In continuation of the “Billion Back” campaign from the summer of 2013, the Ohio Bureau of Workers’ Compensation (BWC) has announced additional changes to come this year and in 2015.
“As we begin 2014, it is important for employers to be aware of impending changes and understand how they can further impact the protection of their workers as well as their bottom line,” says Randy Jones, senior vice president of Ohio TPA Operations at CompManagement, Inc.
Smart Business spoke with Jones about the upcoming changes and their potential benefits to the employers of Ohio.
What is ‘A Billion Back?’
‘A Billion Back’ is a one-time dividend equating to $1 billion for private employers and public taxing districts. It was made possible because the financially strong Ohio State Insurance Fund exceeded the target funding ratio of assets to liabilities established by the BWC Board in 2008.
Checks were released to eligible organizations in June 2013. For private employers that participated in a group retrospective rating program for the July 1, 2011, policy year, dividends were calculated and paid following the 12-month retrospective refund calculation that occurred in October 2013.
What other program benefits may employers utilize this year?
The BWC has also expanded its safety grant program from $5 million to $15 million to further promote workplace safety, workplace wellness and encourage investment in protecting Ohio’s workers. It has modified the program to be a 3-to-1 match with a maximum grant of $40,000 per employer. The BWC has also expanded the program to allow for various types of previously excluded equipment.
Now is the time to minimize your out-of-pocket expense for new equipment that may be eligible under the safety grant program. For example, your out-of-pocket cost of $13,333 would be matched with the BWC’s $40,000, which equates to a 300 percent return on your investment in safety.
According to BWC statistics, every dollar spent on safety equipment equates to a $3 reduction in claims costs.
What can employers expect in 2015?
The BWC will be transitioning to a billing system that will align it with a standard industry practice, enabling them to collect premiums before extending coverage. The transition will become effective July 1, 2015, for private employers and Jan. 1, 2016, for public employers. The BWC has indicated that a change to a prospective billing system could have an overall base rate reduction of 2 percent for private employers and 4 percent for public employers, and provide an opportunity for more flexible payment options of up to 12 installments.
The BWC envisions a few changes as it implements prospective billing, including:
- Earlier deadlines to sign up for incentive/discount programs. Beginning in the fall of 2014, employers wishing to participate in programs such as group rating, group retrospective rating or other discount programs will have to make those selections sooner.
- One-time credit. A one-time premium credit will be given in July 2015 to the average private employer to cover its August payroll report, which includes the January to June 2015 premium as well as the July and August prospective premium. Public employers will receive a 50 percent credit for 2015 and a 50 percent credit for 2016 within the March 2016 invoice.
- A new payment schedule. Private employers will receive their invoices in June and begin paying premiums before July 1. While that’s earlier than in the past, employers will be able to make quarterly payments, with some employers able to choose as many as 12 installments. Public employers will need to pay at least 50 percent of their annual premium for both 2015 and 2016 by May 2016.
- A true-up process. Since the BWC will be providing workers’ compensation coverage based on estimated payroll, it will ask employers to report their actual payroll for the prior policy year and pay any shortage, or receive a refund for any overage in premium. This begins in August 2016.
- Employers should contact their third-party administrator for workers’ compensation to discuss the transition process. ●
Randy Jones is senior vice president of Ohio TPA Operations at CompManagement, Inc. Reach him at (800) 825-6755, ext. 65466 or firstname.lastname@example.org.
Insights Workers’ Compensation is brought to you by CompManagement, Inc.
The Ohio safety council rebate program created by the Ohio Bureau of Workers’ Compensation (BWC) rewards employers for their active participation in a local safety council. It also provides an additional performance bonus rebate for reducing the frequency or severity of workers’ compensation claims.
“With the number of safety councils available across the state with a focus on a variety of industries, employers are able to not only receive information on new safety techniques, products and services to assist their businesses, but also reduce their premium for simply attending these helpful meetings throughout the year,” says Russ Hocutt, vice president at CompManagement, Inc.
Smart Business spoke with Hocutt about how this rebate program works.
How much of a rebate can be earned?
Currently the incentive program enables employers to receive a rebate of 2 percent of their annual workers’ compensation premium through program participation and an additional 2 percent performance bonus based on the reduction of the frequency or severity of claims.
How can a local safety council be found?
BWC’s Division of Safety & Hygiene sponsors more than 80 safety councils across the state, organized through chambers of commerce, trade and manufacturing associations, American Red Cross chapters or other local, safety-minded organizations. A list is available at www.ohiobwc.com.
What are the requirements for the participation rebate portion?
An employer must enroll in a local safety council by July 31. Once enrolled, an employer must attend 10 meetings or events between July 1 and June 30. Two of the 10 meetings may be external educational options such as BWC Safety & Hygiene training courses or industry-specific training. The chief executive officer must attend at least one safety council-sponsored function or meeting. Semiannual reports must be submitted for the calendar year to document attendance. The documentation must be an official certificate of attendance or transcript. Only employers that meet the participation eligibility requirements will be eligible for an additional 2 percent performance bonus.
How is the performance bonus calculated?
Employers that reduce their frequency or severity of claims by 10 percent or more compared to the previous year’s frequency or severity, or employers that maintain both frequency and severity at zero, will receive an additional 2 percent refund of their annual premium, assuming the participation portion of the safety council program is met.
BWC calculates frequency by multiplying the total number of claims reported in the measurement year by 1 million and dividing by the employer’s total reported payroll for that year. Severity is determined by multiplying the total number of days absent during the measurement year by 1 million and then dividing by the employer’s total reported payroll for that year. The measurement period for private employers is claims and payroll reported between July 1 and June 30 compared to the previous year. For public employers, the measurement period is between Jan. 1 and Dec. 31.
What impact would the program have on a midsize company’s premium?
Assuming the participation requirements are met and the employer was able to reduce the frequency or severity of claims as indicated above, a midsize service company could expect the following in annual premium savings, assuming the employer is participating in no other alternative rating programs:
- Payroll — $3,990,000.
- Individual discount — 16 percent.
- Individual premium — $14,683.
- 2 percent safety council participation rebate — $200*.
- 2 percent safety council performance rebate — $200*.
*Based on pure premium which does not include assessments for DWRF and administrative costs for operation of BWC/IC
Savings reflected above do not include the additional savings that can be realized by also participating in programs compatible with the safety council program such as Destination Excellence, Drug Free safety Program, Group Rating (performance bonus only), Group Retrospective Rating (participation bonus only), Large/Small Deductible, Individual Retrospective Rating, or One Claim Program. Always have your third-party administrator conduct a feasibility study to evaluate the best savings options available for your organization.
Russ Hocutt is vice president at CompManagement, Inc. Reach him at (800) 825-6755, ext. 65619 or email@example.com.
Save The Date: Safety council enrollment ends July 31 for the 2013 policy year.
Insights Workers’ Compensation is brought to you by CompManagement, Inc.
The Deductible Program was implemented in 2009 by the Ohio Bureau of Workers’ Compensation (BWC) as another alternative for employers to control their costs while promoting workplace safety. Over the past few years, the program has been enhanced to include a small and large deductible program so that employers of different sizes, hazard groups and risk tolerance levels have options that best fit their organization.
“The Deductible Program can be financially beneficial for those employers that have a focus on their safety efforts and are able to keep their claim costs low,” says Mark MaGinn, vice president at CompManagement, Inc. “An employer should consider having a feasibility study performed by their third-party administrator prior to participating in order to analyze the deductible levels available and ensure it is the best program for their organization.”
Smart Business spoke with MaGinn about how this alternative rating program works.
How does the Deductible Program work?
Similar to other insurance deductible plans, an employer agrees to pay the portion of a workers’ compensation claim that falls below their selected deductible level in exchange for an upfront premium discount. Claims costs are paid in full by the BWC, then the employer reimburses the BWC for the claim costs up to the selected deductible level. The employer will receive monthly invoices from the BWC until the selected deductible level is reached. All deductible bills must be paid within 28 days of the invoice date.
What deductible amounts are available to choose from?
Deductible levels range from $500 to $200,000. The small deductible program includes levels of $500, $1,000, $2,500, $5,000 and $10,000. The large deductible program includes levels of $25,000, $50,000, $100,000 and $200,000. There is no deductible level available between $10,000 and $25,000. An employer is limited to 25 percent of its annual premium if the deductible selected is less than $10,000, and 40 percent of annual premium if the deductible is $25,000 or more.
How does an employer join the Deductible Program?
An employer must complete a BWC Application for Deductible Program (U-148) to enroll in the Deductible Program, and meet eligibility requirements. The enrollment deadline for private, state-funded employers is the last business day in April for coverage beginning July 1, and for public employers it is the last business day of October for coverage beginning Jan. 1. Changes to the deductible level or withdrawal from the program are not allowed until the next policy year.
Is there any method to cap the annual out of pocket?
Employers selecting a deductible level of $25,000 or more have the option to request an annual aggregate stop-loss limit of three times the deductible, allowing them to cap the potential annual out-of-pocket expense that may arise from participating in the program.
How is the Deductible Program savings projection calculated?
Based on the deductible level chosen and the employer’s hazard group, which is based on the employer’s manual classifications and risk level, the BWC will establish the savings percent. This discount can range anywhere from 1.4 to 26 percent for small deductible options and is applied to the employer’s standard premium.
An example for a midsize service company selecting a $5,000 deductible within the small deductible program:
• Payroll — $5,000,000.
• Individual premium — $460,000.
• Deductible discount savings — $32,000.
• Premium with discount — $428,000.
• Plus estimated deductible billing — $10,000.
• Net premium — $438,000.
• Net savings — $22,000.
In addition to this savings, deductible payments under the small deductible program will not be charged to the claim, therefore possibly reducing future rate calculations. ?
Savings reflected above do not include the additional savings that can be realized by also participating in programs compatible with either the small or large deductible program, such as the Go Green or Safety Council discounts.
Mark MaGinn is vice president at CompManagement, Inc. Reach him at (800) 825-6755, ext. 65868 or firstname.lastname@example.org.
Insights Workers’ Compensation is brought to you by CompManagement, Inc.
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Because CompManagement Inc., a division of Sedgwick, operates in the occupational health sector, it concentrates its corporate giving and volunteer services in the areas of health and human services. CompManagement is strongly committed to the growth of business and industry in Ohio, as well as to community service.
CompManagement provides support to civic organizations, such as EPIC and several chambers of commerce across the state of Ohio. In 2010 and 2011, CompManagement contributed more than $165,000 in membership dues, event outings and financial gifts supporting chambers of commerce and civic associations.
CompManagement’s extensive community involvement demonstrates the spirit of giving that permeates the organization’s corporate culture. Examples of corporate financial contributions over the past three years include a 2011 Sedgwick holiday card project to raise awareness of and to raise funds for injured U.S. military personnel and the donation of a $25,000 Ohio-manufactured vehicle to Ohio State University’s James Cancer Hospital.
CompManagement has a 15-member colleague activity committee that promotes colleague interaction through office activities. The committee is self-funded; all money raised is given back to the colleagues as a prize or incentive for participation unless otherwise specified.
The colleague activity committee meets monthly to manage the company’s community service efforts, including fundraising events, blood drives, volunteer opportunities and other service activities. The group works closely with the company’s human resources department to advertise and promote volunteer activities among the company’s employees to ensure that all of CompManagement’s team members have an opportunity to be involved in a meaningful way.
Across the country, every business continues to look for ways to save money and reduce operational expenses in order to reinvest in their people, technology and other business practices. Workers’ compensation premiums are one operational expense that may be reduced if your organization has implemented safe work practices and adopted claims management best practice techniques.
“If you are an employer in Ohio, there are many solutions available to you for discounted workers’ compensation premium. Group Rating remains one of the best programs available as a solution for your company with high discounts and program compatibility options,” says John Logue, vice president at CompManagement, Inc.
Smart Business spoke with Logue about why every employer in Ohio should review options for workers’ compensation discounts regardless of size.
What is Group Rating and why should my organization participate?
The Ohio Bureau of Workers’ Compensation (BWC) designed Group Rating in the early 1990s as an incentive program for those employers who establish and maintain safe working conditions. Employers with a better-than-average safety record and little if any claim costs pay at or below the base premium rates established by the BWC. The BWC looks at the group of employers and adjusts the rates as if the group was one big company, thus potentially giving employers much lower premium rates than they could attain on their own. Discounts typically range between 15 percent and the maximum discount available from BWC, which for policy year 2013 is 53 percent for private employers.
How are groups formed?
Third-party administrators (TPAs) that represent sponsoring organizations, such as trade associations and chambers of commerce, review an employer’s experience (current year and past four years). Once the employer has signed a Temporary Authorization to review their information, the TPA will review both the employer’s claim costs and payroll. Group participation is a year-to-year enrollment. If the employer’s experience meets the sponsor’s guidelines for the policy year, then they are invited to participate in the program. Many employers are already members of trade associations or chambers of commerce in their community, so it is worthwhile to investigate whether or not it includes this member benefit.
If eligible for Group Rating, what other programs should my organization consider?
While participating in Group Rating, an employer may also earn additional discounts through Destination Excellence, Drug Free Safety Program and Safety Council, to name a few. Some of these programs include elements of things companies are already doing today, such as making payments online, paying on time, being active in local safety councils and reducing the frequency/severity of claims, and establishing drug-free workplace policies. An employer should contact the group sponsor’s program administrator to evaluate the multiple 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.
How is the group savings projection calculated?
Group savings will differ between sponsor programs with those with larger groups offering more stability and accuracy in projected savings. It is very important to make sure that your organization provides the most current payroll information and any future budget impacts when comparing quotes between sponsoring organizations, as payroll, claim costs and industry are major factors in determining the premium for your organization.
An example of the potential savings for a mid-sized service company:
• Payroll — $3,990,000
• Individual discount — 16 percent
• Individual premium — $14,683
• Group discount — 53 percent
• Group premium — $9,632
• Group savings — $5,051
John Logue is vice president at CompManagement, Inc. Reach him at (800) 825-6755, ext 6574 or John.Logue@sedgwickcms.com.
Save the date: Group Rating enrollment for private employers ends Feb. 28 for the 2013 policy year
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|Self-insurance is an alternative rating plan offered by the Ohio Bureau of Workers’ Compensation (BWC) for large private and public employers that are in a position to take on the responsibility of paying all compensation and medical payments for their injured workers.|
In return for taking on all that risk, self-insuring employers have more control over their program and can reduce their overall workers’ compensation costs.
“A self-insured employer can self-administer its own program or administer the program along with its third-party administrator, and can realize potential savings in comparison to state fund premiums paid directly to BWC,” says Bill Bradbury, vice president of Self-Insured Sales and Client Services for CompManagement, Inc.
Smart Business spoke with Bradbury about how to determine whether self-insurance is the right choice for your company.
What are the requirements in Ohio for becoming self-insured?
To be able to self-insure, BWC requires that an employer have a minimum of 500 employees within Ohio, pay premiums within the Ohio state fund for at least two years, show the ability to administer a workers’ compensation program, and demonstrate strong financial stability. Financial requirements differ between public and private employers for self-insurance qualification in Ohio.
What should an employer consider in regards to self-insuring?
First and foremost, an employer should contact its third-party administrator to request a ‘feasibility study.’ This study will identify both the savings and costs of becoming self-insured in order to help the employer make a sound financial determination.
An employer needs to consider if it is set up to handle a self-insured program and is able to meet all of the responsibilities required by BWC and also if it is comfortable with the liability assumed with paying benefits directly. Employers should understand that self-insurance is not an immediate quick fix to reducing their annual premium, but can be a long-term benefit towards reducing overall workers’ compensation costs.
What are the advantages of self-insurance?
Self-insurance as an option has a number of advantages for an employer such as:
n More control of your program, immediate payment of medical and compensation, and employee recognition on the delivery of benefits by your organization versus BWC.
n Cash flow and budget control: pay claims as they occur versus a premium paid every six months based on payroll and claim experience; reserve on claims can be established and managed with the same philosophy of the employer along with input from its TPA versus the state-funded MIRA system; and the ability to budget based on actual claim experience.
n Medical management: review claims for appropriateness of treatment, utilization of preferred provider organization (PPO) networks and control of medical provider requiring justification of treatment in writing; utilization of effective prescription program; and claim and nurse case management develop timely expectations on return to work and treatment plan.
n Analysis of expense: reports can be generated immediately with accurate analysis; and flexibility in reporting losses by employer, department, shift, causation codes, etc.
What are the disadvantages of self-insurance?
Employers should be cognizant of three areas when approaching self-insurance:
n Financial stability: employer has unlimited claims liability (without purchase of excess insurance) as there is no maximum value of a loss as there is within the Ohio state fund system; responsibility of payment of claim expenses (including allocated expenses); and payment of excess insurance premiums and BWC self-insured assessments.
n Loss of State Fund Benefits: an employer no longer receives managed care organization services or BWC Safety & Hygiene services that are covered by its annual premium; in addition an employer can no longer receive handicap reimbursements and rehabilitation funds, and is no longer able to participate in premium discount programs offered to state fund employers.
n Responsibilities: all self-insured employers are expected to make timely payments of compensation and medical benefits, have an internal claims administrator, have a consistent date stamping process and ability to maintain claim files in an orderly manner, and will be audited by the BWC to ensure compliance with all program requirements.
How do I know if my organization is a good candidate for self-insurance?
An employer can get started by performing a simple financial measurement comparing its premium paid to the BWC for the past four years to its actual claim losses (as shown on its Experience Report provided annually by BWC). If premiums paid are higher than actual claim losses and it is a sizable employer, then a ‘feasibility study’ that can typically be prepared by any full-service third-party administrator should be completed. That study will compare an employer’s estimated state fund costs to the estimated costs of a self-insured program within a projected five-year period.
Be sure that all costs are captured in the feasibility study including those for BWC assessments, the self-insured guaranty fund, excess insurance and claims management administration fees. Investment earnings should also be accounted for.
In the end, if the savings projected outweigh the costs associated with participating in the state fund at a risk tolerance level acceptable to your organization, self-insurance may be a good option to affect your overall bottom line operational costs.
Bill Bradbury is the vice president of Self-Insured Sales and Client Services for CompManagement, Inc. Reach him at (800) 825-6755, ext. 2407, or Bill.Bradbury@sedgwickcms.com.
Designing programs and using best practices to keep your employees safe may feel like the right thing to do, but this decision does more than just ease your mind.
“By implementing best practices and a safety management program in the workplace, employers can not only protect their employees and prevent incidents from occurring, but they can also reduce their annual workers’ compensation costs,” says Randy Jones, the senior vice president of TPA Operations for CompManagement, Inc.
Smart Business spoke with Jones about how improving safety in the workplace benefits both employees and the bottom line, and about what employers can do to improve workplace safety.
Why should organizations focus on safety and how does doing so benefit an organization’s employees and its bottom line?
The most valuable asset that any organization has is its people. Employers should implement and use safety best practices and a safety management program in the workplace. By using those tactics, employers protect their employees and prevent incidents from occurring while also reducing their workers’ compensation costs.
Claim costs are one of the three major factors that determine an employer’s annual premium with the Ohio Bureau of Workers’ Compensation (BWC). Reducing and/or preventing workplace injuries and illnesses from happening dramatically impacts costs.
What are some steps organizations can take to improve safety?
In order for any safety program to be successful, an employer must be committed to safety. It is absolutely imperative for management to support the safety process.
There are several simple steps that an organization can implement to create an awareness of safety in their organization, such as:
- Holding monthly safety training meetings focused on specific topics.
- Having an emergency evacuation plan in place and practicing it regularly.
- Ensuring that your organization always has adequate personal protective equipment and that employees know how to access and utilize properly.
- Posting warning signs where appropriate as reminders for best safety practices, as well as marking all hazardous areas.
- Ensuring that all equipment has appropriate safety devices installed and is checked regularly for proper working condition.
- Appointing someone within your organization to do a monthly safety checklist review of the entire workplace.
- Providing employee recognition for safe work habits.
- Ensuring that first aid kits are available and easily accessible throughout the building.
Where should organizations look for safety training programs?
Many third-party administrators have in-house safety and loss control departments that offer a variety of onsite and online training programs. In addition, training is available from the BWC’s Division of Safety & Hygiene.
What types of safety grants are available and how can an organization apply for one?
The Ohio BWC has a Safety Intervention SafetyGRANTS program that is available to state-funded employers in business for at least two years. This program awards safety grants to employers for the purchase of ergonomic, safety and/or industrial equipment. Employers are eligible for a two-to-one matching grant up to a maximum of $40,000, which equates to a total of $60,000 ($20,000 from the employer and $40,000 from the BWC). The BWC requires that the employer provide ongoing documentation, case studies and access for staff to evaluate in order to determine the cost effectiveness of these interventions in reducing occupational injuries. The BWC also offers a safety grant for the implementation of a drug-free safety program and just recently announced a safety grant available for the wholesale/retail trade sector for the implementation of safety controls in their workplaces.
What are the advantages of participating in safety councils?
The BWC has more than 80 sponsored safety councils located throughout Ohio. By becoming an active member, an employer is able to receive a 2 percent rebate on its annual workers’ compensation premium. An additional rebate may be earned if your workplace reduces either the severity or frequency of injuries by 10 percent or keeps both at zero.
To qualify for the rebate, an employer must meet the following eligibility requirements: join a local safety council by July 31, 2011; attend 10 safety council meetings (at least eight through the local safety council; the additional two hours may be through attendance at BWC safety training courses or industry specific training); send a qualified senior-level manager to a safety council sponsored meeting; and submit semiannual workplace accident reports for the 2011 calendar year.
The program does not apply to self-insuring employers, state agencies and employers enrolled in the BWC group retrospective rating programs. Employers enrolled in the group rating program are eligible for the 2 percent performance rebate in addition to their group rating discount, but are not eligible for the 2 percent participation rebate.
How can an organization determine whether it is eligible for these safety improvement programs?
Your third-party administrator’s safety and loss control department should be able to review the different safety improvement programs with you and assist in identifying which ones are the best fit for your organization and management team. In addition, resources are available from the BWC’s Division of Safety & Hygiene at www.ohiobwc.com or (800) OHIOBWC.
Randy Jones is the senior vice president of TPA Operations for CompManagement, Inc. Reach him at (800) 825-6755, ext. 2466, or Randy.Jones@sedgwickcms.com.
The Ohio Bureau of Workers’ Compensation (BWC) calculates an employer’s annual premium based on three factors: the employer’s industry, claim costs and payroll.
In some cases, employers can reduce their workers’ compensation annual premiums by qualifying for any of the several alternative rating programs available, including Group Retrospective Rating, Deductible, Safety Council and One Claim Program, among others.
“It is important for employers to participate in the program that makes the most sense to their organization and to have studies completed that show the best savings options,” says Randy Jones, the senior vice president of TPA Operations for CompManagement, Inc.
Smart Business spoke with Jones about how to determine which of these options is right for your business.
What are some ways employers can reduce workers’ compensation annual premiums?
Again, there are three factors the Ohio BWC uses to calculate an employer’s annual premium: the employer’s industry, claim costs and payroll. To reduce annual premium, an employer may qualify for an alternative rating program. Employers can also control costs by ensuring timely reporting and investigation of their claims and then also working with their third-party administrator to utilize cost-containment strategies such as a transitional duty program, salary continuation, aggressive claims management and possibly settlement.
How can alternative rating programs help?
The BWC has several alternative rating programs that offer discounts toward annual premiums, whether up front or retrospectively. The programs available to employers are Group Rating, Group Retrospective Rating, Individual Retrospective Rating, Small and Large Deductible Programs, Drug Free Safety Program, Safety Council, One Claim Program and Self Insurance.
Some programs are also compatible with each other to allow an employer to ‘stack’ the discounts together up to the maximum discount allowed, which is determined annually by BWC. There are different eligibility requirements for each program as well as expectations that must be met in order to participate and maintain eligibility. However, each program has the goal of rewarding an employer for its focus on safety in the workplace and controlling claim frequency and severity.
What are the pros and cons of these alternative programs?
The main advantage tied to participating in any alternative rating program is the ability to potentially reduce your spend on workers’ compensation and thus impact your company’s bottom line. These programs all provide a mechanism that can result in cost savings if implemented properly. As mentioned, some programs offer an up front discount, while others are capable of being stacked together to maximize savings.
The amount of potential savings associated with each of these programs must always be weighed against the amount of time (and potential other costs) you may be required to invest in order to participate in these programs.
You also need to be aware of ‘stacking’ limitations that are associated with some of the programs. In some cases there is no up front discount, but rather the potential to receive deferred savings based on program performance. Your third-party administrator should be able to review these different programs and assist in identifying which ones are the best fit for your organization.
What kind of results can an employer expect from using one of these programs?
Each program has its own maximum discount determined annually by the BWC Board of Directors. Discounts vary by the amount of risk an employer wishes to take in a given year. For example, if an employer participates in the Deductible Program, it may choose from nine different levels ranging from $500 to $200,000. Available discounts go as high as 77 percent, dependent upon industry and the deductible level chosen.
An employer should pick the program that is best suited for its organization. With the addition of new alternative rating programs by the BWC in 2009, employers now have more options in order to make a selection based on risk tolerance, the size of their business and their overall payroll/premium.
How can employers determine which program makes the most sense for them?
Employers should contact their workers’ compensation third-party administrator to request a ‘feasibility study.’ A feasibility study is a tremendous tool for employers to evaluate the many different rating/discount programs in order to see how they can impact the costs associated with their workers’ compensation program. In addition, a ‘feasibility study’ should include which rating programs can be ‘stacked’ together for greater discount potential if qualifications are met.
When should an employer begin researching these programs to ensure it meets the filing deadline?
For a private employer, the deadline to enroll in a group rating discount program is the last business day of February each year. All other programs have an enrollment deadline of the last business day in April. For a public employer, the enrollment deadline for participation in group rating is the last business day of August. The deadline for all other programs for public employers is the last business day of October.
The one exception to these deadlines is for the Safety Council program. The deadline to enroll for both private and public employers is July 31.
Randy Jones is the senior vice president of TPA Operations for CompManagement, Inc. Reach him at (800) 825-6755, x2466, or Randy.Jones@sedgwickcms.com.
Many employers wonder if using a third-party administrator (TPA) to process their workers’ compensation claims is the right choice. TPAs represent private and public state-funded employers and self-insured. They work with trade associations and chambers of commerce to administer alternative rating programs.
“To sum it up, I’d say the most meaningful thing a TPA does is promote safer working environments, and assist employers in managing and helping to reduce their overall workers’ compensation costs,” says Randy Jones, senior vice president, TPA Operations for CompManagement, Inc.
“There are programs and processes we use that have the ultimate goal of reducing or controlling the cost of that program, for example claims management, safety and risk management services, and risk analysis. Most TPAs offer alternative rating program administration and actuarial services as well.”
Smart Business spoke with Jones about how to determine if a TPA would be able to help your business.
Why would an employer consider using a TPA?
It allows the employer the option of having an experienced partner to help manage their claims and control the costs of their program. It is particularly helpful for a small-to-medium size employer that may not necessarily have a full-time risk manager, but has someone wearing multiple hats. He or she may have responsibility for all employee benefits, and workers’ compensation is just one piece of that. TPAs provide an experienced partner that can work on behalf of the employer by providing another set of eyes in terms of managing their program.
TPAs in Ohio are a very affordable option for employers, as well. A lot of employers say ‘I pay my premiums to the Ohio Bureau of Workers’ Compensation (BWC), aren’t they providing these services for me?’ While that is true, the BWC has to be an objective party. They aren’t just representing the interests of employers in Ohio; they also have to represent the interest of injured workers, medical providers, and any other stakeholder that may be part of the process. A TPA can advocate more appropriately for the employer.
What are some of the benefits of partnering with a TPA?
One of the key benefits is that TPAs provide an ability to quickly analyze and make recommendations when the BWC’s board of directors and staff approve new regulations and requirements. Another important benefit is that a full-service TPA has the ability to assess what programs might be of the greatest benefit to an employer. The goal of the analysis would be to create a safer work environment, reduce premiums and manage the outcome of claims.
If a TPA has a rating department, they also provide a great tool to an employer: the ability to run feasibility studies. These studies provide concrete, black-and-white examples of what alternative rating programs best fit an employer’s particular needs.
What types of businesses can benefit from being represented by a TPA?
It’s an obvious opportunity for larger employers, both private and public. It’s probably also obvious for employers with a propensity for a higher volume of claims, or that may be in an industry with a higher risk in day-to-day operations. That’s conventional thinking. We like to take it a step further, as many businesses, although not necessarily large, can take advantage of a pretty significant number of alternative rating programs the BWC offers. It’s all about what the best option is for the employer. TPAs assist in evaluating if some kind of a significant discount on premium is available, help to manage their risk management program, and provide assistance to the employer with their unique challenges in their line of business.
How can an employer determine if hiring a TPA would be a good decision?
Employers should review their program costs over the past several years. If they determine that the overall cost of the program or their premiums have continued to rise and they can’t determine the reason why, there is a very good argument for having a trained set of eyes analyze their program.
Another reason it’s a good decision: if the employer is in a business that is prone to common types of injuries, such as slips and falls, repetitive motion, or soft tissue injuries. TPAs can assist with the implementation of several safety programs. TPAs can also review an employee’s job duties that may lead to common injuries that can be avoided and/or prevented.
When a workers’ compensation injury occurs, you want to make sure you have an organization that is ready to help in a proactive fashion instead of reactive.
What should an employer look for in a TPA?
They need to consider an organization that is full-service. There are a fair number of organizations that refer to themselves as full-service that are not. A true full-service TPA firm provides claims management, cost control, safety consulting services, rating and actuarial services, as well as hearing representation for the employer before the Ohio Industrial Commission and/or BWC.
You should consider a TPA that is well represented in your industry. If you are a public employer, you should consider a TPA with experience with public employers. Likewise, on the private side, if you’re in the construction industry, it’s fair to ask a TPA what kind of experience they have in your field. Another thing that should be considered is if the TPA is SAS 70 compliant, which ensures tight controls and oversight of the program.
The final thing to look at is a TPA’s reputation in the industry. You can learn a lot about a TPA from the references that they provide and their business partners.
Randy Jones is the senior vice president of TPA Operations for CompManagement, Inc. Reach him at (614) 760-2466 or Randy.Jones@sedgwickcms.com.