workerscompbiz.com

Normally, I don’t like to insult the BWC.  I’ve been working with it since 1981, and it has made terrific improvements.  The people who work there are generally knowledgeable and helpful.

But here’s a situation with sole proprietors and partners that is ridiculous, unfair, and a complete waste of time.

As background, you should know that, when calculating premiums, sole proprietors and partners who have elected coverage for themselves have to report a weekly minimum payroll.  The amount of the weekly minimum payroll is printed on the back of the Payroll Report that is sent out every six months.  You multiply the weekly minimum payroll times 26 weeks, multiply that times the premium rate, and then pay that premium amount to the BWC.  You report that supplemental coverage payroll on a separate line on the Payroll Report.

There are two exceptions to the above background:  You have to pay at least $50 every six months even if the premium you calculated is less than that.  And, if you pay online, the BWC doesn’t send a Payroll Report, it sends you a postcard reminding you to pay online.

Nowhere on the webpage where you calculate your premiums does the BWC indicate how much the weekly minimum is.  So, you have no idea whether it has changed since the last time you paid.

Now here’s the really nutty part:  if you don’t REPORT the correct minimum amount, the BWC CANCELS YOUR SUPPLEMENTAL COVERAGE.  It doesn’t matter if reporting the correct amount is STILL less than $50 and you’ve paid $50.  Cancelling the coverage means that the sole proprietor or partner will not be covered in the case of a work related injury.

Adding insult to injury, the sole proprietor or partner has to REAPPLY for supplemental coverage.

If a corporation doesn’t report the correct payroll, the BWC does not cancel coverage.  When an audit reveals incorrect payroll reporting, the corporation gets an invoice and 30 days to pay.  Why are sole proprietors and partners singled out for minimum payroll reporting and cancellation without notice?

Here’s an easy fix:  make sure that the online box for supplemental coverage payroll cannot show less than 26 weeks times the minimum weekly amount.  The BWC could also put the new minimum weekly amount in BOLD on the reminder postcard.

One final thought:  if I don’t reapply for supplemental coverage, will the BWC automatically refund the $50 premium already paid, or would I have to ask for it?

What does a new business owner need to know about workmen’s compensation?

First, you must have Ohio workers’ compensation coverage for your Ohio employees. Go to the Bureau of Workers’ Compensation (BWC) website at www.ohiobwc.com and click on Apply for Coverage under the orange Employer heading. This will take you to a brief explanation of the application process, and you can download the application to make sure you have all the information required. You can also file your application on line, but you won’t know how much your initial premiums will be until after you have applied. You or your accountant can call the BWC before you apply to find out.

If you are a sole proprietor or partner in a partnership, you can (and should, in my opinion) elect coverage for yourself. If you do the labor yourself, your chances of being injured are higher and your need for coverage is greater. Even if you are office based, you can still be injured in an auto accident driving from meeting a prospect or customer. If you become unable to work, you will need quick treatment and efficient bill payments so you can continue to concentrate on your business. See the July 24, 2009 post for details on minimum and maximum payroll to report.

You will receive a Payroll Report (form DP-21) in late December and late June. Enter the six-month payroll, multiply it times the premium rate, and send it back to the BWC with payment by check or credit card. If you pay by credit card on line, you can choose to pay your premiums every three months, if that is better for your cash flow.

Second, once you file an application for coverage, the BWC will ask you to choose a Managed Care Organization (MCO). This is a company that will manage the medical care of your employees when they file an injury claim. You do not pay the MCO; it is paid a portion of your premiums by the BWC. Every two years, you can easily switch to a different MCO during open enrollment.

You may receive letters from an MCO claiming to be endorsed by the BWC, or creating the impression that it is a division of the Ohio BWC. No MCO is endorsed by or is a part of the BWC. Personally, I avoid doing business with any company that starts off with misleading communications.

And last but not least, the name changed back in 1977 to the Bureau of Workers’ Compensation. It’s easier to say workmen’s compensation, but it’s just not politically correct.

It’s time to pay semi-yearly Ohio workers’ compensation premiums, and here’s a situation one company faced.

Situation. The owner did not take a paycheck for all 26 weeks, but she did take $1,200 each week for 14 weeks. The question was whether she had to report her actual earnings for 14 weeks and then the minimum for the other 12 weeks.

The answer is NO. As much as possible, use the actual earnings. In this case, multiply the weekly earnings times the number of weeks paid, $1,200 times 14 weeks, which totals $16,800. This is more than the minimum required, and less than the maximum. So the owner only has to report her real earnings of $16,800 regardless of how many weeks she took a check.

Minimum and maximum. Corporation officers, and sole proprietors and partners who have elected to be covered by Ohio workers’ compensation, must report certain minimum dollars of payroll. Currently, the minimum is $384 per week, so an officer has to report at least $9,984 for six months ($384 times 26 weeks). The maximum the officers, sole proprietors and partners have to report is $1,151 per week, or $29,926 ($1,151 times 26 weeks).

50-50 Plan. What if the officer chooses the 50-50 plan, where he only reports three months of payroll? Again, the officer multiplies the minimum $384 times 13 weeks, which equals $4,992. As long as his actual earnings are between the minimum of $4,992 and the maximum of $14,963 ($1,151 times 13 weeks), he should report his actual earnings. He has to report at least $9,984 and no more than $29,926 at the end of the 26 weeks regardless of when he actually received the money.