The handicap reimbursement program designed by the Ohio Bureau of Workers’ Compensation (BWC) is an important means for employers to reduce their overall experience costs and resulting premium rates.
“The program was designed to encourage employers to hire individuals with pre-existing conditions,” says Teri Hinckley, handicap reimbursement specialist at CompManagement. “It allows employers to request a percentage reduction in cost of the claim charged to their experience if the claimant has a pre-existing condition that caused the injury, contributed to increased costs or delayed recovery.”
Smart Business spoke with Hinckley about the handicap reimbursement program in Ohio as well as the impact that an employer may see from filing a request.
What is a handicap reimbursement?
The Ohio Revised Code 4123.343 explains that the handicap reimbursement program was designed to encourage employers to hire and retain handicapped employees. An employer then may be eligible to have a percentage of the costs associated with a workers’ compensation claim charged to, or refunded from, the statutory surplus fund.
When is a claim eligible for a handicap reimbursement?
In order for a claim to be eligible for handicap reimbursement, the claimant must have received temporary total compensation, permanent total compensation, a scheduled loss award, death benefits or have been paid salary continuation. The claimant must also have one of the conditions that qualify for reimbursement, a list of which is available on the BWC’s website. All requests for handicap reimbursement are reviewed and determined by the BWC’s Legal Operations Department.
What impact may a handicap reimbursement have on a company’s premium rate?
The handicap percentage that is awarded by the BWC is applied to medical costs, reserves and any reducible compensation — temporary total compensation, permanent total compensation, a scheduled loss award or death benefits — charged to the claim. Those reduced costs are then used in the experience calculation for the employer and the employer’s rates are reduced accordingly.
When a handicap is awarded, it is applied to all years that the claim impacts the employer’s premium rates. Based on our experience with employers, that can result in premium refunds for previous years as well as rate reductions for current and future years. The percentage, however, is not directly applied to the employer’s bottom line premium — a 10 percent handicap does not equate to a 10 percent premium reduction.
When is the best time to file for a handicap reimbursement?
We have found through working with employers that there are several factors that can determine the optimal time to file an application for a handicap reimbursement. In order to obtain the greatest percentage relief, employers have generally found it is best to wait until the claim has been sufficiently developed. This may entail waiting until the claim is nearly out of the employer’s experience. If a handicap application is filed too soon in the life of the claim, the percentage awarded can be lower because it may be difficult to show delayed recovery if the claimant has not recovered yet. In addition, there may be additional conditions allowed later in the claim that could result in a higher percentage.
Employers, however, also like to weigh the alternative rating program eligibility impact and premium savings when determining the best time to file. For example, if obtaining a handicap will help keep an employer eligible for a group rating program, it may be better to file for the application earlier in the claim as the group savings may offset any potential for a higher handicap percentage. In addition, for employers that participate in a group retrospective rating program, filing earlier may result in increased retrospective refunds.
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