As a state-funded employer in Ohio, do you know what your payroll assessments are? Do you know what your premium dollars finance, and can you contain your premium and assessment costs?
The premium and assessments you pay to the Bureau of Workers’ Compensation pay compensation and medical benefits to Ohio’s injured workers and cover administrative and operating cost such as financing the BWC Division of Safety and Hygiene. An employer’s payroll fluctuations, accident experience and workers’ compensation benefit levels are the primary factors affecting premium rates.
Alternative rating plans allow employers the flexibility to select rating options that meet their specific needs. With all alternative plans, there are levels of eligibility criteria that must be met to qualify.
Self insurance
Self-insurance affords the employer the potential of claims cost savings due to the administration of their own workers’ compensation claims. The applying employer must meet several criteria, including but not limited to:
* A minimum of 500 employees in Ohio
* Two years experience in the state fund
* Demonstration of strong financial stability
* Verification of the ability to administer a workers’ compensation program that meets or exceeds state requirements
After all application and supporting documentation requirements have been met, a review panel specifically geared toward self insurance reviews the application request and approves or denies it.
Retrospective rating
This alternative rating plan is tricky. Prior to entertaining the benefits, you may want to talk to a retrospective rating expert, perhaps the BWC Risk Technical Services Department. The plan appears to be ideal for the employer who was thrown into a penalty rated status due to only one or two employee injuries, possibly catastrophic.
Those who have proven safety practices, minimal to no claims and a consistent claims history will benefit the most. While participating in this plan, the employer agrees to assume a portion of the risk in return for a possible reduced premium.
The retrospective rating plan is customized by the employer with the notion of controlling the amount of risk and the amount of savings by determining the maximum premium combined with the maximum claims cost that the company can realistically afford. The projected benefit is realized cash flow and lower initial premiums. Retrospective rating drawbacks can outweigh the advantages, so talk to the experts.
Group rating
Group rating allows employers of like businesses to group together to potentially achieve lower premium rates than they could on their own.
An organization/trade association sponsors a group and must exist for two years prior to being eligible for sponsorship. The organization’s purpose must be established for something other than sponsoring a workers’ compensation program.
A sponsored group must demonstrate a common purpose with safety and loss-control practices. And, a safety plan must be submitted each year on behalf of the sponsoring organization.
BWC establishes premium rates for the group members as a whole, as though all accepted members are one big happy company. Thus, all group plan sponsors select which of their members will participate and at what level of savings. Groups must reapply each year for group premium rates.
If your company has not checked into group rating this year, now is the time. All groups must be submitted to the BWC by the end of February.
Group rating and retrospective rating require the employer be current on all funds owed to the BWC, such as assessments, undisputed premiums or administrative costs. You must also be in active status on the first day of the policy year.
Reviewing these programs will help employers get an edge on managing their own workers’ comp costs.
Sherrie Beane ([email protected]) is CEO of Total Health Management, an MCO that works with employers to provide workers compensation services. Reach her at (800) 881-8348.