Basic rate is 2.7% on new employers other than construction contractors, who pay the average construction contractor rate. Rate for fully experience-rated employers (after 4 years experience) may vary from 0.06% to 10.3%, depending on the employer's experience rating and solvency of the fund. Total tax rate calculation is based on the following components:
(1) Nonchargeable Benefit Component (NBC): a rate of 0.06-1% to cover certain pooled costs. The 1% rate is charged to employers with recent claims filed against their accounts. If employers' CBC rate (see below) is less than 0.2% or if they have not had any benefit charges over a number of consecutive years, this rate can be reduced in accordance with the following schedule:
If Number Of Consecutive
Years Without Claims Is: |
Rate Is: |
| |
2003 |
| 5 (or if CBC rate is less than 0.2%) |
0.10% |
| 6 |
0.09% |
| 7 |
0.08% |
| 8 |
0.07% |
| 9 |
0.06% |
(2) Experience Account (5th or subsequent year of liability), which has two parts:
| |
(a) Chargeable Benefit Component (CBC), a rate of 0-6.3% measured by the "benefit ratio" (benefits charged to employer's account in the last 5 years as a percent of employer's taxable wages in those years).
(b) Account Building Component (ABC), a rate of 0-3% based on a "reserve ratio" deficiency (amount by which an employer's actual reserve falls below 3.75% of total payroll). If overall trust fund balance is at least 1.875% of all contributing employers' payrolls, employer's deficiency, as defined above, is multiplied by 0.25, not to exceed a 2% rate. Otherwise, employer's deficiency is multiplied by 0.5, not to exceed a 3% rate.
|
If overall trust fund balance is 1.2% of all contributing employer's payrolls, all fully experience-rated employers (after 4 years experience) receive a rate reduction of the greater of 10% or 0.1 percentage points in the rate determined by components (1) and (2) above. (The 10% reduction is not in effect for 2005 or 2006 rate years.)
(3) Solvency Tax, a rate of 0-2% based on a "reserve ratio" deficiency, imposed only on "negative balance" employers (those with deficit in experience account as of prior June 30) and only during years when the fund has interest-bearing loans outstanding.
