Ohio Workers’ Compensation

On Wednesday, November 14th, a first in BWC history took place in the BWC’s auditorium in Columbus, Ohio.  For over three hours, sixty (60) employers and trade association representatives appeared before the members of the BWC Board of Directors’ Actuary Committee to offer public comment and input to the members of the Board in attendance.   One Hundred Fifteen (115) additional witnesses submitted written testimony only.  The Committee had requested public testimony in response to the BWC Administrator’s proposal to decrease the maximum available credibility discount to employers in the Ohio group rating program from 90% to 80%.  BWC alleges group-rated companies are actuarially being subsidized by non-group-rated companies by an estimated $200 million a year.  At the September board meeting, at the request of the Administrator, the Board had referred the matter to the Actuary Committee for study and to recommend a maximum discount percentage.

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There are many changes presently being considered by the Ohio Bureau of Workers’ Compensation (BWC).  Perhaps the most impacting for Ohio employers are the changes being discussed regarding private employer group rating programs.

If you are presently in a group rating program receiving the maximum 90% discount and assuming you continue to qualify for group rating, you may find the maximum discount reduced to 85% or even lower. 

What might this mean in terms of dollars and cents? 

Let us assume your undiscounted premium is $5,000.  A 90% discount would result in paid premiums of $500.  An 85% discount would result in paid premiums of $750 or a 50% increase in premium. 

There is strong consideration being given to reducing the maximum discount to around 65% in possibly a few years or less. 

An employer who was receiving a 90% discount and a premium of $500 would now pay $1,750 or a 350% increase in premiums.

Another change the BWC is considering is to require employers who ordinarily would be removed from group rating because of higher claim costs to stay in the group program for possibly up to three years.  This change would cause all other members of the group program to absorb the increased costs of those employers required to stay in the group.  Presently there are approximately 100,000 Ohio employers in group rating programs.  It is my opinion that over time fewer employers will qualify for group rating or will explore other funding arrangements such as retrospective rating or self insurance in order to keep costs suppressed and avoid the volatility associated with group rating.

No matter what final decisions the BWC makes, two things remain constant regarding controlling workers’ compensation costs.  Safety programs must be in place to avoid injuries and proactive claims management strategies must be employed.  Ensuring these components are in place puts your organization in the best position to control costs.

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