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With the BWC touting “safety” in every program it offers, it’s easy to be confused about which program provides which benefit is to employers.
Safety Council Rebate Program: Employers get a rebate of their premiums when they join the local Safety Council, attend monthly meetings and provide injury statistics to the Council every six months. Rebates are good.
Drug Free Safety Program: This program replaces the Drug Free Workplace Program. Employers get a 3%, 4% or 7% discount stacked on top of their experience modifier (EM). There is paperwork that costs time & money to prepare and implement, although “DFSP employers may apply for reimbursement for specified start-up costs for the first two years of DFSP program operation.” Go to http://www.ohiobwc.com/employer/programs/dfspinfo/dfspdescription.asp for more information. The real downside is that employers will be prohibited from paying salary continuation for claims with dates of injury 1/1/2011 and later. See previous blog post RED FLAG Drug Free Safety Program for examples of how much the premiums are reduced by the discounts.
Group experience rating: This is still the best way to reduce premiums, but each employer has to meet various criteria and deadlines. The BWC now requires 2 hours of safety training on-line or in person for companies participating in group rating.
Group retrospective rating: The 7/1/09-6/30/10 policy year is the first for this program. Employers pay their individual premiums. At the end of 12, 24 and 36 months, the group experience is analyzed and employers either get a rebate because the group performed well, or they get a bill for more premiums due to poor group performance (too many claims). There does not appear to be a safety training requirement for employers in this program, but employers can participate in the Safety Council Rebate Program.

The deadline for enrolling in the Drug Free Safety Program is June 30, 2010. The program used to be called the Drug Free Workplace Program, but is has been renamed to alert you that the program has changed.
RED FLAG: If you enroll in the Drug Free Safety Program starting 7/1/2010, your company cannot pay salary continuation in any claim with a date of injury of January 1, 2011 or later.
The good news is that a company will be able to stay in the program longer than the current 5 years – at least until the BWC changes the program again. If your company was in drug-free and was eliminated after 5 years, it can apply again. There are 2 levels, Basic and Advanced.
Basic level: 4% discount for non-group experience rated employers. The components are similar to the current program, including written policy, testing, education, training and assistance, and the hourly education and training requirements have been reduced. A safety review, and supervisor accident analysis training and accident reporting have been added. If your company will receive a group experience rating discount, it will not get an additional discount for the Basic level.
Advanced level: 7% discount for non-group experience rated employers. Your company must meet all requirements of the Basic level plus 15% random drug testing, safety action plan and a second chance after first positive. A group experience rated employer can stack up to 3% on top of the group discount, as long as the total discount is equal to or less than the maximum discount (currently 49%).
Is a 3%, 4% or 7% discount worth the paperwork hassle and the inability to pay salary continuation?
Here’s an example. A company has yearly payroll of 3.5 million dollars. Without group rating, its EM would be 120. If it enrolled in the Advanced level, its EM would be 113 and its premiums would be $7,400 lower. With group experience rating, its EM will be 83. Enrolling in the Drug Free Safety Program would lower its EM to 80, and reduce its premiums by $3,000. Are those savings in one year worth giving up the ability to control its claims costs in lost time claims?

RED ALERT!

Workers’ compensation premiums are due by February 28 every year. If those premiums are not paid by April 1, or a payment plan is not agreed upon between you and the BWC, your company will not be included in group rating starting July 1.

(If premiums are not paid on time, the coverage for the employer will lapse. See the post titled Lapsed Coverage: Who Cares? for an explanation of the consequences.)

This is the BWC’s carrot-and-stick technique to get employers to pay their premiums on time: group rating discounts are the carrot, and elimination from group rating is the stick.

True story: A company owner did not pay the premiums due by the end of February. He got an invoice dated March 15 from the BWC which gave him 30 days to pay. He paid the premiums 20 days later. He was unpleasantly surprised when he was eliminated from group rating starting July 1 because he hadn’t paid by April 1. The invoice did not mention that consequence.

Paying premiums later than the August 31 due date does not impact group rating participation, as long as your coverage has not lapsed for more than 40 days in the 12 months prior to the February 28 payment deadline.

If you have already paid a fee to join a group, you may be able to get some of the fee refunded.

Today’s the day if your company is going to enroll in group rating for the 2010 policy year and hasn’t sent in the paperwork.

The group TPAs must provide all information to the BWC by the close of business on Friday, February 26. They must have the AC-26 form for each company along with the roster of companies in each group. Group TPAs form and represent more than one group, and the rosters of companies in each group have to be correct.

If you have not already mailed your AC-26 form and check, fax the AC-26 Employer Statement for Group-Experience-Rating Program to the group TPA today.

The Bureau of Workers’ compensation (BWC) does not want group rating to be the problem it was most recently. Just before the February 28 deadline for this year’s group rating, the BWC instituted a 31.1% break even factor (BEF). All group experience modifiers (EM) had to be multiplied by 31.1%, which lowered the maximum discount from 77% to 70%, and eliminated groups with discounts less than 30%. Some offers did not mention the BEF, so the employer couldn’t tell if a projected discount had or had not been modified by 31.1%. Groups that did not mention the BEF enrolled some employers because their offers looked better than their competitors’ offers.

This year, the BWC has proposed a stratified BEF, which means that the groups with the largest discounts have BEFs that are greater than the groups with smaller discounts. Once the BEFs are applied, the maximum discount should be about 50%, and the minimum discount should be about 17%. The stratified BEF table has to be approved by the Workers’ Compensation Board before any group sponsors or TPAs (third party administrators) can send out any offers.

The BWC has already instituted rules that require every group rating offer to include the BEF in its formula, and not just mention it in a footnote. The goal is to enable an employer to make an “apples to apples” comparison among all the offers.

As an employer, you should not receive any offers that include a projected discount or projected savings at this time.

As always, you can apply to any group that sends you an authorization. You can also seek out other groups, or have an objective TPA seek out and apply to the best groups for you.