What is a Retention Limit?
A retention limit is similar to an insurance deductible dollar amount. Members select a retention limit, with a corresponding premium rate, for each calendar year. The Association reimburses members for all statutory workers' compensation loss payments in excess of the chosen retention limit.
Retention Limit Choices
Currently there are three retention options: a low, a high, and a super retention. The low retention is $500,000 with the high retention at two times the low, or $1,000,000, and the super retention at four times the low, or $2,000,000. The WCRA Board of Directors may change these retention limits over time, subject to approval by the Commissioner of Labor and Industry.
Before 2016, the low retention was indexed to the statewide average weekly wage and rose gradually over time as a result of increasing wages in the state. The high retention was set at two times the low retention while the super retention was set at four times the low retention. Before 1996, there were only two retention levels, with the low retention indexed to the statewide average weekly wage and the high level fixed at $200,000 higher than the low retention.
When to Select the Retention Limit
New WCRA members are notified of their retention level options as part of the licensing process conducted by the Minnesota Department of Commerce. The Department will not approve self-insurer authority until the WCRA receives a completed retention level form.
Every autumn the WCRA informs members of the retention limits available in the upcoming year. If a member wishes to change its retention level for the upcoming coverage year, the WCRA must receive the Retention Level Change form postmarked by December 1. If no form is returned, or it is postmarked after December 1, the retention level currently in effect is retained for the upcoming year. Members are not allowed to change retention levels during the coverage year.
How to Select the Retention Limit
In making your selection, carefully review the financial liability for each limit. When selecting the high or super retention over the low retention, your organization will want to carefully consider the substantial additional liability your organization will have to assume if you experience any serious workers’ compensation claims.
All insurers and self-insurer members that are affiliated or part of a holding company must choose the same retention level