Cost relief and cost reallocation - Archived Sep 16, 2024

A cost relief review may be triggered by requests from an employer or their representative, or initiated by a WCB industry specialist, supervisor, or decision maker.

A review can occur at any time. WCB decision makers review for cost relief as soon as:

• A claim is reviewed for initial entitlement.
• A claim is reviewed after assignment.
• A non-economic loss payment or permanent partial disability award is implemented.
• An entitlement decision is updated which changes the level of responsibility.
• An economic loss payment or permanent partial disability award is implemented.
• The worker’s recovery is prolonged relative to the diagnosis.
• Costs should be split between industries or employers.
• Claims costs exceed the rate as outlined in policy for back claims.

The system automatically applies cost relief on the following policies and circumstances:

• Compensation overpayments (system created)
• Level 1 home maintenance allowance (previously called Independence allowance)
• Concurrent earnings
• Medical investigation (except for subsequent lay offs) Employer Fact sheet – Medical Investigation [PDF, 0.04MB]

When cost relief is applied automatically, there are no tasks for the decision maker.

When there is a non-complex prolonged recovery due to aggravation of a pre-existing condition or a concurrent condition, the eCO system automatically processes the cost relief decision after the decision maker updates the eCO Injury Details screen with the necessary information. Refer to the eCO Injury Details screen for automated cost relief (aggravation of a pre-existing or concurrent condition) section.

An employer is eligible for cost relief when a worker has a pre-existing conditionA pre-existing condition is a physical or mental condition which pre-dates a work-related injury. that has prolonged the period of recovery for the compensable injury beyond the expected recovery period for that injury. This includes physical injuries (both back injuries and non back injuries), occupational diseases, psychological and psychiatric conditions. The pre-existing condition may have been a separate factorA separate factor means the pre-existing condition was not affected by the compensable injury. or aggravated by the accident. Employers that are part of the Industry Custom Pricing Program (ICP) may not qualify for cost relief for aggravation of a pre-existing condition that results in a prolonged period for disability. Refer to the ICP section for more information.

Note: A neck (cervical) injury is not considered to be a back injury under the back cost relief policy. An aggravation involving the neck would be considered under Policy 05-02 Part II, Application 1 - General.

When cost relief is effective and how costs are calculated

For non-back injuries, cost relief may be applied for all costs beyond the expected recovery for the compensable condition or injury. The effective date can be from the onset of the prolonged period of recovery or the date of accident. When the prolonged period of recovery only lasts for a certain period, cost relief is applied only for that period.

In some cases, the entire period of recovery may be due to the pre-existing condition (for example, a worker inhales dust which aggravates their pre-existing cystic fibrosis condition causing the entire period of disability). In these cases, the decision maker determines if a worker without a pre-existing condition would have developed an injury based on the same accident or exposure and, if so, what the expected period of recovery would be for the injury. If not, cost relief is applied the day after the date of accident.

For back injuries (excluding neck injuries) with dates of accident:

• On or after September 1, 2018, cost relief is applied for all claim costs exceeding eight times the worker’s weekly compensation rate. The dollar value will differ for all workers as the amount is based on the worker’s individual earnings.
• This should be calculated using the rate in effect at eight weeks post date of accident. This includes using the base rate (worker is seasonal) when it is in effect at that time (that is, eight weeks post date of accident).
• Before August 31, 2018, claim costs exceeding the dollar value of eight times the weekly maximum compensation rate in effect on the date of accident are relieved. Refer to Policy 04-01, Part II, Addendum A for a list of maximum compensable earnings. The dollar value is the same for all workers, regardless of the worker's individual earnings at date of accident.

Considerations for when there is one or more compensable injury and/or pre-existing condition

When it is determined that the worker has:

• More than one compensable aggravation of a pre-existing condition it must be determined if the period of recovery has gone beyond the expected period of recovery for each of the compensable aggravations. If two or more compensable aggravations resulted in a prolonged period of disability, cost relief is applied based on the latest date the worker would have recovered had it not been for the pre-existing condition.
  
  Example:
  A worker has an aggravation of pre-existing knee tear (medial collateral ligament) and an aggravation of pre-existing major depressive disorder. The Disability Duration Reference indicates that the worker would have recovered from a knee tear within twelve weeks. The Medical Consultant indicates that, had it not been for the pre-existing depression, the worker likely would have recovered within six months from depressed mood. Cost relief should be applied six months from the date of accident because the worker's period of recovery for the first six months of the claim is reasonably related to at least one of their compensable conditions. If cost relief is applied at twelve weeks based on the anticipated period of recovery for the knee, the costs related to the compensable depression would not be reflected on the employer's experience account.
• One (or more) compensable aggravation and one (or more) condition that has not been aggravated, it must be determined if the period of recovery has gone beyond the expected period of recovery for the condition that has been aggravated.
  
  Determine the date the worker would have recovered from the pre-existing condition that was aggravated as if the worker had not sustained any other injuries. Next, determine if the worker has recoveredRecovery means the date that no further improvement of the condition(s) is expected. from the compensable condition that was not aggravated and, if so, on what date they recovered from the condition. Cost relief is applied based on the latest of the two dates. If the worker has not yet recovered from their compensable condition, cost relief is not applied until they have recovered.
  
  Example:
  A worker has an aggravation of pre-existing knee tear (medial collateral ligament) and has sustained a femur fracture. The Disability Duration Reference indicates that the worker would have recovered from a knee tear within two to twelve weeks. The worker recovers from their femur fracture at 29 weeks after the DOA. Cost relief should be applied at 29 weeks from the date of accident. If we apply cost relief at twelve weeks based on the anticipated period of recovery for the knee, the costs related to the compensable femur fracture will not be reflected on the employer's experience account.

Industries in the ICP programSee Industry Custom Pricing - Employer Fact Sheet [PDF, 0.07MB] for more details have voted to waive cost relief when an aggravation of a pre-existing condition results in a prolonged period of disability. As such, cost relief is not granted for prolonged periods of recovery due to an aggravation of a pre-existing condition for the time the employer's industry is participating in the ICP program. This includes aggravation of pre-existing back and non back injuries. Cost relief can be reviewed for ICP employers for any other reason (such as concurrent condition(s) that prolonged the worker’s recovery, delay in hospital admission, etc.).

An employer who is participating in ICP as of the date of accident may be identified by the ICP flag beside the policy number in eCO. However, there are circumstances in which the ICP flag is displayed but the employer is eligible for partial cost relief. In addition, the ICP flag is removed from a claim when it is more than four years after the date of accident year even if the employer is still participating in ICP. To ensure the employer is eligible for the cost relief, it is a good practice for the decision maker to check the Cost Relief Table before applying cost relief regardless of whether an ICP flag is displayed in eCO.

An employer is eligible for cost relief when there is a concurrent conditionA concurrent condition is a separate, non-compensable condition that exists at the same time as the compensable disability. that has prolonged recovery from the compensable injury. The concurrent condition must not have been aggravated by the compensable accident or injury.

The onset of the concurrent condition can be either before or after the date of accident except when the date of accident is before June 1, 2017. In this case, the concurrent condition must have existed before the date of accident.

When the concurrent condition impacts the worker’s treatment or healing of the compensable injury and prolongs their recovery, (i.e., period of disablement) from the compensable injury, the employer may be eligible for cost relief for that period. For example, the worker has a non-compensable wrist surgery that delays their treatment for a back injury prolonging their recovery or the worker has diabetes which delays their healing from an ankle fracture prolonging their recovery.

Personal risk factors such as smoking, obesity, addictions, etc. are not considered concurrent conditions and cost relief cannot be applied unless the personal risk factors cause a delay in medical treatment or return-to-work services. However, diseases arising out of personal risk factors that result in a prolonged period of recovery (for example, Type 2 diabetes, lung cancer, cirrhosis of the liver, etc.) are considered concurrent conditions.

When cost relief is effective

When the worker’s recovery is prolonged because of a concurrent condition, costs that are attributable to the prolonged period may be relieved. The effective date can be from the onset of the prolonged period of recovery, the onset of the concurrent condition if it occurs after the date of accident or the date of accident when the concurrent condition pre-dates the date of accident.

The eCO Injury Details screen automatically triggers the application of cost relief for concurrent and pre-existing conditions when it is completed as outlined below. The cost relief applied is based on the Disability Duration Reference (refer to eCO help) or the medical consultant’s review (if the information is not available in the reference).

Cost relief is automatically applied for:

• Aggravation of a simple pre-existing condition (back and non-back claims) that resulted in a prolonged period of disability (back and non-back).
• Concurrent condition or pre-existing condition that was a separate factor that resulted in a prolonged period of disability.

To enable cost relief automation, complete the Injury Details screen as follows:

• For the pre-existing or concurrent condition, update the Injury Decision field to “not accepted.”
• Choose the injury decision type (that is, pre-existing or concurrent). This displays the relevant policy for cost relief application. When a pre-existing condition has not been aggravated but cost relief is to be applied (separate factor), select “concurrent condition.”
• For pre-existing conditions:
  • Indicate whether the injury/condition has been aggravated. (Yes for a pre-existing condition and No for a concurrent condition).
  • For a pre-existing condition, indicate whether the aggravation is temporary or permanent.
  • For a concurrent condition, indicate whether the injury is temporary or permanent.
  • For both pre-existing and concurrent conditions, indicate whether the recovery for the compensable condition has been prolonged.
  • For both pre-existing and concurrent conditions, indicate the expected recovery date by adding the anticipated recovery date for the compensable injury based on the Disability Duration Reference or the medical consultant’s opinion (if not available in the reference). For back injuries, input the date of accident in the expected recovery date field.
• Indicate whether the recovery for the compensable condition has been prolonged.
• Indicate the expected recovery date by adding the anticipated recovery date for the compensable injury based on the Disability Duration Reference or the medical consultant’s opinion (if not available in the reference). For back injuries, input the date of accident in the expected recovery date field.

When the update is saved, the system automatically applies cost relief and sends the appropriate letter.

Effective January 1, 1999, the Cost Distribution Sunset Clause restricts application of cost relief after a four-year period following the date-of-accident year, except for the following circumstances where cost relief can be applied within a six-year window following the date-of-accident year:

• Enhancement factor
• Hearing loss
• Respiratory disease
• Occupational disease
• Third party recoveries
• Negligence of another employer.

Cost relief is only permitted after the four- or six-year period following the date-of-accident year when:

• A copy of the file was requested within the allowable period, but the issue of cost relief was not addressed until after the allowable period had expired.
• An error is discovered, such as:
  • An overlooked request that was received within the allowable period.
  • An incorrect application of cost relief that occurred within the allowable period.

When cost relief is requested after the four- or six-year period, supervisor approval is required.

Claim costs on NTL claims are not applied to an employer’s experience account until costs reach the applicable threshold described in the table below. Cost relief is not considered or applied on NTL claims until the claim’s costs reach the applicable amount specified. The costs on all time loss claims are charged immediately to the employer’s experience account.

See the No time-lost claims processing – Employer fact sheet for more details.

When a worker is injured in a third-party accident (for example, motor vehicle accident), WCB may pursue recovery of the claim costsSee Policy 07-02, Part II, Application 6, Third Party Recoveries. if the other party was at fault and is not covered under the Workers’ Compensation Act. If the action for recovery results in a settlement or judgment, the employer will have costs of the claim relieved from their record, either in the amount of the settlement or the percentage of liability.

When the WCB is unable to recover the costs from a third party (for example, the third party is uninsured or is unknown), cost relief may be approved if the WCB is satisfied that costs would have likely been recovered had the third party been identified or insured. Policy 07-02, Part II, Application 6.

Cost relief under Third Party Recovery is initiated and recommended by Legal Services. Legal Services is notified of possible third-party action on a claim when the initial entitlement decision is made. If a request is received before the third-party recovery has reached a settlement, refer to Legal Services as outlined in step 1.

A date-of-accident employer may request a transfer of claim costs on the basis that the injury was the result of negligence of another employer or the employee of another employer. The employer must clearly identify the alleged negligent employer(s) and provide sufficient information that sets out the negligent conduct or action when requesting a transfer of claim costs.

The cost relief decision on these claims is determined and communicated by the WCB Underwriting team once the employer sends in the Claims Cost Transfer (A638) form. 

See Transferring Claims Costs: Negligence fact sheet.

Note: When costs have been transferred to the negligent employer, cost relief may be applied if the policy criteria are met. If the reason for cost relief consideration is aggravation of a pre-existing condition, then it would depend on that employer's industry's pricing program. For example, if the negligent employer participated in ICP for the DOA year, they would not be eligible for cost relief if an aggravation resulted in a prolonged period of disability.

The cost of benefits paid due to concurrent earningsThese are earnings from an additional job(s) held by the worker at the date of accident, which the worker cannot perform due to the injury. Concurrent earnings are included in the worker’s compensation rate. are automatically relieved from the claim without any action required from the decision maker (except in the case of a wage loss supplement).

In wage loss supplement cases, the decision maker first identifies the worker’s compensation rate in effect (that is, section 56, 61, 67 or 68) when the wage loss supplement was approved. They then calculate the portion of that rate that comes from concurrent earnings and request cost relief be applied for the same proportion of the wage loss supplement benefit.

Example: A worker's S56 rate is $90,000. One third of that ($30,000) is from concurrent earnings. An Economic Loss Payment (ELP) is approved on the claim. The worker's s56 rate was in effect at the time the ELP was approved. This means two thirds of the worker's ELP comes from earnings with the date-of-accident employer and one third comes from earnings with the concurrent employer. Based on this, the decision marker would request cost relief for one third of the cost of the ELP.

Cost relief in this situation (referred to as forced charging) applies when costs are charged to the industries to which the employers who contributed to the condition belong rather than to the date of accident employer for occupational disease claims (for example, hearing loss and respiratory disease). Forced charging is used for these claims because the injury most often occurs from working with more than one employer over time and not solely due to employment with the date-of-accident employer.

WCB decision makers obtain a detailed history of the worker’s employment to determine whether the hearing loss or respiratory claim is attributable to only one employer; in these cases, cost relief is not applied.

All other types of injuries (including progressive injuries such as carpal tunnel syndrome) are not eligible for forced charging even when work with other employers may have contributed to the injury.

Employers operating in Canadian jurisdictions are subject to the Interjurisdictional AgreementSee Policy 06-01, Part 2, Application 5, Coverage Outside Alberta [PDF, 0.25MB] for more details. on Workers’ Compensation (IJA). The IJA is intended to avoid duplicate payment of premiums and to aid injured workers in claiming and receiving compensation when two or more jurisdictions are involved.

Per the IJA, WCB-Alberta staff review claims to determine if they should be charged to another Workers’ Compensation jurisdiction; cost relief requests on IJA claims are deferred until the claim can be reviewed by the IJA Unit.

When the IJA Case Manager sends a request to another Board under the IJA, an eCO system task (High priority, Cost Relief Deferred) is sent to the decision maker telling them to defer cost relief requests until they are notified by the IJA Unit. This task must remain on the decision maker’s task list until that happens; the date may be adjusted into the future if appropriate.

When reimbursement has been received from the other Board and the Insured is changed to reflect that other Board, another eCO system task (High priority, IJA – Cost Relief N/A) is sent to the decision maker advising them that cost relief is not applicable.

All costs of the claim will be removed from the date-of-accident employer’s Alberta account once the other Board accepts responsibility and reimbursement is received. As a result, cost relief must be considered by the Board where the employer’s costs reside.

Costs may be reallocated for wage replacement (TD-01) benefits paid when modified work becomes unavailable during a provincial or local state of emergency that occurs after May 1, 2016. Only wage replacement (TD-01) benefit costs are reallocated; other costs (for example, those related to the unavailability of local medical treatment or lodgings) are not reallocated. Refer to Policy 07-02, Part II, Application 2- Experience Rating for further information.

To be eligible for cost reallocation a worker must be performing modified work when the state of emergency is declared. Costs may be reallocated from the date the state of emergency was declared or the date the event occurred if there was a delay in declaring the state of emergency. Cost reallocation ends when the state of emergency ends, the worker returns to modified duties, or the worker becomes fit for pre-accident duties, whichever occurs first.

When there is a delay in declaring a state of emergency, yet it is clear the event would have impacted an employer's ability to provide modified duties, cost reallocation may begin prior to the date the state of emergency was declared. For example, a state of emergency was declared in Fort McMurray on May 4, 2016, yet the evacuation of Fort McMurray began on May 3, 2016. In this example an employer may be eligible for cost reallocation as of May 3, 2016.

A request from an employer or representative is not required to initiate cost reallocation. It is considered for any claims where the worker was performing modified duties in the affected area at the time the state of emergency was declared, and modified duties were disrupted due to the state of emergency.