In Ohio, group and group retrospective ratings remain the highest discount programs offered by the Ohio Bureau of Workers’ Compensation (BWC) for employers to reduce their annual premiums. Sponsors of public and private employer workers’ compensation group rating, or group retrospective rating programs, are in the evaluation process to determine eligibility for the Jan. 1, 2013, policy year for public employers and the July 1, 2013, policy year for private employers.
“Now is the time to have your program evaluated,” says Mark MaGinn, vice president for CompManagement, Inc. “Employers should submit the BWC AC-3 form (Temporary Authorization to Review Information) to the workers’ compensation third party administrator of the sponsor’s program of interest to evaluate the many different discount programs available to impact their costs.”
Smart Business spoke with MaGinn about what an employer should consider regarding a sponsor’s group rating or group retrospective rating program before deciding to participate.
What is the discount range available for group rating and the refund percentage range for group retrospective rating?
Group rating discounts typically range between 15 percent to the maximum discount available from the Ohio BWC which, for policy year 2012, was 53 percent for private employers and 65 percent for public employers for the 2013 policy year (59 percent with break-even factor included). The BWC board of directors evaluates the maximum discount on an annual basis setting it typically in the fall for private employers for the upcoming July 1 policy year and in the spring for the upcoming public employer policy year that begins Jan. 1. For group retrospective rating, most groups can expect to save between 5 and 45 percent with claim costs included.
Why is past performance history of the sponsor’s group important?
Past group performance is a good indicator of future results. Asking about this will help determine if the projection provided in the quote will meet the performance of the group. A group sponsor should be able to produce a history of obtaining the quoted discount, versus just an estimate designed to attract business. Employers should be leery of sponsors that consistently overproject but fail to deliver, as this creates loss savings that would not be forecasted in your annual operational budget.
How does having a large number of policies in a group impact an organization?
Large groups offer stability and allow sponsors to achieve projected savings, which, in turn, delivers the maximum savings available to your organization. Be wary of programs that do not have a substantial number of enrolled policies in its group. A low number of policies in a group may impact the possibility of the group actually being formed, and therefore, force your organization to find another group sponsor before the BWC filing deadlines.
Why is it essential to understand how a company’s claims experience compares to that of other group members?
Proper placement within the correct savings level of a group program will ensure that your organization is getting the discount rate that it deserves. If your claims-to-payroll ratio is substantially better than other members in the group, your organization may not be properly placed and should be moved to a higher-discount tier. However, if your claims-to-payroll ratio is significantly lower than other members, the group savings quoted may suffer with your enrollment. If the sponsor allows other prospective group members to enroll with similar low ratios, the savings level that you have been quoted may not be realistic.
When comparing quotes, is it crucial to have the payroll estimates utilized be the same?
Payroll figures may vary based on when the information was received from BWC.
Because different payroll estimates can skew quoted savings, it is important to make sure that the payroll is consistent on all quotes. If the payroll estimates are not consistent or do not reflect future budget impacts, be sure to contact the program’s administrator for an updated quote before making your enrollment decision.
What other critical factors should be considered when choosing a group sponsor?
Group savings may be the first factor your organization looks at in determining which group to join. The maximum possible discount an employer in the group rating program may receive is 53 percent.
However, it is just as important to know what else is being offered to protect your eligibility for future discounts. Employers should ask questions regarding the sponsor’s chosen program administrator’s services and the average length of experience its colleagues have in the workers’ compensation industry.
Full-service administrators with an experienced staff offer far more beyond group formation, such as claims administration, cost containment strategies, hearing representation, data trending, online system access, and in-house safety and loss control services.
Can a company stack discounts on top of a group rating or group retrospective rating discount?
Recent changes made by the BWC allow for the following stacking options while participating in either group rating or group retrospective rating.
- Group Rating — Destination Excellence, Drug-Free Safety Program, $15K Medical Only Program, Early Payment and Safety Council (performance bonus only)
- Group Retrospective Rating — Safety Council (participation rebate only) and Early Payment
An employer should contact the group sponsor’s program administrator to evaluate the options and discount percentages allowed, as well as be informed of the different eligibility requirements and expectations to be met for continued participation in the programs.
Mark MaGinn is vice president of Ohio state fund program management and business development for CompManagement, Inc. Reach him at (800) 825-6755, ext. 8168, or Mark.MaGinn@sedgwickcms.com.
Insights Workers’ Compensation is brought to you by CompManagement, Inc.