form of workers’ compensation that pays benefits to workers who had a pre-existing medical condition that was worsened at work to the point where the worker can no longer do his or her job. It is funded by a surcharge paid by employers on top of their workers’ compensation insurance premiums.

Second Injury Fund has been a source of relief for thousands of injured workers since it was introduced in the 1940s. Since the 1980s, the number of applicants has surged. Currently, the fund has 27,000 pending claims. However, a 2005 amendment that lowered employers’ surcharge payments into the fund to 3 percent has reduced the fund to the point where State Auditor Susan Montee predicted in 2007 that it would be bankrupt within a few years. In February, Attorney General Chris Koster told a state House Committee that Second Injury Fund might by $20 million in debt by the end of the year.

Possible solutions to the problem vary. Some have proposed cutting off new applicants and only keeping Second Injury Fund around to pay for existing claims, dissolving the fund after the current claimants die. Some claim that the fund is paying benefits for what the director of the state chapter of the National Federation of Independent Business called “lifestyle problem[s]” like obesity and diabetes.

Yet other proposals would raise employers’ contributions to the fund above 2005 levels. One version of this would add a temporary 4 percent supplemental surcharge on top of the current 3 percent one. A spokesman for the Missouri Chamber of Commerce said the group’s membership was split, but was considering support for the supplemental payments.

Source: Columbia Missourian, “Missouri’s Second Injury Fund threatened by financial crisis,” Audrey Moon, April 20, 2011

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