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Cuomo: new law cuts workers’-compensation costs

By Eric Reinhardt


Gov. Andrew Cuomo on Wednesday detailed a series of measures intended to reduce the cost to employers under New York’s workers’-compensation system 26 percent in 2014.


The measures would save businesses and local governments $300 million in annual expenses, the governor’s office said in a news release.


The Business Relief Act, which Cuomo signed as part of the 2013-14 state budget,  cuts the assessment to employers from 18.8 percent to 13.8 percent, the largest reduction since 1998, Cuomo said.


It also provides a one-time, workers’-compensation assessment savings to all self-insured employers of about $500 million.


The “improvements” in the workers’-compensation system will deliver “major” savings for New York businesses, Cuomo said in the news release.


“With the cost reductions in the workers’-compensation system, we are saving New York employers $800 million in 2013 and $300 million for each year moving forward, [representing] a tremendous savings that will be felt immediately by businesses, municipalities and school districts statewide. As we continue to make state government more efficient and take actions to make doing business in New York easier, we are also spearheading a comprehensive review of the current workers’-compensation system so that we can continue to find ways to deliver for our employers,” Cuomo said.


The Business Relief Act reduces the system’s operating costs (also known as assessments) in two ways, leading to $800 million in savings, according to the governor’s office.


The measure closes the re-opened case fund, which initially saves all New York employers a $300 million annual assessment.


In recent years, the cost of the re-opened case fund has grown “exponentially,” while failing to serve its originally intended purpose, Cuomo said.


The fund’s closure also reduces “unnecessary” litigation in the workers’-compensation system, another cost savings for employers, Cuomo said.


Additionally, the Business Relief Act simplifies the “antiquated, disjointed and overly complicated” system used to calculate employer assessments, the governor’s office said.


Unlike the old system, the new system charges all employers using the same methodology. As a result, it means a one-time savings in claim reserves of $500 million for New York’s self-insured employers, including most municipalities and school districts, Cuomo said.


In addition to these measures, the state has also launched two other initiatives this year that will have a “long-lasting” positive impact on the system, Cuomo said.


New York in late June began implementing the first phases of electronic reporting of injuries, known as eClaims.


By March 2014, insurers and third-party administrators will submit injury information electronically, instead of on paper. Electronic submissions will mean more claim information, “faster” payments of benefits, and a reduction in friction costs for employers, Cuomo said.


The Workers’ Compensation Board is beginning a project known as “business process re-engineering” to evaluate and re-imagine New York’s workers’-compensation system. The effort is intended to examine the state’s current workers’-compensation system, assess how well it meets goals, and re-create a system that “more effectively” serves the needs of injured workers and employers, the governor’s office said.


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