On October 29, 2024, Act 126 was approved by the Governor, after bipartisan support in both the Pennsylvania State House and Senate. Act 126 is a significant step forward in the modernization of the Pennsylvania Workers’ Compensation system, by providing for direct deposit of workers’ compensation checks in many instances for injured workers. Injured workers often experience delay in receiving paper checks by mail, sometimes checks are lost, and it is anticipated that this will eliminate many problems of this nature. Some of the key aspects of Act 126 are as follows:
Payments on a claim with an expected duration of 60 days or less may be made by paper check, but payments where the claim has an expected duration or has lasted more than 60 days are eligible for direct deposit.
If a person does not have an account at a bank or credit union capable of receiving direct deposits, paper checks are to be sent.
Direct deposit must be started, stopped or changed within 45 days of an injured worker submitting an authorization form.
The employee may change the account they wish the funds to be deposited to, but no more than two times per year.
Direct deposits may not be split between multiple accounts or payment methods.
Injured workers must be careful to complete the direct deposit forms legibly. Act 126 states: “An insurer or a self-insured employer shall 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. An insurer or a self-insured employer shall take reasonable actions to attempt to recover the money and any money later recovered by the insurer or self-insured employer shall promptly be credited to the person entitled to receive compensation.
Lump sum payments for a Compromise & Release (settlement) are to be made by paper check, unless the insurance carrier or self-insured employer agrees to do so via direct deposit.
The Pennsylvania Workers Compensation Bureau, as required by Act 126, has published a standard payment authorization form for use by all insurers and self-insured employers under this section.
Act 126 was signed by the Governor on 10/29/24 and went into effect 60 days thereafter on 12/29/2024. However, direct deposit will initially be on a voluntary basis for one year, but thereafter, as of 12/29/25, all insurers and self-insured employers must make direct deposit available. Likewise, after that date, accepting payment by direct deposit is mandatory for injured workers to whom it is otherwise available.
Insurance carriers or self-insured employers are required to send notice to injured worker of their right to receive direct deposit. This is to be done immediately upon the carrier or self-insured employer having this option available or concurrently with the issuance of a Notice of Compensation Payable, the document utilized to accept responsibility for paying a workers compensation claim.