League of Minnesota Cities Insurance Trust Administrator
Recently signed legislation mandates that public safety and healthcare workers who contract COVID-19 are presumed to have gotten it on the job and are therefore eligible for workers’ compensation. It’s critical we support those on the frontlines in this crisis. A volunteer firefighter exposed to COVID-19 on a call shouldn’t have to worry about their financial well-being if they need time off to recover. The League of Minnesota Cities Insurance Trust (LMCIT) supports the intent of the legislation – it was a step in the right direction.Adding these claims to the workers’ compensation system, though, also puts a financial burden on self-insurance pools like LMCIT. We’re owned and managed by our member cities. Cities, and their property taxes, are where we get the money to pay claims.
That works well in normal times. Our members strive to keep their staff healthy and safe. When someone does get hurt, the workers’ compensation system steps in and we take care of that person until they’re back on their feet.
Using a self-insurance pool to pay for this helps spread risk around. Some years, one city will have more claims. Another year, a different city will. Belonging to a pool smooths out the annual variations in costs and makes budgeting easier.
No Way To Spread the Risk
A pandemic changes the rules. When everyone is suffering the same kind of losses at the same time, there’s no way to spread the risk. While local governments maintain reserves, we’re also conscious of our obligation to not hold onto more money than we reasonably expect to need – after all, those are tax dollars.
That’s why we’ve approached the state with a plan to share the COVID burden. Just like the state has sought help from the federal government for costs it couldn’t budget for, we’re doing the same. We’re proposing to pay the first full percentage of COVID-related workers’ compensation claim costs that fall within the range of unexpected losses that we budget for. After that, the state would use its resources to help mitigate the impact on property taxes. This will guarantee the protection that first responders deserve while ensuring our local economies aren’t placed under further strain.
We’re encouraged by how clearly our colleagues at the state level recognize the financial consequences this issue could have for us. As we continue our discussion with them, you can follow along at: www.lmc.org/covid19.
