workerscompbiz.com

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.

If you are negotiating to settle a workers’ compensation claim, you should file the Settlement Agreement by 4 PM on Thursday, October 15, 2009. The claimant, his/her attorney, and the employer (or employer’s attorney or TPA) all have to sign it, and the settlement amount must be agreed upon. The BWC will eliminate any reserves for that claim, which should decrease its impact on your workers’ compensation premiums starting 7/1/2010.

If the BWC has paid or been authorized to pay the settlement amount on or before 12/31/2009, the settlement will be included in the published rate letter that will be mailed in July 2010.

If the payment authorization date is after 12/31/2009, the settlement will be included in the rate calculations, but not in the published rate letter in July 2010.

If the settlement agreement is filed after 10/15/09, the settlement money has to be paid on or before 12/31/09 for the reserves to be eliminated for 7/1/2010 policy year.

If the settlement is filed after 10/15/2009 and the BWC doesn’t pay the settlement money until after 12/31/09, the reserves will be included in the premium rate calculations for the 7/1/2010 policy year.

If the settlement is through the attorney general and/or the court, the settlement must be paid by the BWC before 12/31/09.

Why are these dates important? First, you want your workers’ compensation premiums to be as low as possible. Second, group rating sponsors will not even consider any company that has a maximum value claim. If you can show that the claim has been settled and will have total claims costs that are less than the maximum value, then you should get several group rating offers. It is easier to get group rating offers with maximum discounts when the sponsors know that the claim is recognized as settled by the BWC.

For an explanation of any terms that you don’t understand, go to www.actucomp-ltd.com and click on Definitions.