What happened?

On October 29, 2024, Governor Shapiro signed Senate Bill 1232 (2024 Act 126), which amends the Pennsylvania Workers’ Compensation Act.
 

Quick Summary:

• The law will require the option of direct deposit for wage loss benefits, aiming to modernize and streamline the payment process.
• Employers and insurers must establish a direct deposit system by December 28, 2025, notify claimants of this option, and manage the authorization process, ensuring compliance within the specified time limit.

What are the details?

Key Provisions

• Direct Deposit Requirement: If requested, wage loss benefits must be paid via direct deposit to the claimant’s account, reducing reliance on paper checks and streamlining the payment process unless the claimant requests payment by paper check due to the lack of a suitable bank account.
• Notification to Claimants: Insurers or self-insured employers must inform claimants about the direct deposit option immediately upon its availability or when issuing a Notice of Compensation Payable and must provide a Commonwealth-issued authorization form either via mail or electronically.
• Implementation Deadline: organizations have one year to comply with the new requirements.

• Authorization Process:
  • Claimants must complete a valid payment authorization form to initiate direct deposit, which can be submitted electronically if accepted by the insurer or employer.
  • A direct deposit must be implemented within 45 days of receiving a valid authorization form.
  • If a claimant does not submit a valid authorization form within 30 days of notification, payments must be made by paper check temporarily.
  • Claimants can change their deposit account up to twice per calendar year, with additional changes allowed by court order.

• Special Cases:
  • Lump sum settlement payments from compromise and release agreements can be made by paper check unless otherwise agreed.
  • Payments for claims expected to last 60 days or less can be made by paper check unless the claimant has previously received direct deposit payments and confirms the account’s validity.

• Standard Payment Authorization Form: The Department of Labor and Industry will develop a standard form for use by all insurers and self-insured employers. The form will include claimant information, financial institution details, and acknowledgments regarding the accuracy and security of the provided information.

Business Considerations

• Employers should establish a direct deposit system before the deadline and comply with the new requirements, ensuring timely and efficient wage loss benefit payments.
• Employers should inform claimants about the direct deposit option when available or issue a Notice of Compensation Payable, provide authorization forms, develop protocols for handling electronic submissions, and implement direct deposit within 45 days.
• Employers should prepare for exceptional cases by having procedures for lump sum payments and short-term claims, ensuring compliance with the law while maintaining flexibility for claimants’ needs.

Source References

• PA SB 1232 2024 (Act 126)

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