(a) Each insurer providing workers' compensation insurance and each employer who is self-insured or uninsured for purposes of AS 23.30 in this state shall pay an annual service fee to the department for the administrative expenses of the state for workers' safety programs under AS 18.60 and the workers' compensation program under AS 23.30 as follows:

(1) for each employer,

(A) except as provided in (b) of this section, the service fee shall be paid each year to the department at the time that the annual report is required to be filed under AS 23.30.155(m) or (n); and

(B) the service fee is 2.9 percent of all payments reported to the division of workers' compensation in the department under AS 23.30.155(m) or (n), except second injury fund payments; and

(2) for each insurer, the director of the division of insurance shall, under (e) of this section, deposit from funds received from the insurer under AS 21.09.210 a service fee of 2.5 percent of the direct premium income for workers' compensation insurance received by the insurer during the year ending on the preceding December 31, subject to all the deductions specified in AS 21.09.210(b).

(b) An employer who is required to pay an annual service fee under (a) of this section may elect to pay in yearly increments over a five-year period the portion of the service fee due under (a) of this section as a result of a settlement of over $50,000 approved under AS 23.30.012. An election under this subsection must be made in the first year that a service fee would be due as a result of the settlement. The employer shall notify the department of an election under this subsection. If an election is made, payment of each yearly increment that is due shall be made at the time the annual report is required to be filed under AS 23.30.155(m) or (n).

(c) Payment of the annual service fee under this section shall be made in the manner and by the method specified by the department.

(d) If an employer who is required to pay an annual service fee under this section does not pay the required amount of the service fee by the time specified in this section, the employer shall pay a civil penalty of $100 for the first day the payment is late and $10 a day for each additional day the payment is late. The civil penalty under this subsection is in addition to any civil penalties imposed for late filings of reports under AS 23.30.155(m).

(e) Annual service fees and civil penalties collected under this section and AS 23.30.155(c) and (m) shall be deposited in the workers' safety and compensation administration account in the state treasury. Under AS 37.05.146(c), the service fees and civil penalties shall be accounted for separately, and appropriations from the account are not made from the unrestricted general fund. The legislature may appropriate money from the account for expenditures by the department for necessary costs incurred by the department in the administration of the workers' safety programs contained in AS 18.60 and of the Alaska Workers' Compensation Act contained in AS 23.30. Nothing in this subsection creates a dedicated fund or dedicates the money in the account for a specific purpose. Money deposited in the account does not lapse at the end of a fiscal year unless otherwise provided by an appropriation.

(f) The department may adopt regulations to implement this section.

(g) Notwithstanding AS 21.76.020(a), a joint insurance arrangement established under AS 21.76 is subject to the provisions of this section and regulations adopted under this section and, if self-insured, is subject to the annual service fee on behalf of its members.

(h) The department shall grant a credit against the service fee imposed under (a)(1) of this section to an employer if (1) the employer applies to the department for the credit on a form prescribed by the department; (2) the employer provides proof that the employer has paid a premium tax imposed under AS 21.09.210 on an insurance policy; and (3) workers' compensation claims have been paid under the insurance policy described in (2) of this subsection and the claims are subject to the service fee imposed under (a) of this section. The credit allowed under this subsection is equal to the amount of the premium tax paid by the employer under the insurance policy, may not exceed the service fee imposed under (a) of this section, and only applies to premium taxes paid by the employer on or after January 1, 2000.

(i) In this section, “insurer” has the meaning given in AS 21.97.900.