The Trust Fund and COLA
MGL c. 152, §§ 65(2)(a) and 34(B) call for the Workers Compensation Trust Fund to reimburse an insurer 100% of all supplemental COLA benefits paid to claimants with dates of injury before October 1, 1986. After October 1, 1986 insurers are entitled to reimbursement only to the extent the supplemental benefits are due to an increase greater than 5% in the Average Weekly Wage (AWW), however, after December 23, 1991, the change in the AWW (as it pertains to COLA) is capped at 5% and therefore extinguishes COLA reimbursement for injuries occurring there after.
Qualifications for reimbursement of COLA payments
Are you an insurer? Have you been paying COLA supplemental benefits under MGL c. 152, § 31 or § 34A? Is there an order that requires you to pay COLA?
If you answered yes to all of these questions you may be entitled to reimbursement from the Workers Compensation Trust Fund.
Determination of COLA
The first cost-of-living-adjustment (COLA) became effective on November 1, 1986 and was based on the average weekly wage (AWW) promulgated for October 1, 1986. COLA is based on the change in the AWW from the prior year to the present year. COLA is a 'supplemental benefit' which is equivalent to the difference between the adjusted (COLA) rate and the base rate, or original compensation rate.
Instructions for insurers to file for reimbursement of COLA
Only the insurer has the right to file for cost-of-living-adjustments (COLA) reimbursement with the Department of Industrial Accidents (DIA). The insurer's right to reimbursement is contingent on proof that COLA was paid, that it was due when paid, that the amount paid was figured correctly, and that the request for reimbursement was submitted timely under 452 CMR 3.03(3), i.e., within 2 years from the date the COLA payment was due.
Insurers must submit the following documents in addition to the form for COLA reimbursement.
- Indemnity records - proof of payment. Insurers must provide a record of what has been paid out to the claimant. These records may also be used to confirm that the reimbursement request was made in a timely manner.
- Proof that payments were due. Insurers must send out an annual CR 28 Form.
- This form will serve as proof that the insurer has not been paying COLA unnecessarily. Workers' Compensation insurance benefits are not affected by collecting Social Security benefits. However, if someone is receiving social security disability benefits, that could affect any cost of living adjustments. More information on this is available from the Social Security Administration. See also Guidelines for Insurers provided by SSA.
- Documentation supporting an obligation to pay either § 34A or 31 benefits. Insurers must provide a copy of the order or agreement that establishes their obligation to make payments under §31 or § 34A. Without proof of their obligation the insurer will be unable to prove COLA was in fact due, and therefore will not be reimbursed.
§ 34A claims
- In addition to the above documents any insurer requesting COLA reimbursement from the Trust Fund for a § 34A claim must also provide recent medicals to support the claim of permanent and total disability.
§ 31 claims
- In addition to the above documentation an affidavit from the widow stating that they are in fact still a dependent of the deceased may be required.