What’s on the horizon in 2015 for Ohio’s workers’ compensation system?

As 2014 comes to a close, we look ahead to the continued changes to be made in the Ohio workers’ compensation system that will bring a few benefits to the employers in the state.

“In 2015, the Ohio Bureau of Workers’ Compensation (BWC) expects to implement several new initiatives that include other states’ coverage, ICD-10 diagnosis codes and a prospective billing system for the collection of workers’ compensation premium versus the current in arrears payment,” says Randy Jones, senior vice president of Ohio TPA operations at CompManagement, Inc.

Smart Business spoke with Jones about why the BWC is planning these changes in 2015 and the advantages that each initiative will bring to employers.

Why is other states’ coverage a problem?

Other states’ refusal to recognize Ohio’s coverage of Ohio employees working temporarily in other states has resulted in fines and ‘stop work’ orders, and has also forced employers to acquire the other state’s policy and pay additional premiums. A solution was implemented in 2008 to segregate out-of-state payroll and have an employer purchase private insurance in the marketplace. This solution has become too expensive and is also not available for certain industries. It has also inflated the employer’s experience modifier — a factor used to calculate premium — because claims continue to be reported to Ohio.

What is the BWC doing to help employers with other states’ coverage?

Through House Bill 493, BWC has been granted the authority to offer limited other states’ coverage. It permits the BWC to enter into a fronting arrangement with an insurer of other states via a request for proposal (RFP) that would provide coverage for employer-requested jurisdictions. Ohio employers would then be able to show proof of coverage, eliminate contingent reciprocity provisions, eliminate the requirement to segregate payroll and be given one combined premium for coverage both in-state and out-of-state. The BWC is expected to issue the RFP by Jan. 1, 2015, and select a provider before the proposed implementation date of July 1, 2015.

Why is the BWC implementing ICD-10 diagnosis codes?

Due to the Health Insurance Portability and Accountability Act (HIPAA), covered entities must convert from the current ICD-9 diagnosis system to ICD-10 in 2015. Although the BWC is exempt from HIPAA, there were still several reasons to implement that included the fact that ICD-9 would not be maintained; medical providers in Ohio would need to treat BWC differently when processing workers’ compensation bills; new diseases would not be listed; ICD-10 is more specific and has approximately 68,000 codes versus the 13,000 under ICD-9; and the impact on Medicare reporting as well as benchmarking for national comparisons. Given these reasons, the BWC is currently modifying its system infrastructure to have the ability to receive both ICD-9 and ICD-10 codes by the deadline date of Oct. 1, 2015.

When it comes to prospective billing, how will employers be able to learn more about it and the changes that are being made to the system?

By now, employers should have received communication from the BWC or their third-party administrator on the key changes for implementation that include earlier enrollment deadlines for premium discount programs, transition credits to be offered, new payment schedules and the implementation of a true-up process. The BWC has plans to continue its communication effort via direct mail; its external website, www.ohiobwc.com; presentations to employer groups; articles in Payroll News; a seminar series to be conducted in the spring of 2015; webinars; social media; newspapers; and sessions to be held at the 2015 Ohio Safety Congress & Expo at the Columbus Convention Center March 31 to April 2.

Employers should have discussions with their third-party administrator and complete a feasibility study to know all of their options for 2015 before automatically re-enrolling in the same premium discount program. Other programs may offer better savings for this next policy year.

Insights Workers’ Compensation is brought to you by CompManagement, Inc.

Ohio workers’ compensation system changes will impact your business

As we approach the end of the calendar year it’s a good time to review a few key events happening for business owners in Ohio in regards to the workers’ compensation system.

“The Ohio Bureau of Workers’ Compensation (BWC) has been moving forward on several initiatives over the past few months that include giving another billion dollars back to employers, settling a lawsuit that has implications for some employers in the state and continuing the implementation of a prospective billing system,” says Mark MaGinn, vice president at CompManagement.

Smart Business spoke with MaGinn about what every employer in Ohio with workers’ compensation coverage issued by the BWC should be aware of right now.

What is the benefit of the Another Billion Back initiative?

Another Billion Back comes on the heels of the Billion Back issued in the spring of 2013. It includes a $1 billion rebate to 3,800 public employers and approximately 184,000 private sector employers, as well as several new programs targeting workplace safety.
The rebate, like the one issued in 2013, is possible because of sound fiscal management that led to strong investment returns. BWC began to issue checks last month to employers that have current mailing addresses on file with the agency. The rebates equaled 60 percent of premiums employers paid for the July 1, 2012, private employer policy year and the Jan. 1, 2012, policy year for public employers.

In conjunction with the rebate, BWC increased its commitment to safety. Up to $35 million has been earmarked over the next two years for several initiatives that include the areas of overexertion, slips, trips and falls, musculoskeletal disorders, health and wellness, firefighter safety training, expansion of the safety intervention grant program for employers to purchase equipment to reduce or eliminate injuries, and the development of safety curricula and funding for skilled labor training programs such as carpentry, welding and plumbing.

What should an employer know about the San Allen case?

BWC has settled the San Allen case, a class action lawsuit filed in 2007 against the State of Ohio over BWC pricing policies that were in place between 2001 and 2008. The settlement administrator mailed eligible employers a class notice with proof of claim form in August. All forms were to be completed in full and postmarked no later than Oct. 22, 2014.

According to the settlement agreement, a preliminary report of payments to be made is expected to be issued by Jan. 14, 2015. More information may be found via the settlement administrator’s website at www.ohiobwclawsuit.com.

When it comes to prospective billing, what are the four things that every employer should know?

With the implementation approaching for the July 1, 2015, policy year for private employers and Jan. 1, 2016, policy year for public employers, it is important to know:

Deadline dates have been moved up approximately 90 days for alternative rating/premium discount programs, such as group rating and group retro. The settlement application deadline and deadlines to pay premium have also changed. It’s important to make note on your calendar of all new deadline dates in order to prevent missed savings opportunities.

BWC will be providing $1.2 billion in premium transition credits for employers in order to prevent a double payment situation and ease into the new payment system.

Private employers will automatically be transitioned to a biannual payment schedule for the first year; public employers will be invoiced monthly. In subsequent years, employers may select their own installment option of monthly, bimonthly, quarterly, biannually or annually.

Since BWC will be providing coverage based on an estimated payroll, employers will be required to report their actual payroll for the prior year and pay any shortage in premium or they will receive a refund if there is an overage. Failure to report in a timely fashion will result in removal from alternative rating/premium discount programs.

Insights Workers’ Compensation is brought to you by CompManagement, Inc.

Prospective billing implementation impacts key dates for Ohio employers

The Ohio Bureau of Workers’ Compensation (BWC) currently collects premium after extending coverage to an employer — i.e. in arrears or retrospective billing. By transitioning to a prospective billing system, the BWC will align with a standard industry practice enabling it to collect premiums before extending coverage. This change will have an impact on many of the key dates for Ohio employers that have been the same for a number of years.

Smart Business spoke with Lisa O’Brien, director of rates and underwriting services at CompManagement, Inc., about upcoming changes that could impact an employer’s coverage status or alternative rating program eligibility, costing them potential savings.

Who will be impacted by the changes?

Prospective billing becomes effective July 1, 2015, for private employers, so they will see changes first. Public employers will not switch to this new billing practice until the Jan. 1, 2016, policy year.

What is the timeline for private employers?

These are the enrollment deadlines for Alternative Rating Programs in the 2015 policy year:

  • Nov. 24, 2014 — Group Rating.
  • Jan. 30, 2015 — Group Retro, One Claim, Individual Retro and Deductible.
  • May 29, 2015 — Destination Excellence.

What are the private employer payroll and premium reporting deadlines?

Payroll and premium reporting during calendar year 2015 are as follows:

  • March 2, 2015 — Payroll due for July 1, 2014, to Dec. 31, 2014.
  • May 1, 2015 — Policy year 2015 estimated premium notice will be mailed by BWC.
  • June 1, 2015 — Policy year 2015 premium invoice will be mailed by BWC for first prospective installment. BWC will pay as part of transition credit.
  • July 1, 2015 — Payroll reports will be mailed by BWC for Jan 1, 2015, to June 30, 2015.
  • Aug. 1, 2015 — Policy year 2015 premium invoice will be mailed by BWC for second prospective installment.
  • Aug. 31, 2015 — Payroll report due for Jan. 1, 2015, to June 30, 2015. No payment will be due for this payroll report as BWC will pay with transition credit. Second prospective installment is due for 2015 policy year. Bi-monthly installment payments will continue through April 2016.

What is the timeline for public employers?

Enrollment deadlines for the Alternative Rating Programs for the 2016 policy year are:

  • May 29, 2015 — Group Rating.
  • July 31, 2015 — Group Retro, One Claim, Individual Retro and Deductible.
  • Nov. 30, 2015 — Destination Excellence.

What are the public employer payroll and premium reporting deadlines?

Payroll and premium reporting during calendar year 2016 are as follows:

  • March 31, 2016 — Policy year 2015 payroll report and policy year 2016 premium invoice will be mailed by BWC.
  • May 15, 2016 — Policy year 2015 payroll report and 2016 premium invoices are due. Both will be discounted by 50 percent as part of the transition credit by BWC.
  • Sept. 1, 2016 — Balance of policy year 2015 and 2016 premium are due. They will be discounted by 50 percent as part of the transition credit by BWC.
  • Nov. 1, 2016 — Policy year 2017 estimated premium notice will be mailed.
  • Dec. 1, 2016 — Policy year 2017 premium invoice will be mailed.
  • Dec. 31, 2016 — Policy year 2017 first prospective installment is due. Employers may opt to defer payment until April 30, 2017.

With the change to how premium is billed, will an organization be able to make installment payments?

In the first prospective year, BWC will invoice and require private employers to follow a bi-monthly payment schedule.
Public employers will be invoiced monthly starting with the 2017 rating year. In subsequent years, employers will have other installment options that include: monthly, bi-monthly, quarterly, bi-annually or annually.

Insights Workers’ Compensation is brought to you by CompManagement, Inc.

What you need to know about BWC’s prospective billing transition credits

As the Ohio Bureau of Workers’ Compensation (BWC) works toward implementing a prospective billing system, it has indicated that transition credits will be given to employers to eliminate any double billing as the change occurs from the current in arrears payment cycle.

Smart Business spoke with Heather Vogus, vice president at CompManagement, Inc., about the details of the transition credit and how it will be applied to an employer’s premium for the policy year.

Why are transition credits being offered?

A one-time premium credit is being given to all state fund employers to aid in the transition to a prospective billing cycle from the current retrospective (in arrears) payroll reporting and premium payment cycle. To eliminate the need for double payments during the transition, BWC will provide $1.2 billion in premium credits. The transition will not cost Ohio employers any extra money.

How will the transition credits work?

Private employers will receive full credit to their final in arrears premium payment due in August 2015, based on their Jan. 1, 2015, to June 30, 2015, payroll. In addition, they will receive a two month or 1/6 credit for the first prospective payment for the July 1, 2015, to June 30, 2016, payroll period.

Public employers will not transition to a prospective billing cycle until the Jan. 1, 2016, policy year. They will then receive a 50 percent credit on their May 2016 premium payment, based on 2015 payroll, and a 50 percent credit on their first prospective payment, based on 2016 payroll.

Who qualifies for the transition credits?

All state fund private and public employers that pay premium during the periods will receive the credit. However, they must be in an active status during the transition. Private employers must be active as of Aug. 31, 2015, and they must file their Jan. 1, 2015, to June 30, 2015, payroll report in order to be eligible to receive the full transition credit for that period. Public employers must be active as of May 15, 2016.

What will the BWC use as premium to calculate the credits?

The premium amount utilized to calculate the credit will be dependent on the rating program that an employer may be participating in for the policy year. For instance:

  • The group rating is dependent on the group rated premium.
  • The individual retrospective rating is based on minimum retrospective premium. The transition credits will not apply to claims costs paid under the retrospective rating plan.
  • The group retrospective rating is dependent on merit rated or base rated premium. The transition credits will not include any group retrospective refunds or assessments.
  • The deductible program is based on the discounted premium. The transition credits will not apply to claims costs paid under the deductible plan.
  • The destination excellence is dependent on merit rated or base rated premium. The transition credits will not be reduced by any lapse-free, go green, safety council rebates or other premium-based bonuses and credits.
  • The individual or base rating is dependent on merit rated or base rated premium.

Why are alternative premium discount program enrollment dates changing and when are the deadlines?

Enrollment dates have been moved up about three months in advance because employers will now be paying in advance for coverage and thus premium paid is impacted by this enrollment. Private employer deadlines for the 2015 policy year include:

  • Group rating: Monday, Nov. 24, 2014, previously last business day of February.
  • Group retrospective rating and other alternative rating programs: Friday, Jan. 30, 2015, previously last business day of April.
  • Destination excellence programs: Friday, May 29, 2015, previously last business day of April.

Enrollment deadlines for public employers do not change for the Jan. 1, 2015, policy year. Public employers will move to prospective billing for the Jan. 1, 2016, policy year so deadlines will change in 2015, not this year.

Insights Workers’ Compensation is brought to you by CompManagement, Inc.

Changes to premium discount programs mean earlier deadlines

As the Ohio Bureau of Workers’ Compensation (BWC) begins its transition to a prospective billing system, it has announced the first changes to be made in order to implement this new system, which involves the enrollment deadlines for premium discount programs.

“In order to implement prospective billing, BWC has created earlier deadlines to sign up for incentive/discount programs,” says John Logue, vice president at CompManagement, Inc. “Employers will have to make their selections sooner than normal as the transition becomes effective July 1, 2015, for private employers and Jan. 1, 2016, for public employers.”

Smart Business spoke with Logue to determine when employers need to be prepared to act this year and next so that they do not miss the opportunity to reduce their annual workers’ compensation premium.

When do private employers need to act for their upcoming policy year?  

Private employer deadlines for the 2015 policy year, which is the first year impacted by prospective billing, have been moved up about three months in advance of normal:

  • The group rating deadline has been changed to Monday, Nov. 24, 2014. It was previously the last business day of February.
  • The group retrospective rating/other alternative rating program deadlines are Friday, Jan. 30, 2015. They had previously been the last business day of April.
  • Destination excellence program deadlines are Friday, May 29, 2015. These have moved from the last business day of April.

Are there other deadline changes outside of the premium discount programs for private employers this year?

Settlement applications (C240 forms) for private employers are due Tuesday, July 15, 2014, for any settlements that are to be applied to the 2015 experience. Previously, this deadline was Oct. 15.

What changes occur this year for public employers?

Enrollment deadlines for public employers do not change for the Jan. 1, 2015, policy year. Employers should enroll by the following deadlines this year:

  • Group rating: Friday, Aug. 29, 2014.
  • Group retrospective rating/other alternative rating programs: Friday, Oct. 31, 2014.
  • Destination excellence programs: Friday, Oct. 31, 2014.

What changes should public employers be aware of for the 2016 policy year?

Public employer deadlines for the 2016 policy year, which is the first policy year impacted by prospective billing for this employer population, are as follows:

  • The group rating deadline will be Friday, May 29, 2015, moved up from the last business day of August.
  • Group retrospective rating/other alternative rating programs will be Friday, July 31, 2015. Previously, the deadlines were the last business day of October.
  • Destination excellence program deadlines are Monday, Nov. 30, 2015, moved from the last business day of October.
  • Settlement applications (C240) are due Monday, Feb. 16, 2015, for settlements to be applied to the 2016 experience. This was previously May 15.

With the implementation of prospective billing and change to enrollment deadlines, will employers end up having two payments at once?

To eliminate having to pay two semi-annual premium payments during the transition, one-time premium credits will be given by BWC to help offset the transition to prospective billing from the current ‘in arrears’ reporting. Private employers will receive a full credit to their final in arrears premium payment due in August 2015, which is payroll between Jan. 1, 2015, and June 30, 2015, and a two-month or 1/6 credit for the first prospective payment for payroll between July 1, 2015, and June 30, 2016. Public employers will receive a 50 percent credit on their May 2016 premium payment, based on 2015 payroll, and a 50 percent credit on their first prospective payment, based on 2016 payroll.

Insights Workers’ Compensation is brought to you by CompManagement Inc.

How Ohio safety council program participation can lead to savings

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.

Insights Workers’ Compensation is brought to you by CompManagement, Inc.

How to use deductibles to lower workers’ compensation premiums

Mark MaGinn, Vice President, CompManagement, Inc.

Mark MaGinn, Vice President, 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. λ

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 [email protected]

Insights Workers’ Compensation is brought to you by CompManagement, Inc.

 

How to use deductibles to lower workers’ compensation premiums

Mark MaGinn, Vice President, CompManagement, Inc.

Mark MaGinn, Vice President, 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 mid-sized 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 [email protected]

Save the date: Deductible Program enrollment for private employers ends April 30 for the 2013 policy year.

Insights Workers’ Compensation is brought to you by CompManagement, Inc.

 

 

Why Group Retrospective Rating may be a solution for your organization

Heather Vogus, vice president, Comp Management, Inc.

Over the past few years, many employers in Ohio have been looking at the Group Retrospective Program implemented in 2009 by the Ohio Bureau of Workers’ Compensation (BWC) as another option to garner savings when it comes to their workers’ compensation premium. Enrollment numbers have doubled each year, especially with employers that are of medium size and debit-rated by the BWC.

“If you are an employer in Ohio who has some claims in your experience — as accidents will happen — but also has a solid safety program in place, Group Retrospective Rating may be an option. Organizations that do not qualify for a Group Rating program or are seeing little savings from this program should consider Group Retrospective Rating as an alternative,” says Heather Vogus, vice president at CompManagement, Inc.

Group Retrospective Rating enrollment for private employers ends April 30 for the 2013 policy year.

Smart Business spoke with Vogus about the program and why it has the attention of businesses across Ohio.

What is Group Retrospective Rating? 

Group Retrospective Rating is a performance-based incentive program designed to recover a portion of premiums for employers that reduce injury rates and lower associated claims costs. It is similar in concept to Group Rating, as companies are grouped together to be rated as if the group was one big company. However, with this program, companies continue to pay their own individual premium but have the opportunity to receive retrospective premium adjustments, such as refunds or assessments, at the end of each of the three evaluation periods performed by the BWC.

How are groups evaluated by the BWC?

Three evaluations are performed by the BWC at 12, 24 and 36 months after the end of the policy year. At the end of each period, the BWC looks at the expected losses of the group and compares those to the actual losses to calculate the group’s Retrospective Premium. If the premium calculated is less than the group’s total Standard Premium, the participants receive a refund for that period. However, if the premium is greater, an assessment will be levied by the BWC, but each group limits the maximum assessment by selecting a premium cap that can be factored into your budget so that your organization is prepared. Before entering a program, be sure to have a feasibility study created to ensure this program fits the risk tolerance of your organization and has the ability to garner appropriate savings.

Why should my organization participate?

If your organization is committed to improving workplace safety and accident prevention, as well as taking action to reduce the frequency and severity of accidents involving your employees, this program has the ability to attain premium savings to boost your bottom line. The BWC has just released statistics showing that the 2009 private employer Group Retrospective Rating program has refunded a grand total of $12.4 million to date, for an average of $33,940 per employer.

How is the Group Retrospective savings projection calculated?

First, the overall group premium is calculated. As an example, suppose the Standard Premium for the group is $4 million and the Minimum Premium, assuming 25 percent, is $1 million. Add Developed Losses, which is incurred losses multiplied by the BWC developmental factor of  $1.4 million, and that equals the Retrospective Premium — the minimum premium plus developed losses — to give you $2.4 million.

The Group Retrospective Refund, which is the Standard Premium minus Retrospective Premium, is  $1.6 million, and the Estimated Refund Percentage is 40 percent.

Using the estimated refund percentage of 40 percent from the group example above, a mid-sized service company, assuming a payroll of $1 million, may expect:

• Individual Premiums of $62,500

• Group Retrospective Rating Premiums of $37,500

• Group Retrospective Rating Savings of  $25,000.

Savings reflected above do not include the additional savings that can be realized by also participating in programs compatible with Group Retrospective Rating such as Destination Excellence Go Green and Safety Council (participation rebate).

Heather Vogus is vice president at CompManagement, Inc. Reach her at (800) 825-6755, ext. 65440 or [email protected]

Insights Workers’ Compensation is brought to you by CompManagement, Inc.


 

How Group Rating allows employers to lower their premium expense

John Logue, vice president, CompManagement, Inc.

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 [email protected]

Save the date: Group Rating enrollment for private employers ends Feb. 28 for the 2013 policy year

Insights Workers’ Compensation is brought to you by CompManagement