How has the program changed over the years?
The program remained virtually unchanged until around 2005. The bureau began to peel back some discounts due to a study that showed that the group-rated employers were not paying enough of a share into the fund, and employers that did not qualify for the group rate due to claims activity were paying too much of the share.
Discounts were peeled back annually from 95 percent in 2005 to 85 percent in 2008. These discounts were off the bureau’s base rates, which are established for each manual class. So companies that were paying 5 percent of the base rate could have a claim that results in them paying 20 percent above the base rate next year. Some employers sued the bureau because they experienced an incredible spike in premiums going from the top discount tiers to being entirely out of the group.
Gradually the employers that were at the top tiers began to pay more in premiums, until 2009. Employers that were out of the group were then paying less of the brunt of the deficit. But in 2009, the BWC took more drastic steps to level the playing field by making the top discount 77 percent, then attaching a 31.1 percent break-even factor to all groups, which made the actual top discount 70 percent. So employers that were once paying 5 percent were now paying 30 percent of the base rate, yet had no increase in claims activity.
In 2010, they took it a step further, making the top discount 65 percent, then applying a graduated break-even factor from 40 to 0 percent, depending on the discount of the group. So the top discount tiers would earn a 65 percent discount with a 40 percent break-even factor applied, making 51 percent the best active discount.
How has the decline in discounts affected how employers feel about the program?
Employers are obviously seeing reduced returns by being a part of group rating programs, yet it’s still better than they can achieve on their own. But there is definite frustration from employers that have no additional claims, yet are paying five times what they paid five years ago.
Also, for 2010, all sponsoring associations, like trade associations or chambers of commerce, and all the affiliate sponsors that may be placing their members into sponsoring association groups must become BWC certified.
How can a sponsor get certified?
They are required to offer a certain amount of safety training and education throughout the year to continue as a sponsor or affiliate sponsor. Even smaller chambers of commerce with one employee and 10 members participating in a group are required to be more safety conscious, and allow more access to more safety resources than ever before. If they are not BWC certified, they are not considered a sponsor with the bureau, so their members would not be able to join through their association.
The BWC also added a requirement that any employer in a group that had a claim during the prior two calendar years must go through two hours of safety training, which can be done through the association or safety councils or by using the BWC’s online services.
Ken Finley is a senior rate analyst with V&A Risk Services, a strategic partner with Ohio Employee Health Partnership. Reach him at (800) 493-9662 or [email protected].
