Assigned to FICO AS PASSED BY COW
ARIZONA STATE SENATE
Fifty-Sixth Legislature, Second Regular Session
AMENDED
FACT SHEET FOR H.B. 2204
workers' compensation rates; deviation
(NOW: workers' compensation; premiums)
Purpose
Allows an insurance carrier to reduce the amount of premiums paid by an employer by up
to five percent if the employer is a part of a qualifying membership organization and the insurance
carrier has a program agreement with that membership organization.
Background
The Industrial Commission of Arizona (ICA) administers and enforces state laws relating
to the protection of life, health, safety and welfare of Arizona's employees, including workers'
compensation. Worker’s compensation insurance provides coverage of medical costs, rehabilitation
and lost wages for an employee who has suffered injury or illness in the course of performing job
related duties. Statute requires employers in Arizona to provide workers’ compensation to their
employees either by securing insurance through an authorized carrier or providing the ICA with
proof of financial ability to pay workers’ compensation costs. An employer can demonstrate
financial ability to pay benefits directly or through participation in an approved self-insurance
compensation pool (Ariz. Const. art 18 § 8; A.R.S. § 23-961).
Both a tax and an assessment are levied on workers’ compensation insurance premiums.
The levies are in lieu of all other taxes on workers' compensation insurance. The tax rate is a
maximum of three percent of net premiums, and revenues are used for the administrative expenses
of the ICA. The ICA rules must specify the premium plans and methods to be used for the
calculation of rates and premiums, which is the basis for the taxes assessed to self-insured
employers. The tax must be at least $250 per annum and must be computed and collected by the
ICA and paid to the State Treasurer for the credit of the ICA's Administrative Fund at a rate of up
to three percent to be fixed annually by the ICA.
Current law allows an insurance carrier to reduce the amount of premiums paid by an
employer by up to five percent if the insured employer: 1) complies with statutory drug testing
policy requirements; 2) conducts drug testing of prospective employees; 3) conducts drug testing
of an employee after the employee has been injured; and 4) allows the employer's insurance carrier
to have access to the drug testing results (A.R.S. § 23-961).
There is no anticipated fiscal impact to the state General Fund associated with this
legislation. However, there may be a fiscal impact to the ICA depending on how many insurance
carriers enter into a program agreement with a membership organization and how many employers
are part of such membership organizations.
FACT SHEET – Amended
H.B. 2204
Page 2
Provisions
1. Allows an insurance carrier to reduce the amount of premiums paid by an employer by up to
five percent if:
a) the insured employer is part of a membership organization that is:
i. comprised of persons in a similar or related line of commerce;
ii. organized to promote and improve business conditions in that line of commerce; and
iii. not engaged in a regular business of a kind that is ordinarily carried on for profit and
whose net earnings do not inure to the benefit of any member; and
b) the insurance carrier has a program agreement with the membership organization of which
the insured employer is a member.
2. Makes technical and conforming changes.
3. Becomes effective on the general effective date.
Amendments Adopted by Committee
• Adopted the strike-everything amendment.
Senate Action
FICO 3/18/24 DPA/SE 5-2-0
Prepared by Senate Research
April 1, 2024
MG/AB/cs