The Next Crisis in Comp: What Happens When the Funds Go Insolvent?

Workers’ Compensation coverage is not immune from the economic realities of the market and injured workers again fail to lose big time as the economy falters.  Many States have established UEFs, Uninsured Employer Funds and IF, Insolvency Funds but they are not uniform in application, some are based on weak economic foundations and others do not provide full benefits.

When the system fails on the employer side of the ledger the consequences trickle down to the employees on the benefit end. In a recent development in the State of New York 12 trusts embracing $200 Million have failed. The domino effect is now a real threat for 50 group trusts remaining covering 20,000 business and 500,000 employees.

States will now have to scramble to provide a resolution of this issue or the consequences of further economic impact will fall upon the taxpayers who are unable to accept the shift in this burden as injured workers seek alternate avenue for at least medical care.

Further Reading:

http://www.nytimes.com/2008/06/16/nyregion/16workers.html?ex=1371355200&en=53fca3d4cee371bd&ei=5124&partner=permalink&exprod=permalink