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November 2019 13
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assigned by their workers’ compensa on insurer.
The NCCI establishes advisory-loss costs for each job Idaho recognizes the defi ni on of payroll for workers’
classifi ca on in Idaho. Loss costs, also known as base loss compensa on premium calcula on purposes established by
costs or pure premiums, are rate factors that represent the NCCI.
the direct cost to insurers of paying for the workers’
compensa on benefi ts and medical care provided to For calcula ons of workers’ compensa on premiums in
employees within a job classifi ca on, excluding overhead Idaho, payroll includes: wages and salaries; commissions;
bonuses; holiday pay, vaca on pay or sick pay, but third-
and other opera ng expenses of the insurers but including
the insurers’ costs of legal defense and cost containment. party sick pay is excludable from payroll; the cash value
The NCCI’s annual updates to Idaho’s advisory-loss of meals, rent and lodging, but not occasional supper
costs are subject to review by the Idaho Department of money provided as a de minimis fringe benefi t; the cash
Insurance. Private insurers have the op on of fi ling with the value of gi cer fi cates, gi cards and store credits given
to employees, although the cash value of discounts from
Department of Insurance loss costs that are diff erent from
those fi led on their behalf by the NCCI. the employer’s goods or services purchased by employees
is excludable from payroll; allowances for tools; annuity
Insurers mul ply the loss cost for a job classifi ca on by a plans for employees; amounts deducted from employees’
loss-cost mul plier (LCM) to determine their basic premium pay for savings plans, re rement plans or Internal Revenue
rate for that job classifi ca on. The loss-cost mul plier, also Code Sec on 125 cafeteria plans and reimbursements to
known as a loss-cost modifi ca on, an expense-loading employees for business expenses that were not confi rmed
factor or a rate mul plier, is a rate factor that accounts for by an employer’s records as valid.
an insurer’s opera ng expenses and represents the insurer’s
profi t component. The Department of Insurance maintains Payments exempt from payroll reportable to insurers:
a list of private insurers authorized to provide workers’ Certain types of payments are not reportable payroll for
workers’ compensa on premium calcula ons in Idaho,
compensa on coverage in Idaho and the primary LCMs
assessed by each. Insurers are not required to annually fi le a including: ps and gratui es; employer payments to
new LCM, and the most recently fi led LCM remains in eff ect. employees’ group insurance or group pension plans,
Most LCMs are from 1 to 2. although amounts employers pay that would have been
deducted from employees’ pay to fulfi ll legal requirements
The basic premium rate o en is expressed as a whole of insurance and pension plans are included in payroll;
number for each $100 of payroll on premium-collec on employer payments to employees’ savings plans, re rement
documenta on sent by insurers to employers. Insurers can plans or cafeteria plans; the cash value of vehicles provided
fi le changes that aff ect basic premium rates at any me. by an employer for employees’ use; the cash value of
Each employer’s gross payroll for employees assigned to memberships to organiza ons provided by an employer
a job classifi ca on is mul plied by the basic premium rate to employees; the cash value of ckets to plays, movies,
charged by the insurer for that classifi ca on to determine concerts and other entertainment performances; airfare
the basic premium due for employees in that classifi ca on. and vaca ons provided by an employer for employees;
The sum of the basic premiums due among an employer’s allowances for work uniforms; military leave pay; rewards
job classifi ca ons is the total basic premium due for that for inven ons or discoveries and severance payments,
employer, although amounts based on an employer’s although payable accrued vaca on me is included in
exposure to certain types of risk can be added to an payroll.
employer’s total basic premium.
Addi onally, while over me generally is paid at the rate
The sum of an employer’s total basic premium and risk- of at least me and one-half the regular rate of pay
exposure addi ons is the employer’s total subject premium. for hours worked in excess of 40 in a week or when an
The total subject premium for an employer that has been employee works in excess of the threshold number of
opera ng in Idaho for at least 21 months can be adjusted by hours in a period when over me extra pay becomes
an experience-modifi ca on factor. required, mandatory extra pay for over me in excess of an
employee’s regular rate of pay generally is excludable from
An employer’s applicable payroll for calcula ng premiums payroll for workers’ compensa on premium calcula ons.
due for a period is the employer’s es mated gross payroll
for the period. A er the end of the period, the employer’s Experience-modifi ca on factor: Premiums for employers
actual gross payroll for the period is compared with the that paid a threshold amount of premiums in the most
es mated gross payroll to reconcile premiums due or recent 24 months or that established a threshold amount
recoverable. of average annual premiums over their experience period
are mul plied by an experience-modifi ca on factor, also
Defi ni on of payroll reportable to insurers: Employers must
determine their gross payroll for each job classifi ca on Con nued on Next Page

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