Ariz. Admin. Code § 20-5-1501

Current through Register Vol. 30, No. 50, December 13, 2024

Section R20-5-1501 - Definitions

In addition to the definitions provided in A.R.S. § 23-901, the following definitions apply to this Article:

1. "Act" means the Arizona Workers' Compensation Act, A.R.S. § 23-901 et seq.

2. "Administrator" means an individual or organization designated by a Self-Insurance Pool Board to manage the daily operations of a Self-Insurance Pool.

3. "Agreement to Process and Pay" means a written agreement that requires an entity to process and pay or guaranty the payment of another entity's liabilities.

4. "Applicant" means an entity or pool seeking initial or renewal authority to self-insure for workers' compensation, a Self-Insurance Pool seeking to add a new member, or a Self-Insurer seeking to Self-Administer.

5. "Authorization Date" means the date designated by the Commission on which self-insurance authority begins.

6. "Basic Premium Factor" means a factor used in the Retrospective Rating Plan formula to represent expenses of the Self-Insurer, such as acquisition, audit, administration, and profit or contingencies, but not taxes.

7. "Cash Flow Ratio" means a numerical relationship that reflects an entity's ability to meet current financial obligations out of cash flow and is calculated as follows: (cash flow from operations) divided by (current liabilities).

8. "Claim" or "claim" means a workers' compensation claim.

9. "Deviation Rate" means the rate applied to the Manual Premium to calculate a discount from the Manual Premium.

10. "D-Ratio" means a factor used in the Ex-Medical Plan that reflects the ratio of primary expected losses and total expected losses.

11. "Division" means the self-insurance office of the Commission.

12. "Ex-Medical Plan" means a method of determining the premium upon which taxes are calculated that provides for rate revisions based upon the Self-Insurer operating a medical facility with a program for providing medical, surgical, or hospital services to a majority of the Self-Insurer's employees that complies with the requirements of A.R.S. § 23-1070.

13. "Experience Modification Rate" means a ratio comparing actual losses to expected losses based on a formula determined by an approved Rating Organization or the Commission.

14. "Fiscal Year" or "fiscal year" means a 12-month financial or accounting period.

15. "Fixed Premium Plan" means a method of determining the premium upon which taxes are calculated in which neither losses nor incurred loss reserves are used for the net taxable premium calculation.

16. "Guaranteed Cost Plan" means a method of determining the premium upon which taxes are calculated that provides for a direct relationship, on an annual basis, of the premium for tax purposes and the Experience Modification Rate developed to reflect the loss payment and incurred loss experience of the Self-Insurer.

17. "Local Government Investment Pool" means a pooled investment fund operated by the Arizona State Treasurer according to A.R.S. § 35-326.

18. "Loss Conversion Factor" means a factor used in the Retrospective Rating Plan formula that is used to cover unallocated claims and the costs of the Self-Insurer's claims services.

19. "Manual Premium" means the aggregate payroll by individual Payroll Classification Code multiplied by the Payroll Classification Rate.

20. "Member" or "member" means an employer described in A.R.S. §§ 11-952.01, 15-382 23-961.01, or 41-621.01 that has joined with other employers to operate a Self-Insurance Pool.

21. "Parent Company" means a company that has sufficient ownership in another entity (the Subsidiary) to have control, directly or indirectly, of the Subsidiary.

22. "Payroll" or "payroll" means the total wages and salaries paid by an employer.

23. "Payroll Classification Code" means a four-digit numerical code assigned by a Rating Organization or the Commission to differentiate between the various job duties or scope of work performed by employees.

24. "Payroll Classification Rate" means a rate assigned to an individual Payroll Classification Code by a Rating Organization or the Commission.

25. "Public Entity" means an individual employer that is a state, county, municipality, school district, or any other entity with taxing authority.

26. "Public Entity Pool" means a workers' compensation pool organized under A.R.S. §§ 11-952.01, 15-382, or 41-621.01.

27. "Public Entity Trust Fund" means an internal service fund or sub-fund dedicated to workers' compensation or risk management established by a Public Entity from which money is used to pay workers' compensation claim liabilities and expenses.

28. "Rating Organization" means an entity that meets the requirements of A.R.S. § 20-363 and is approved by the Department of Insurance and Financial Institutions to establish rates, codes, and formulas used to calculate workers' compensation premiums.

29. "Renewal Date" means the date designated by the Commission by which a renewal application shall be filed with the Division.

30. "Reserves" or "reserves" means an amount of money that is set aside to satisfy the financial and legal obligations associated with a workers' compensation claim or group of claims.

31. "Resolution of Authorization" means a document issued by the Commission that grants authority to self-insure for purposes of workers' compensation.

32. "Retrospective Rating Plan" means a method of determining the premium upon which taxes are calculated that provides for a relationship between the premiums for tax purposes, the Experience Modification Rate developed to reflect the loss payment and incurred loss experience of the Self-Insurer, and the actual incurred losses for the tax year.

33. "Security" or "security" means any financial instrument authorized by R20-5-1521 through R20-5-1524, or appropriate documents renewing, amending, or continuing any of these.

34. "Self-Administer" means the process under which a Self-Insurer administers its own claims, once approved by the Division.

35. "Self-Insurance Pool" means a Public Entity Pool or Similar Industry Pool.

36. "Self-Insurance Pool Board" means a body of individuals that directs a Self-Insurance Pool according to R20-5-1527.

37. "Self-Insurer" means an entity authorized by the Commission to self-insure for workers' compensation and may include a Public Entity, an individual private employer under A.R.S. § 23-961(A)(2), a Public Entity Pool, or a Similar Industry Pool.

38. "Similar Industry Pool" means a pool with members in similar industries as authorized by A.R.S. § 23-961.01.

39. "Subsidiary" means an entity of which a Parent Company has sufficient ownership to have control, directly or indirectly.

40. "Third-Party Administrator" means an organization that processes workers' compensation claims for a Self-Insurer.

41. "Workers' Compensation Pool Loss Account" means an account or sub-account in the Workers' Compensation Pool Operations Account established by a Self-Insurance Pool from which money is used to pay workers' compensation claims, liabilities, and expenses.

42. "Workers' Compensation Pool Operations Account" means an account or sub-account into which premiums, investment proceeds, and other revenues are deposited for purposes of a Self-Insurance Pool.

Ariz. Admin. Code § R20-5-1501

New section made by final rulemaking at 28 A.A.R. 3435, effective 10/5/2022.