In an earlier blog post, we discussed the Missouri work comp Second Injury Fund, a state program that encourages employers to hire people with pre-existing conditions and disabilities. The employer pays into the fund at a flat rate and, should an employee suffer a "second injury" on the job, the fund will help cover the costs. When these first funds started after World War II, they helped maimed returning veterans obtain jobs. As the decades passed, the fund was used to compensate injured workers in Missouri who came about their disabilities in a non-military context. Unfortunately, recent times have depleted these funds, leaving them on the brink of insolvency.
Last week's Wall Street Journal discussed how several states are facing shortfalls in their Second Injury funds. Twenty states have already shut down these funds and more are at the brink of insolvency. Even New York State, the first state to create a Second Injury Fund, ceased accepting new claims in July 2010. Use of the funds by veterans from the wars in Iraq and Afghanistan have only pushed these funds faster into insolvency, which is ironic considering that the Second Injury funds were initially created specifically to benefit veterans.
Second Injury funds encourage employers to hire disabled workers by limiting their financial liability. Typically, when a worker gets injured on the job he is compensated by his employers' workers' compensation insurance. Rates that employers pay vary based on the risk associated with the job. But for the Second Injury Fund, employers pay a flat rate. Therefore, payment out of the Second Injury Fund could be less costly than the cost of increased workers comp premiums for employers. This incentive to use the Second Injury Fund to pay out claims have left many states struggling with shortfalls.
Unfortunately, Missouri's Second Injury Fund is one of those the Wall Street Journal singles out as being on the brink of insolvency. Last year, the fund received $43 million in payments from employers, but took on $77 million in liabilities. State Attorney General Chris Koster described the situation as "spiraling out of fiscal control." Much of the fund's troubles can be traced back to a 2005 law that capped the Second Injury surcharge on workers' compensation premiums at 3%. Currently, there is support to raise the surcharge cap to 4.5% or 6%, but that may not be enough to save the Fund. Many of the businesses that supported the 3% cap back in 2005 are the ones campaigning for an increased surcharge now.
With resources becoming even scarcer, it becomes vital that you have an advocate who can navigate the legal pitfalls. An experienced Missouri Work Comp attorney will provide you with the representation you need to fight for the benefits you deserve. Please contact Sansone/Lauber today for a free initial consultation at (314) 863-0500.
Source: "State disability funds going broke, and going away" by The Associated Press, published at WSJ.com.
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