Mont. Old Fund Insurance In Dire Need of Funds

A Montana-owned insurance agency for injured workers may need $69 million to pay all of its bills, according to a Montana State Fund executive.

Outside insurance experts hired by the State Fund concluded earlier this year that the Old Fund — a pool of money set aside to pay the medical bills and lost wages for Montanans injured on the job before July 1990 — needs $14.2 million to remain solvent. The same estimates show that if lawmakers wait for the fund to run dry, the state would have to pay $27 million to cover all the Old Fund’s bills.

However, the account managers for the 1,100 injured Montanans covered by the Old Fund estimate that the account could need another $42 million.

If the Old Fund ever runs dry, the potential $69 million deficit will fall on state taxpayers to fix.

The Old Fund developed after Montana’s previous workers’ compensation system had $500 million in possible payouts but didn’t have the money for – a situation known as “unfunded liability.” Lawmakers at the time agreed to a special tax on employers and wage earners to bail out the agency. The State Fund was more independent and began selling workers’ comp insurance in 1990.

The old cases and enough money to cover all the benefits to those injured workers went into the Old Fund. The Old Fund does not sell insurance and has no source of revenue other than state tax coffers.

Problems with the Old Fund’s resources began in 2002, when lawmakers at a special session used about $4 million from the Old Fund to help pay for general state government operations. In 2003, the state faced an estimated $300 million budget shortfall, and again used monies from the Old Fund to fill the general fund.

Topics Legislation Workers' Compensation