The WCB Alberta is Changing
In 2017, for the first time in more than 15 years, the WCB Alberta underwent a comprehensive review. The results of the review were compiled and introduced to the Alberta legislature as Bill 30: An Act to Protect the Health and Well-being of Working Albertans which was passed into law in late December 2017. The recommendations made by the review panel were to ensure a Workers’ Compensation system that is fair and provides greater benefits to support injured workers. But at what cost to employers?
The amendments to the Workers’ Compensation Act (WCA) will be realized in the form of policy changes mostly affecting workers and employers. A number of policy changes came into effect January 2, 2018 and the rest will follow throughout 2018; some requiring additional input from concerned stakeholders.
So, just what has changed and what does it mean to Alberta workers and employers? Let’s start with the changes that have already come into effect.
There are four amendments to the WCA that came into effect on January 2, 2018 that directly impact workers and employers:
Policy 04-01, Part II, Application 4: Cost-of-Living Adjustment (COLA) – there has been a change to the formula used to establish the COLA for 2018 and subsequent years, which removes a 0.5% reduction previously used in the calculations. The COLA is now based on 100% of all the items included in the Alberta Consumer Price Index (ACPI).
This change not only affects wage replacement benefits but other benefits issued to injured workers by the WCB including: Home Maintenance Allowances, Funeral & Death Benefits and Payment to Dependant Children.
This will have a positive impact on injured workers, as the COLA calculation will result in their benefits remaining the same or increasing by .5% over what they would have been under the previous formula.
For employers, it represents a potential increase in claims costs since the new calculation used to establish COLA is .5% higher than the previous formula. However, since there is a defined window that costs used to determine WCB premiums can accumulate on a claim and claims that qualify for a COLA often falls outside this window, the impact of this new calculation is limited.
Policy 04-04, Permanent Disability – amendments to this policy included new provisions for claims occurring on or after January 1, 2018, changes to the Earning Loss Payment (ELP) retirement award and some policy updates for consistency and clarity. In order to differentiate between the new provisions and accidents occurring before January 1, 2018, a new application was added which addresses the following:
The definition of permanent disability has been revised to clarify that although impairment of an injured workers ability to work may be permanent, impairment of their earnings capacity may not. This recognizes that an injured worker’s ability to earn a living may change and improve following their return to work even if their physical status has not altered and allows the WCB to review earnings capacity more frequently and adjust benefits accordingly.
The definition of ‘normal retirement age’ has been modified and is now defined to be 65 or 5 years following the Date of Accident, whichever comes later. This date can be extended if an injured worker can provide sufficient and satisfactory evidence that, if it had not been for the accident, they would have continued to work beyond the normal retirement date. The change is reflective of current workforce trends that suggest many workers continue to work full or part time beyond the age of 65.
The calculation of the Earnings Loss Payment (ELP) retirement adjustment has been simplified and now takes into consideration an injured workers total wage loss benefits from the date of accident to the date of retirement or date they regained their pre-accident earnings capacity. It also acknowledges the period of time that a worker was unable to contribute to a pension plan due to a work-related injury.
The amendments also address what happens when a previously retired worker returns to the workforce and has already received a retirement adjustment.
Finally, it is now explained how costs associated with an ELP and Temporary Earnings Loss (TEL) differ and how they are charged to the employer’s account. Most ELP’s, TEL’s, retirement awards, extended retirement dates and re-entries into the workforce occur well into the life of a claim, as a result the changes to this policy have very little, if any impact on the costs used to establish employer premiums.
Policy 04-06 Part II, Application 1 – Health Care – addresses Recommendation 15 of the WCB Review panel’s final report and resulted in a rewording of the policy to make the options clearer to the worker.
Recommendation 15 focused on the WCB enabling injured workers to choose their own healthcare professionals, initially and subsequently throughout their claim, so long as the treatment provider met the criteria established by the WCB.
There is no direct monetary impact as a result of this change; however, it does promote a better ‘patient-healthcare professional relationship’ by allowing an injured worker to have a say about who provides their treatment. Ultimately, this can positively influence recovery periods, improve return to work timelines and reduce claim costs.
Policy 04-08 Part II, Application 1 – Fatalities – the introduction of a new lump sum fatality award paid to the dependents of or the estate of a worker who dies as a result of a work-related accident or occupational disease. It is a one-time benefit up to the maximum of the Non-Economic Loss Payment (NELP) for the same calendar year as the worker’s death ( maximum of $90,772.02 in 2018). The amount of the lump sum is offset by the cumulative percentage of any NELP awarded to the worker on the current or any prior claims.
While it is hard to argue with any benefit that assists a worker’s family after the tragic loss of a loved one, the direct impact that this has on the employer is undeniable. Many work-related deaths occur instantly, shortly following the accident or within the 3 year window that costs accumulate on a claim. As such, if the award is issued within the 3 year window following the date of accident, the impact will be felt by employers in their premium calculations. Since the WCB calculates the average cost of fatality claims each year and distributes the cost equally amongst the employers who experienced a fatality in that year, fatality claims just became even more expensive to Alberta employers.
The legislative changes that have been made certainly favour workers by improving the benefits they are entitled to. The burden on the employer is relatively limited, as many of the changes only come into effect after the point where claim costs are no longer used as part of premium calculations. The area where employers will really feel the new changes is with the new lump sum award on fatality claims; however, those claims make up less than 1% of the total number of WCB claims reported in any given year and only the employers with a fatality claim on their record are affected.
Moving forward, there are proposed policy changes that are scheduled to come into effect throughout the remainder of 2018. The WCB is looking for consultation and feedback from now until March 6th, 2018, in the following areas:
Code of Rights and Conduct – intended to describe the rights of employers and workers in their interactions with the WCB and how the WCB is committed to operate in recognition of this code.
Interim Relief – provided for workers and employers while they have WCB issues under appeal. Every injured worker and Alberta employer covered under the Workers’ Compensation Act should have the right to appeal any matter of concern without suffering undue financial hardship.
Obligation to Return Injured Workers to Work – employer’s duty to provide return to work options and a workers’ obligation to cooperate with return to work plans.
Estimating Earnings Capacity – ensuring that the correct re-employment factors when making reasonable efforts to assist an injured worker in his job search.
There are aspects of these proposed changes that, if put into practice, could significantly increase claims costs and negatively impact employer premiums. This is an excellent opportunity for Alberta employers, workers and concerned stakeholders to speak up and help shape the future of the WCB in Alberta. In the coming weeks, we will be exploring the proposed changes in further detail and providing some insight on the impact these changes may and could have on Albertans.
If you would like to discuss the recent or proposed changes in further detail, you can contact us directly, during business hours, using our chat feature, or by phone at 1-844-377-9545, you can reach us by email at [email protected], [email protected], and you can always connect with us on Facebook, Twitter, or LinkedIn.