As the Ohio Bureau of Workers’ Compensation (BWC) works toward implementing a prospective billing system, it has indicated that transition credits will be given to employers to eliminate any double billing as the change occurs from the current in arrears payment cycle.
Smart Business spoke with Heather Vogus, vice president at CompManagement, Inc., about the details of the transition credit and how it will be applied to an employer’s premium for the policy year.
Why are transition credits being offered?
A one-time premium credit is being given to all state fund employers to aid in the transition to a prospective billing cycle from the current retrospective (in arrears) payroll reporting and premium payment cycle. To eliminate the need for double payments during the transition, BWC will provide $1.2 billion in premium credits. The transition will not cost Ohio employers any extra money.
How will the transition credits work?
Private employers will receive full credit to their final in arrears premium payment due in August 2015, based on their Jan. 1, 2015, to June 30, 2015, payroll. In addition, they will receive a two month or 1/6 credit for the first prospective payment for the July 1, 2015, to June 30, 2016, payroll period.
Public employers will not transition to a prospective billing cycle until the Jan. 1, 2016, policy year. They will then receive a 50 percent credit on their May 2016 premium payment, based on 2015 payroll, and a 50 percent credit on their first prospective payment, based on 2016 payroll.
Who qualifies for the transition credits?
All state fund private and public employers that pay premium during the periods will receive the credit. However, they must be in an active status during the transition. Private employers must be active as of Aug. 31, 2015, and they must file their Jan. 1, 2015, to June 30, 2015, payroll report in order to be eligible to receive the full transition credit for that period. Public employers must be active as of May 15, 2016.
What will the BWC use as premium to calculate the credits?
The premium amount utilized to calculate the credit will be dependent on the rating program that an employer may be participating in for the policy year. For instance:
- The group rating is dependent on the group rated premium.
- The individual retrospective rating is based on minimum retrospective premium. The transition credits will not apply to claims costs paid under the retrospective rating plan.
- The group retrospective rating is dependent on merit rated or base rated premium. The transition credits will not include any group retrospective refunds or assessments.
- The deductible program is based on the discounted premium. The transition credits will not apply to claims costs paid under the deductible plan.
- The destination excellence is dependent on merit rated or base rated premium. The transition credits will not be reduced by any lapse-free, go green, safety council rebates or other premium-based bonuses and credits.
- The individual or base rating is dependent on merit rated or base rated premium.
Why are alternative premium discount program enrollment dates changing and when are the deadlines?
Enrollment dates have been moved up about three months in advance because employers will now be paying in advance for coverage and thus premium paid is impacted by this enrollment. Private employer deadlines for the 2015 policy year include:
- Group rating: Monday, Nov. 24, 2014, previously last business day of February.
- Group retrospective rating and other alternative rating programs: Friday, Jan. 30, 2015, previously last business day of April.
- Destination excellence programs: Friday, May 29, 2015, previously last business day of April.
Enrollment deadlines for public employers do not change for the Jan. 1, 2015, policy year. Public employers will move to prospective billing for the Jan. 1, 2016, policy year so deadlines will change in 2015, not this year.
Insights Workers’ Compensation is brought to you by CompManagement, Inc.
