The Contracting Classification Premium Adjustment Program otherwise known as CCPAP is a workers compensation premium discount program for contractors. This premium discount program can drastically reduce the premium a contractor pays for a workers compensation. In this post I’ll discuss the CCPAP as administered by NCCI, what it is and how it works.
The CCPAP was developed to provide a premium credit for those contractors who pay their employees more than the average wage. To adjust the unfair premium difference between employers who pay higher wages to their employees and those who pay lower wages. Here’s where you should remember that basic workers compensation premium is determined by payroll times a rate per 100. So if you think about it, a contractor who pays his employees $15.00/hour will have a lower base premium than one who pays his employees $25.00/hour to do the exact same work. It’s the Contracting Classification Premium Adjustment Program that evens out the playing field.
The CCPAP program is available in 13 states:
- Alaska
- Connecticut
- Florida
- Hawaii
- Illinois
- Maryland
- Missouri
- Montana
- Nebraska
- New Mexico
- Oklahoma
- Oregon
- and Virginia
The CCPAP is not a national program rather each participating state has their own rules which include qualification and calculation of credits. You’ll also find there is typically some type of hourly pay rate threshold for entry into this program. Here’s some items required to qualify:
- Each state has their own eligibility requirements;
- All states have qualifying contractor codes;
- Ten of the thirteen states require a minimum of 50% of the manual premium be within the qualifying classification codes;
- Four of the thirteen states require the applicant to be experience rated.
How does it work? The contractor is furnished with a CCPAP application which they must complete and return to NCCI within 180 days from the effective date or anniversary rating date, which ever applies to their individual situation. The application will include the name of the insured contractor, the state in which CCPAP is being applied for, insurance carrier name, policy number, effective date of the policy and/or the anniversary rating date. The next step in completing the application is determining which calendar quarter data to use on the application:
- For an existing business you will use payroll and hours worked from the third quarter preceding the effective date of the policy. If the contractor did not perform contracting operations during the the entire third quarter then you will use the last complete quarter prior to the effective date where they did perform contracting operations;
- For a new business you will use payroll and hours worked from the first quarter after the effective date.
The application will have columns to fill in for a description of operations or classification, code, total wages paid and total hours worked. Once this information has been gathered and filled out on the application the application will need to be submitted to NCCI. Most applications will have the return address, fax or email indicated on them. The insurance company will then be notified and the credit will be applied to the policy.
The CCPAP must be applied for every year. There is no carry over and without completing and submitting an application, no credit will be generated or applied.
Once the application is received by NCCI the average hourly wage will be computed and the CCPAP credit will be generated as guided by the rules for the state in which the application is being made.
The insurance company is responsible for notifying their policyholders as to the availability of the CCPAP. Remember, these programs are not available in all states! But for those who use it the premium credits can be substantial!
A word of caution…while it is the responsibility of the insurance company to notify a policyholder, many do so by simply enclosing the CCPAP application along with a letter of explanation within the policyholders renewal policy.
The notice may be buried within the renewal packet and lets be honest…how many policyholders really read through their workers compensation policy? We’ve consulted on cases where a contractor should have been receiving 25% CCPAP credit but who was never schooled on or educated to the fact that it was available to them to use! One of the largest cases we’ve handled was due to this very situation!
So be aware! The CCPAP is a great tool for qualifying contractors to significantly reduce their workers compensation premium. It’s there to use. It’s there for a reason!
If you should have any questions about the CCPAP, how it effects your premium or whether your company may qualify just drop us an email or call! It’s the kind of work we do!
Hope this helps you out!
Thanks!
