Ohio Approves Workers’ Comp Initiatives Including $1 Billion Rebate

Labor & Employment @lert

Date: June 06, 2013

Ohio Governor John Kasich and the Ohio Bureau of Workers' Compensation's (BWC) board of directors just approved a plan that:

  • Provides a one-time rebate of $1 billion for private employers and public-taxing districts that pay into Ohio's state insurance fund.
  • Expands the BWC's Safety Grant Program from $5 million to $15 million to support statewide efforts to promote workplace safety.
  • Asks the Ohio Legislature to authorize the BWC to move toward a prospective payment system and subsequently requests the board to issue an additional $900 million to mitigate transition costs.
$1 Billion Rebate

Each rebate issued by the state of Ohio will reflect approximately 56 percent of an employer's blended premium paid to Ohio's state insurance fund for the July 1, 2011 to June 30, 2012 policy period. Rebates will be reduced by any money owed to the BWC, and an employer who reports through a professional employer organization (PEO) will receive their rebate from the PEO. To be eligible for a portion of the $1 billion rebate, a private employer must:

  • Have active, reinstated, combined or debtor in possession status as of April 1, 2013.
  • Pay into the state insurance fund.
  • Have active, up-to-date policies.

This rebate is possible because the BWC currently has $8.3 billion in combined net assets, which exceeds the target funding of assets to liabilities as set by the BWC's board. In a separate action, the board also approved a 2.1 percent base-rate reduction for private employers for the 2014 policy year, which runs July 1, 2013 through June 30, 2014.

Safety Grant Program

The Safety Grant Program will now provide for the BWC to match 3 dollars for every dollar, up to $40,000, that an employer spends to purchase equipment that will substantially reduce or eliminate injuries and illnesses. To qualify for the Safety Grant Program, an employer must:

  • Pay into the state insurance fund.
  • Be current on monies owed to the BWC.
  • Maintain active coverage.
  • Not previously have purchased the equipment proposed in the application or otherwise have started a program similar to what is requested in  the grant application.
Prospective Payment

Currently, employers pay workers' compensation premiums in arrears, meaning they paid premiums in February 2013 for the July 1, 2012 to December 31, 2012 coverage period. The BWC is seeking legislative approval to change to prospective billing, meaning an employer would pay their premium in April for the coverage period beginning July 1. The transition, if approved by the Ohio Legislature, would likely begin late 2014 at the earliest. The BWC reports several benefits of a prospective payment plan, including:

  • Opportunities for more flexible payment options (monthly, quarterly, yearly), with possible discounts for employers paying a year in advance.
  • Better ability to anticipate budgetary impacts of workers' compensation coverage.
  • Better opportunities for the BWC to provide quotes online or via phone.
  • Lower costs for employers who either do not pay premiums timely or have workers injured without coverage being mutualized among employers in good standing.
FOR MORE INFORMATION

For more information, please contact:

M. Scott Young
513.352.6617
Scott.Young@ThompsonHine.com

Allison M. Kendall
513.352.6507
Allison.Kendall@ThompsonHine.com

or any member of our Labor & Employment group.

***

This advisory bulletin may be reproduced, in whole or in part, with the prior permission of Thompson Hine LLP and acknowledgement of its source and copyright. This publication is intended to inform clients about legal matters of current interest. It is not intended as legal advice. Readers should not act upon the information contained in it without professional counsel.

This document may be considered attorney advertising in some jurisdictions.

© 2013 THOMPSON HINE LLP. ALL RIGHTS RESERVED.