If you are a construction company that purchases workers compensation insurance make sure you are receiving the CPAP workers compensation insurance premium credit. The Contracting Classification Premium Adjustment Program (CPAP) is a discount program that can reduce the amount that an a construction company pays in workers compensation insurance premiums. It was designed to help offset the higher workers compensation costs for union based shops who pay a higher wage rate. If your construction company buys workers comp insurance in NY and pays NY workers comp rates you must look into obtaining the CPAP credit. It could lower your NY workers compensation rates for your construction company by over 10% a year. CLICK HERE to have us review your workers comp policy to see if your construction company qualifies.
How does the CPAP Workers Compensation Insurance Premium Credit work?
CPAP Workers Compensation Insurance Premium Credit
The CPAP was developed to provide a premium credit for employers in the contracting and construction industry who pay their employees higher than average wages. The CPAP discount is calculated using the hourly rate of employees who are classified within the construction industry’s contracting class codes.
The system that is used to calculate workers’ compensation premiums groups employees according to risk-based classifications. For each classification, the employer must pay a certain amount of workers’ compensation premiums based on every $100 of payroll. Since high wages amount to higher workers’ compensation premiums, employers use the CPAP. The goal is to lower their premiums to an amount more level with what they would be paying if they paid their employees less. Think Union shops versus open shops. With the CPAP, employers aren’t penalized for paying their employees higher than average wages.
How does an employer apply for the CPAP Workers Compensation Insurance Premium Credit?
An employer must complete the CPAP application and return it to either the NYS Workers Compensation Rating Board or the National Council on Compensation Insurance (NCCI) if they are a multi-state operation within 180 days from either the effective date or the anniversary rating date of the workers’ compensation policy. The CPAP form MUST be completed every year as this is a use it or lose it proposition. Most construction companies do not have a process in place to reapply every year. especially if they use a pay as you go program as they automation makes them fall asleep at the wheel.
When completing the application, the employer must determine which calendar quarter data to use.; in NY it’s always Q3. The employer will also be asked to provide a description of operations or its classification, the appropriate classification code, the total wages paid and the total hours worked.
Once the application is received by the NYS Workers Compensation Rating Board or NCCI, the average hourly wage will be computed and the CPAP credit will be generated according to the rules for the state in which the application is being made. The insurance company will then be notified, and the credit will be applied to the policy.
In which states is the CPAP Workers Comp Premium Credit Available?
The CPAP is not a national program. Each participating state has its own rules, which include qualification and calculation of credits. Some states may also have an hourly pay rate threshold for entry into this program.
To see if the CPAP is available for your business, consult with Metropolitan Risk Advisory. For more information about the CPAP program and the potential to lower your workers’ compensation premiums by CLICKING HERE. You can also call (914) 357-8444 today!
Photo by Timon Studler on Unsplash 
