Changes to CA Workers’ Compensation Coverage Exclusions July 2018

Attention Fusco & Orsini business clients! 

This is to inform you that there is an important change happening which requires your immediate attention. SB 189 is a new legislation that changed the Labor Code Section 3351. It revises the changes made in 2017 (AB 2883) on Workers Compensation policies.

These changes apply to new and renewal CA policy with effective dates of July 1, 2018 or later.

• There will be a new SB 189 Waiver/Exclusion Form that will be implemented, that will replace the AB 2883 Form. The carriers will be mailing or emailing a copy of the new forms directly to you to sign. If you don’t receive it, please contact our agency ASAP.
• SB 189 allows exclusion of the owners listed below with signed waivers:
• Corporate Officers and Members of Board of Directors who own at least 10% of the issued and outstanding stock; and are covered by a health insurance policy or health care service plan.
• Corporate Officers and Members of Board of Directors who own at least 1% of the issued and outstanding stock of the corporation if his or her parent, grandparent, sibling, spouse or child owns at least 10% of the issued and outstanding stock; and is covered by a health insurance policy or health care service plan.
• An owner of a professional corporation, who is a practitioner rendering professional services for which the professional corporation is organized (i.e. Medical Group, Law Firm, etc.); and stating that he or she is covered by a health care service plan or a health insurance policy.
• An officer or member of the board of directors of a cooperative corporation organized pursuant to the Cooperative Corporation Law; and stating that he or she is covered by a health care service plan or health insurance policy, and a disability insurance policy that is comparable in scope and coverage to a workers’ compensation policy. The Insurance Commissioner shall determine whether a disability policy is comparable in scope and coverage to a workers’ compensation policy.
• A person holding the power to revoke a trust with respect to shares of a private corporation held in trust, or general partnership or limited liability company interests held in trust.
• A general partner of a partnership or managing member of an LLC must execute a waiver to opt out of coverage.
• For those eligible, a signed Waiver/Exclusion Form must be submitted to the carrier for each officer. Please be sure to sign and send the SB 189 Waiver Form. Follow the instructions stated on the waiver/exclusion form. Any prior AB 2883 waiver/exclusion form becomes void by law.
• Carriers will backdate the signed waivers, up to a maximum of 15 days from the date of the receipt and acceptance.
• As a qualified officer, director, managing member or general partner, you must personally file a waiver of coverage to be excluded. If you don’t do so, you will be included in coverage and premium calculations.

Important: If the carrier provides an email address for you to send the signed waiver forms, we strongly advise you to send it through the email they provided. This is an effective way to document, if the carrier claims that he or she did not receive your signed waiver form.

Please be prepared to provide proof of health coverage, as the carrier may request a copy.

If you have any questions, do not hesitate to contact our office at (858) 384-1506 . Please make sure to review your renewal with your agents as well.

Thank you.