Direct Deposit of Pennsylvania workers’ compensation payments, including settlement payments, became effective on December 28, 2024.  Prepare yourselves now to avoid the onrush of Penalty Petitions that are sure to follow.

Briefly, the Direct Deposit Bill, Act 126 of 2024, will require all payments of workers’ compensation indemnity benefits (total disability benefits and partial disability benefits), death benefits, specific loss benefits, and potentially settlement payments to be paid via direct deposit.  If someone does not have an account with a financial institution capable of accepting a direct deposit, insurance carriers and self-insured employers can continue to pay compensation by paper check.  The payment of medical expenses and counsel fees are not covered by this Act and, therefore, can still be paid by paper check.  The link to Act 126 of 2024 is  https://www.palegis.us/legislation/bills/text/HTM/2023/0/SB1232/PN1949.

Insurers and self-insured employers are now in the first tier of the amendment to Section 308 which means that you may permit, or require, payment of compensation by direct deposit.  Remember, if you, as an insurer or self-insured employer, offer payment by direct deposit to any one person entitled to compensation, you have to offer it to all persons to whom it pays compensation.

When offering direct deposit, the following steps must be complied with:

1. Notice: You need to notify the persons entitled to compensation on all claims, current and in the future, of the option (or requirement) to receive compensation by direct deposit.  If this notice is being provided on a new claim, it needs to be provided with the issuance of a Notice of Compensation Payable.  If the notice is going to be provided on an existing claim, you can provide it with the paper check payment or in a separate mailing.  If you, as an insurer or self-insured employer, require payment by direct deposit and the person entitled to compensation does not submit a valid payment authorization form within 30 days of receiving notification of the requirement and the Payment Authorization Form from you, you must continue to temporarily pay compensation by paper check.
2. Payment Authorization Form: After notice is provided, the insurer or self-insured employer must provide a payment authorization form or direct the person to an online authorization form. It is important to note that the insurer or self-insured employer shall not be required to pay compensation by direct deposit unless the person has submitted a valid payment authorization form or completed a valid online authorization form.  If the person does not submit the authorization, compensation is still payable by check, even if the insurer or self-insured employer requires direct deposit.  The Department of Labor and Industry (Bureau of Workers’ Compensation) has developed the Payment Authorization Form (LIBC-215) that you must utilize; this Payment Authorization Form needs to be provided to the person entitled to compensation for their completion.  Importantly, this Payment Authorization Form must be completed by the person entitled to compensation before insurers and self-insured employers can initiate or stop payment of wage-loss benefits via direct deposit.  A link to the Payment Authorization Form (LIBC-215) is provided as follows: https://tinyurl.com/PA-WC-Direct-Deposit-Form.
3. You received the Payment Authorization Form – Now What? You have 45 days from the receipt of the completed valid Payment Authorization Form (LIBC-215) to implement a request to initiate direct deposit, change deposit accounts, or discontinue a direct deposit.  You can be sure that counsel for the person entitled to compensation will be counting these 45 days because if the request authorized by the person entitled to compensation in their completed LIBC-215 Form is not complied with, a Petition for Penalties most likely will be filed.  Please note that a person entitled to compensation is allowed to change deposit accounts no more than two times in a calendar year unless otherwise ordered by a Workers’ Compensation Judge or a court of competent jurisdiction.  A person entitled to compensation is not allowed to request that the payment of compensation be split between multiple accounts; the payment must go into one account.  Moreover, a person entitled to compensation is not allowed to request that some of their compensation payment be directly deposited and some be paid by paper check; either the full payment of compensation is directly deposited or paid by paper check.
4. You are advised that the payment of compensation was deposited into the wrong account.  Are you liable?  You would not be responsible for repaying any money deposited into an incorrect account if the sole reason for the error is incorrect information provided by the person entitled to receive compensation on the Payment Authorization Form.  Notwithstanding the above, you are required to take reasonable actions to attempt to recover the money incorrectly deposited; and, any money later recovered by the insurer or self-insured employer shall promptly be credited to the person entitled to receive compensation.

Finally, it is important to remember that: (1) while an insurer or self-insured employer can utilize direct deposit for settlement payments, it is not required to do so as settlement proceeds may still be paid by paper check; and, (2) a payment made on a claim with an expected duration of 60 days or less may be made by paper check unless the insurer or self-insured employer agrees to make payment by direct deposit or the person previously received compensation by direct deposit and verifies that the account previously used is still valid.

The deadline for providing direct deposit is October 29, 2025.  As noted above, you will need to send out a notification to every person receiving compensation along with a Payment Authorization Form (LIBC-215).

Cipriani and Werner, P.C. stands ready to assist you in setting up your direct deposit process so you can get in front of the anticipated onslaught of direct deposit requests by claimants and their counsel.  Please feel free to contact Deborah A. Beck, Esq. at dbeck@c-wlaw.com or by phone at (717) 390-3021 if you have any questions.

Disclaimer

The information in this article is provided for general informational purposes only and may not reflect the current law in your jurisdiction.  By reading this article, you understand that there is no attorney-client relationship between you and Cipriani & Werner, P.C. or any of our attorneys.  No information contained in this article should be construed as legal advice from Cipriani & Werner, P.C. or the individual authors.