The last business day in April is the deadline for TPAs to provide their rosters of companies to the BWC. This year, 2012, it is April 30.
Earlier deadlines are to create urgency and are part of the marketing strategy of the group TPAs. Believe me, if you waited to sign up for group retro in March or early April, you could.
If your company was not group rated during any 12 months between 7/1/2001 and 6/30/2009, you should have received a notice from the Court of Common Pleas of Cuyahoga County regarding the class action lawsuit SAN ALLEN dba Corky & Lenny’s, et al. I’m not a lawyer, but as I understand it, the lawsuit has been filed alleging that the BWC charged excessive premium rates that were prejudicial to non-group rated employers.
The BWC denies that it owes money to the members of the class and denies that its rating system is prejudicial to non-group rated employers.
Of course non-group rated employers paid higher premium rates than group rated employers. But the court will decide if it was unlawful and if monies are due to non-group rated employers.
I’m staying in the class, even though I doubt that the BWC will have to pay refunds to non-group rated employers.
You may have received a renewal invoice from your current group rating TPA. DON’T PAY IT YET!
Until further notice, the BWC has forbidden sponsors and TPAs from providing any discount levels and projected savings in their communications with customers and prospects.
Without a discount level, you can’t know whether your current group rating program will be the best for you next year. Are you really sure that your company will be eligible for group rating next year? If you pay now, can you get a refund if you change to a different group or the TPA doesn’t have a group for your company? Three years ago, the BWC instituted a break even factor that eliminated groups with discounts less than 30%. Don’t gamble by paying a fee for a service that may not be available.
The BWC is deciding whether to continue with 51% as the maximum discount. And it is reviewing all its employer incentive programs, including whether to continue “stacking” programs for additional discounts.
The renewal invoice you receive should indicate 2012-2013. If the invoice doesn’t say what services it includes or what period of time it covers, don’t pay it. (If your accounts payable person routinely pays invoices that are not specific, you have a bigger problem than just getting the best group rating discount!)
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 on 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 but the BWC kicks you out of group rating due to late premium payment, you may be able to get some of the fee refunded.
Bonnie R Fraser
Yes, it is possible to get a company with a projected EM of 126 in group rating. I just did it. Yes, it’s the only offer the company received, but you only need one good offer to reduce your workers’ compensation premiums!
The point of being a matchmaker is to find at least one group that meets the company’s needs.
Here’s my philosophy on how to be a good matchmaker: be upfront about the company’s situation, establish relationships with individuals at the group TPAs, and don’t try to get them to reduce their fees to unprofitable levels. Good quality groups need a fair fee so they can continue to offer discounts to Ohio employers. Competition is healthy.
How can group TPAs protect their group members from PEO (professional employer organization) surprises?
First, they have access to the payroll history of each prospective group member. They should question any gap of more than 6 months with no payroll reported to the BWC.
Second, they review the questionnaire that the prospective member sends in with the application and fee. Employers are expected to reveal whether they are a PEO or if they have ever been a client of a PEO.
Third, they include a clause in the contract that requires the former PEO client-employer to reimburse the other members of the group if the discount is smaller than projected because of the PEO relationship.
How could this affect you? Could your company afford to pay all group members for the difference in premiums between the projected discount and the actual smaller discount? Also, your premiums will be higher because your discount is smaller or because your company was kicked out of the group.
If your company has been in an employee leasing arrangement during the past 5 years, you will find that you have fewer options for group rating when the contract is over.
Some group rating TPAs refuse to include any company that has been in an employee leasing relationship for the PREVIOUS FIVE YEARS.
Why? If the BWC does not transfer all the correct claims and payroll information to the client employer, there could be adverse effects on the other companies in the group.
Each employee leasing company (Professional Employer Organization, also known as PEO) is supposed to report claims and payroll for their client employers to the BWC. But if they don’t report the correct claims and payroll, the BWC can’t transfer the correct claims and payroll to the client employer when the PEO relationship ends.
If a TPA accepts a company into group rating based on a certain number of claims and then additional (big) claims are included, all the companies in the group will be affected. The companies will be unhappy that they didn’t get the discount they expected. The sponsor will be unhappy that its members are unhappy. And the group TPA may get blamed for poor performance.
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.