HB 2204
Initials PB Page 1 Senate Engrossed
ARIZONA HOUSE OF REPRESENTATIVES
Fifty-sixth Legislature
Second Regular Session
House: COM DPA 9-0-0-1 | 3
rd
Read 58-0-1-0-1
Senate: FICO DPA/SE 5-2-0-0 | 3
rd
Read 21-7-2-0-0
HB 2204: workers' compensation rates; deviation
NOW: workers' compensation; premiums
Sponsor: Representative Livingston, LD 28
Senate Engrossed
The House Engrossed version of HB 2204 allows certain insurers to file a premium
credit of up to 5% from the rating organization's uniform rate filing based on a
policyholder's membership in an association.
The Senate adopted a strike-everything amendment that does the following:
Overview
Allows an insurance carrier to reduce the amount of premiums paid by an employer by up to
5% if specified criteria are met.
History
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 medi cal costs,
rehabilitation and lost wages for an employee who has suffered injury or illness in the course
of performing job related duties. Employers are statutorily required 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 (A.R.S. §§ 23-107 and 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 3% 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 5% if the insured employer: 1) complies with statutory drug testing policy
requirements; 2) conducts drug testing of prospective employees; 3) conducts drug testing of
☐ Prop 105 (45 votes) ☐ Prop 108 (40 votes) ☐ Emergency (40 votes) ☐ Fiscal Note HB 2204
Initials PB Page 2 Senate Engrossed
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).
Provisions
1. Allows an insurance carrier to reduce the amount of premiums paid by an employer by
up to 5% if:
a) the insured employer is part of a membership organization whose membership 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;
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. (Sec. 2)
2. Makes technical and conforming changes. (Sec. 1-3)