56% of private employees are now covered by Workers’ Compensation insurance

admin — Sun, 04 Feb 2024 13:59:37 +0000

56% of private employees are now covered by Workers’ Compensation insurance

FEBRUARY 4, 2024

After almost 4 months since the RMI Workers’ Compensation Law was implemented, around 2,790 employees of the estimated 5,000 labor force employed by private companies and family- owned businesses in the country are now protected by workers’ compensation insurance.

As reported recently by two local insurance carriers, Moylan’s Insurance Underwriters (Marshalls), Inc. and Marshall Insurance Agency (MIA), around 165 (about 20%) of more than 800 active private employers on Majuro, Ebeye/Kwajalein have already taken workers’ compensation insurance for their employees. These employers have an aggregate total of about 2,790 workers and are comprised of private businesses, a few state-owned enterprises (SOEs), construction companies, banks and financing companies, big retailers and wholesalers, taxi operators, restaurants and small mom and pop stores.

As agreed with MISSA, the two local insurance carriers have offered a minimum premium of $150- $200 per year to small businesses employing 1-4 workers, which comprised about 70% of the more than 800 active private businesses in the country. This incentive prompted dozens of small mom and pop stores to cover their workers with workers’ compensation insurance. The 20% reduction in the premium rates that were patterned from the CNMI tariff rates prior to October 1, 2023 has also provided a significant savings especially for big companies and will remain in force for two years (until September 30, 2025).

It is important to note that under the WC Law, the RMI Government shall be the (self) insurer of the 5,000 estimated employees of the Government, its agencies and instrumentalities, including public corporations, state owned enterprises (SOEs) and any other organizations approved by the Nitijela, elected officials of both the national and local Governments, local government employees whose operations are being funded in full by the RMI Government and subject to audit under the supervision of the National Government. As part of the procedures, a PSC appointed “Workers’ Compensation Officer” shall process claims from Government employees who sustained work related injuries, illness or death that are covered under the WCP. MISSA will then review the claims and when approved by the Administrator, a Compensation Order is issued. Payments shall come from the Government Self-Insurance Fund.

Last month, MISSA’s senior officers and Task Force members, together with representatives from Moylan’s and Marshall Insurance Agency, have met with Ebeye employers and employees to discuss the implementing rules and regulations of the RMI Workers’ Compensation Law.

The highlights of the Workers’ Compensation program follow:

Death benefits of $1,200 for funeral expenses and $40,000 for workers who are fatally injured during the performance of their work.
Disability (temporary and permanent) benefits due to injuries while at work.
Medical/hospitalization benefits arising from injuries/accidents during work.
Maximum coverage for disability wages is $40,000 per claim.

Although there is a $40,000 cap on wage-related benefits covering death, temporary and permanent disability, the reimbursement for the cost of treatment, medical expenses and rehabilitation, has no limits. One serious work-related injury may require treatment overseas which may cost well beyond the $100,000 limit set by the Ministry of Health & Human Services.

In a related development, the Cabinet has approved the Workers’ Compensation Regulations 2023 during its meeting on December 29, 2023. With the approval of the regulations, MISSA has now the legal authority to implement strictly all the provisions, rules and procedures of the RMI Workers’ Compensation program that started on October 1, 2023.

MISSA’s Tax Compliance and Audit teams are now closely monitoring those who have not yet complied and will soon start issuing notices and imposing penalties in accordance with the WC Law. MISSA wants to encourage the non-compliant employers (mostly small family businesses employing 1-4 workers) to pay the $150-$200 minimum premium being offered by the two local insurance carriers. They need to realize that when they delay their workers’ compensation coverage, they are taking a serious financial risk as they may pay up to $40,000 for work-related injuries, ailments or death of their workers. Further, the cost of treatment, medical expenses and rehabilitation, has no limits. A few years ago, one claim in CNMI has reached $4 million.

Penalties

The Administrator may assess a criminal penalty to employers for:

Failure to provide or renew workers’ compensation coverage: maximum of $1,000 per year or by imprisonment of not more than one year, or both.
Where the total annual premium for all employees is more than the maximum penalty of $1,000 and the Administrator has sufficient reasons to believe that an employer has intentionally decided to pay the $1,000 fine in order to avoid covering the costs of total annual premium for all employees, the Administrator may seek a Court of competent jurisdiction to penalize such employer up to the amount of the total premium, plus $1,000, or by imprisonment of not more than one year, or both.
Failure to submit an Employer’s Report of Worker’s Injury/Death (Form WCA-101) within 10 working days of employer’s knowledge of the injury/death: $5.00 per day but not to exceed $500.00.

The Administrator may bring action against an employee or employer/insurance carrier for:

Misrepresentation. Any person who willfully makes false or misleading statement or representation shall be guilty misdemeanor and upon conviction, shall be punished by a fine of not more than $1,000.00 or by imprisonment not to exceed one year, or both.
Unlawful deduction of salary. Any employer who makes a deduction from the salary or wages of an employee for the purpose of paying workers’ compensation premium shall be guilty of misdemeanor and upon conviction, will be subject to a fine of not more than $1,000.00.
Tampering with Evidence. Any employer who knowingly tampers with a property belonging to such employer following an injury to an employee, with the intent to avoid the payment of compensation, shall be guilty of a misdemeanor and, upon conviction, shall be fined not more than $1,000.00, or be imprisoned not more than one year, or both.
Defrauding the Program. Any employer who knowingly and intentionally defrauds the program for the purpose of avoiding payment of worker’s compensation shall be guilty of misdemeanor and shall be fined not more than $1,000.00, or be imprisoned not more than one year, or both. In the case of a corporation, the president, secretary and treasurer shall be severally, jointly and personally liable for imprisonment and/or fine.