North Dakota Fund Balance – Another Review of the Same Numbers?
The North Dakota Fund balance situation has now caused another review with a different auditor.
This time the auditor, from Maine, is supposed to come up with reasons why there is a surplus. There are two reasons for a surplus in a Workers Comp fund. They are:
- Overcharging the fund members for their premiums
- Denying benefits to claimants
The first one is obvious. You get a surplus because you have had your fund members pay out more money in premiums than were paid out in benefits. How do you fix this problem? You may reduce premium increases or add to the premium decreases to your members. Another way to remedy the situation is to return the premiums to the members as dividends on at least every three years.
One area that usually causes premium overcharges is the over-reserving of the Workers Comp claims. If the file has a huge reserve and only a small portion of the reserves are paid out in benefits, then the fund takes in too much $.
The second one was supposed to be addressed in a round of audits by a provider earlier this year to see if too many claims were denied. Unfortunately, to date, no actual data was produced by the auditing company on how many files were legitimately denied.
I do hope that the current auditor hired by North Dakota realizes the two very obvious reasons for a fund to have an excess in reserves. We shall see.
On a side note, did anyone notice that another one of their prior auditors is now refusing to talk to them or turn over data? Who is making the final decisions on what auditors to use? I will revisit the North Dakota fund balance situation when the auditor produces some results.
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