Understanding Senate Bill 1232

In an effort to streamline payment of Pennsylvania workers’ compensation wage loss benefits, Gov. Shapiro signed Senate Bill 1232 into law on October 29, 2024. Senate Bill 1232 amends section 308 of the Pennsylvania Workers’ Compensation Act to allow for direct deposit of wage loss benefits. The legislation aims to update the Act to require direct deposit as a method modernizing payment of wage loss benefits and promoting reliability of payments, for all parties, as opposed to reliance on U.S. Mail for delivery of paper checks.

Senate Bill 1232 specifically amends sections 308 of the Act under subsection 308(b) to state, “Compensation payable under this article shall be paid by direct deposit to the account of the person entitled to the compensation upon request of the person.” If the claimant does not have an account with a financial institution capable of accepting direct deposit, payments shall be made by paper check in lieu of direct deposit.

The bill also requires insurers or self-insured employers to notify claimants of the entitlement to receiving benefits via direct deposit, which must be made immediately upon availability of the requirement of direct deposit or concurrently with issuance of the notice of compensation payable. Insurers or self-insured employers must permit payment of compensation by direct deposit within one year of the effective date of the law, or by October 29, 2025.

To ultimately receive direct deposit, the claimant must complete a valid payment authorization form or valid online authorization within 30 days of receiving the notification of direct deposit being available. A claimant may request changes to the direct deposit account or discontinue direct deposit by submitting a revised payment request. Requests to initiate direct deposit, change accounts, or discontinue direct deposit must be implemented within 45 days of the receipt of a valid authorization to make the change.

Lump sum settlement payments as a result of compromise and release agreements may be made by paper check unless otherwise agreed upon by the insurer or self-insured employer to make the payment via direct deposit.

As a result of this new law, insurers and self-insured employers must develop a system for direct deposit of wage loss benefits by October 29, 2025, if they have not already done so. Failure to offer direct deposit would likely result in a violation of the Act and potentially penalties. Insurers and self-insured employers will also need to integrate the protocols of accepting claims, as well as distributing documentation providing notice of the availability of direct deposit, as it is also required under Senate Bill 1232. Insurers and self-insured employers should also be aware of the 45-day requirement to comply with requests for changes in the method of payment, as a failure to do so may also constitute a violation of the Act.

Overall, Senate Bill 1232 is expected to alleviate the many logistical issues associated with the issuance of paper checks and provide a streamlined method to issue regular wage loss payments in an efficient, practical manner, reducing Petitions for Penalties and claimant inquiries pertaining to alleged payment problems. Insurers and self-insured employers must prepare for the required availability of direct deposit and also develop protocols regarding notice and changes to the method of payment to ensure compliance with the new law.

This article originally appeared on Weber Gallagher LLP. https://www.wglaw.com/

About the Author:

Lucas J. Csovelak is a partner at Weber Gallagher LLP. lcsovelak@wglaw.com