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League of Minnesota Cities Insurance Trust 145 University Avenue West, St Paul, MN 55103-2044 (651) 281 -1200 • (800) 925 -1122 Fax: (651) 281 -1298 • TDD: (651) 281 -1290 www.lmnc.org RISK MANAGEMENT INFORMATION THINGS TO THINK ABOUT WHEN RENEWING YOUR CITY'S WORKERS' COMPENSATION COVERAGE The LMCIT workers' compensation program is specially designed for Minnesota cities. LMCIT's coverage is unique because it picks up some related risks that standard workers' compensation insurance policies don't cover. This program also offers a number of coverage and premium options, deductibles and credits. LMCIT tries to make buying coverage for the city's workers' compensation exposures as simple and straightforward as possible, but there are still a number of decisions the city needs to make in renewing its work comp coverage. This memo is intended to serve as a guide for cities and agents when thinking about purchasing or renewing work comp coverage. Boards and commissions Elected officials Unlike city employees, elected officials are not automatically covered by the work comp law. Cities wishing to cover elected officials need to pass an ordinance or resolution to make the elected officials "employees" for purposes of work comp coverage. If the city does not pass the resolution, a city official that is injured while on city business wouldn't receive any work comp benefits from the city. This mostly affects mayors and council members, but it could also apply to clerk, treasurers, and other officers in cities where those are elected positions. The 2006 premium rate for mayors and council members is $.41 per $100 of payroll. This rate is applied to the greater of either the official's actual salary or an imputed salary of $70 per week. In case of injury, an elected official would receive the same work comp benefits as any other city employee. Indemnity benefits would be based on the sum of his/her earnings from his/her regular employment plus the actual salary (if any) s/he receives from the city. An alternative to work comp coverage for elected officials is to purchase LMCIT's board member accident coverage. Under this option, cities can provide more limited benefits to council members injured or killed in the course of performing their duties. Accident policy rates are $12.75 per person per year. Benefits are paid for death or short-term disability. This program was originally developed a number of years ago as a low -cost alternative to work comp for elected officials. However, LMCIT has reduced the cost of work comp for elected officials very substantially since then, so the cost advantage of the accident coverage option is now minimal. - 2 4 -