Ohio Workers’ Compensation Changing to “Upfront” Premiums
The Ohio Bureau of Workers’ Compensation (BWC) is changing to upfront premium payments versus the current process of paying premiums in arrears after each 6-month coverage/payroll period. Going forward, employers will be required to pay premiums in advance of receiving coverage from the BWC. The change will take effect for the July 1, 2015 policy year for private employers and January 1, 2016 policy year for public employers.
Prospective (upfront) premium billing is the industry standard for insurance coverage and the change is part of BWC’s ongoing efforts to modernize its operations and provide better service to Ohio employers. BWC noted benefits include:
- Overall base rate reduction of 2% for private employers & 4% for public employers
- More flexible payment options (monthly, every 2 months, quarterly, annually, etc.)
- Improved opportunity for BWC to provide quotes online or via the phone
- Increased ability to detect employer non-compliance and fraud
BWC will provide a 1-time premium credit for 8 months covering the period January 1, 2015 through June 30, 2015 arrears premium payment plus the first 2 months of prospective premium (July & August 2015). The transition credit will prevent employers from paying 2 premiums at the same time (the arrears payment & the prospective payment), which would have created a huge burden on Ohio employers.
- Private employers will pay their August 2014 and February 2015 arrears premium as normal
- First prospective premium payment will be due August 31, 2015 to cover September & October 2015
- Employers still need to file the payroll report due by August 31, 2015 even though transition credit will cover the Jan. 1, 2015 – June 30, 2015 period. BWC will be utilizing this reported payroll to estimate upfront premium invoices going forward
- At the end of the 2015 rate year (June 30, 2016) BWC will perform “true-up” process to align actual payroll with premium obligation. An employer could owe more or less based on the actual payroll “true-up” process
- BWC will provide 50% transition credits for premium payments to be made in May 2016 & September 2016, which will cover 50% credit to both arrears and prospective payments due.
As mentioned above, the BWC will be providing prospective premium invoices & coverage based on an employer’s estimated payroll. At the end of the policy year, the BWC will perform a reconciliation of the actual payroll vs. the estimated payroll that was utilized to calculate the prospective premium invoices throughout the policy year. The “true-up” is to ensure proper premiums were paid based on the actual payroll. Employers may receive a premium refund/credit or premium billing/invoice from BWC.
Key Dates – BWC Program Deadlines Changing
Even though the move to prospective premium is not effective until July 1, 2015 for private employers and January 1, 2016 for public employers, many BWC program deadlines have changed. Most deadlines and key dates have been moved up 3 months earlier.
Private Employer deadline changes for the July 1, 2015 policy year:
- Group Rating: November 24, 2014 – (previously last business day of February)
- Group Retrospective Rating: January 30, 2015 (previously last business day of April)
- Individual Retro/Deductible/EM Cap/ 1-Claim: January 30, 2015 (previously last business day of April)
- Destination: Excellence programs: May 31, 2015 (previously last business day of April)
- Claim Settlement Applications: July 15, 2014 to be applied to 2015 experience (previously October 15)
- BWC “snapshot” for claims & costs included in 2015 experience: September 30, 2014 (previously December 31)
Public Employer deadline changes for the January 1, 2016 policy year:
- Group Rating: May 29, 2015 (previously last business day of August)
- Group Retrospective Rating: July 31, 2015 (previously last business day of October)
- Individual Retro/Deductible & other programs: July 31, 2015 (previously last business day of October)
- Destination: Excellence programs: November 30, 2015 (previously last business day of October)
- Claim Settlement Applications: February 16, 2015 to be applied to 2016 experience (previously May 15)
- BWC “snapshot” for claims & costs included in 2016 Experience: March 31, 2015 (previously June 30)
There is quite a bit of information involved with the BWC’s conversion to prospective (upfront) premium payments and Matrix will continue to provide further updates and education as they become available. If you have any questions or need further clarification, please contact Matrix at 1.877.550.7973. Let Matrix be your guide.