OhioBWC - Basics: (Policy library) - File


Policy Name:

Retroactive Coverage and Penalty Abatement

Policy #:


Code/Rule Reference

Ohio Administrative Code (OAC) 4123-14-03, 4123-14-06.

Effective Date:

May 15, 2018


Employer Policy


All EM policies and procedures regarding retroactive coverage and penalty abatement that predate the effective date of this policy.


New policy, September 1, 2008; latest revisions August 20, 2012; September 10, 2014; July 1, 2015; January 11, 2016; March 3, 2016; May 15, 2018.

Review Date:

May 15, 2023



I.       Policy Purpose


To guide Ohio Bureau of Workers’ Compensation (BWC) staff in processing employer requests for retroactive coverage and penalty abatement when the lapse in coverage or penalty results from good cause, BWC error, or an extenuating circumstance.


II.     Applicability


This policy applies to BWC Call Center, BWC Employer Services, employers, and authorized representatives.


III.    Definitions:

A.     Bill date: Always the first day of a month. BWC will “bill” the employer on the first day of the month for each installment payment that is due.

B.     Default in payment: An employer that fails to pay an installment before the end of any grace period will have its coverage lapsed. Such lapse will be effective the first day of the month following the bill date, regardless if such date occurs prior to the installment due date.

C.     Estimated annual premium (EAP): The annualized estimate of premium utilizing the estimated payroll and approved rates.  BWC’s premium estimates are based on the last full policy year of actual payroll multiplied by the employer’s blended rate for the policy year being estimated. New employers applying for coverage on or after July 1, 2015, are required to provide twelve (12) months estimated payroll on the U-3 application.

D.     Extenuating circumstance: A substantial reason, or mitigating factor, that justifies granting the employer’s request for relief.

E.      Good cause: Means a substantial reason, one that affords a legal justification or legal excuse as defined in OAC 4123-14-03.

F.      Grace period: A time frame during which BWC will not impose a penalty for installment payments and true-up payroll reports received after established due dates.

G.     Lapsed: Coverage status applied to an employer’s policy who fails to pay the required premium by the established due date. This status indicates the workers’ compensation coverage has been suspended.

H.     Penalty: Fee assessed by BWC to employers who fail to pay the required premium by the expiration of applicable grace period.

I.       Policy in good standing: The employer is current on all payments due BWC and is in compliance with BWC laws, rules, and regulations at the time of the request.

J.       Reinstatement: Coverage status applied to an employer’s policy that indicates workers’ compensation coverage has been restored effective on the date BWC received full payment for any and all delinquent premium(s).

IV.   Policy

A.     Background.

1.      An employer may request retroactive coverage and penalty abatement to cover a claim, to qualify for a BWC program, or to lessen the financial impact of a lapse in coverage.

2.      As set forth in OAC 4123-14-03, the BWC Administrator may for “good cause”:

a.      Waive a default in the payment of premium by an employer where workers’ compensation coverage has lapsed for a period less than sixty (60) days. If such a waiver is granted, the employer’s workers’ compensation coverage including elective coverage will be reinstated retroactively.

b.      Abate penalties imposed on an employer for failing to comply with the Ohio workers’ compensation statutes. For additional information about penalties, see the Employer Services policy Prospective Billing Installment Payments.

3.      As set forth in OAC 4123-14-06, unless a different time is provided by the Revised Code or the Administrative Code for such matter, an employer must file a protest or appeal of BWC’s decision on the request, protest, petition, or application within two years of receipt of BWC’s determination. This limitation also applies to a request to use the Governor’s One-Time Forgiveness (GOTF) set forth in paragraph E below.

B.     Employer requirements.

1.      BWC will only consider retroactive coverage if the period of lapsed coverage is less than sixty (60) days (i.e., fifty-nine (59) days or less). The number of lapse days is NOT a factor in evaluating an employer’s request for penalty abatement. For example, an employer with a lapse period of sixty-five (65) days who can show “good cause” will be denied retroactive coverage, but may be granted penalty abatement.

a.      BWC will deny employer requests for retroactive coverage when the lapse period is sixty (60) days or more.

2.      A request for retroactive coverage and/or penalty abatement must be submitted in writing and signed in handwriting as required by OAC 4123-14-03.

a.      Employers requesting retroactive coverage cannot be granted penalty abatement unless both are requested.

b.      All requests for relief must fully explain the reasons for the relief sought.

3.      Retroactive coverage and/or penalty abatement may only be granted if the employer’s policy is in good standing.

a.      Good standing means the employer is current on all payments due to BWC and is in compliance with BWC laws, rules, and regulations.

b.      Any outstanding balances must not be past due or they must be in an appeal status.

c.      The employer’s coverage must be active or reinstated.

d.      The employer must have completed all payroll reporting requirements.

e.      The employer must be current on the payment schedule of any part-pay agreement it has entered for any outstanding balances.

C.      Resolution of complaints.

1.      Employer complaints should be processed under the General Employer Complaint Policy. BWC staff will refer to the following sections of the General Employer Complaint Policy:

a.      Section IV.B.3.a to IV.B.3.e for examples of extenuating circumstances that do not qualify as good cause. An employer may be eligible for the GOTF scenario outlined in section IV.E below.

b.      Section IV.D.2 to IV.D.5 for examples of extenuating circumstances that do qualify as good cause.

2.      Examples of BWC Errors which would allow granting an employer’s request for relief are found in section IV.D below.

3.      Specific extenuating circumstances that meet the “good cause” standard for retroactive coverage and penalty abatement are found in section IV.F below.

D.     BWC and Attorney General (AG) errors: An employer can be granted relief based on BWC or AG error regardless of the length of the lapse period, and is not required to utilize the relief outlined in OAC 4123-14-03. Example of a BWC error which would allow granting an employer’s request for relief: The employer just opened its business and contacted BWC about how to pay its premium and was given inaccurate information or advice in writing from BWC, relied upon and documented by the employer. Relief will be granted for a one-time excuse within a five (5) year period.

E.      Governor’s One-Time Forgiveness (GOTF). The intent of GOTF is to implement Governor Kasich’s Executive Order 2011-01K.

1.      Effective July 1, 2015, each employer will have one GOTF, regardless if such forgiveness was used, or unused, for a lapse that occurred prior to July 1, 2015. The GOTF may be used after July 1, 2015, for:

a.      A failure to meet the payroll reporting deadline that occurred prior to June 30, 2015.

b.      A default of a premium installment payment that occurs after July 1, 2015.

c.      A failure to file the annual payroll true-up (see Payroll True-Up policy).

2.      An employer’s request for GOTF is subject to the time limitation for filing a protest or appeal that is set forth in section IV.A.3 above.

3.      When GOTF is used, it is no longer available to the employer. The employer may not rescind a prior use of GOTF.

4.      Requesting GOTF relief in no way waives the employer’s right to file additional requests for relief for good cause under a different scenario of this policy.

5.      GOTF should only be used when the employer has not established “good cause” for the lapse in coverage.

6.      The following conditions must be met in order to grant the employer’s GOTF request:

a.      The coverage on the policy must be reinstated.

b.      The request must be in writing and specify that the employer is using GOTF to remove the lapse in coverage and billed penalties.

c.      The lapse period must be less than sixty (60) days (fifty-nine (59) days or less).

d.      If there are multiple lapse dates, and the employer has not previously been granted relief under this scenario, BWC may waive one lapse period. The employer must communicate to BWC which lapse period to apply the GOTF exception.

7.      BWC will grant retroactive coverage and penalty abatement and waive any other penalties associated with the violation if the employer meets all the conditions for granting relief based upon GOTF. BWC may grant retroactive elective coverage, when applicable.

8.      Scenario: Default of a premium installment payment. This scenario applies to prospective premium payment.

a.      BWC will allow an employer, who cannot otherwise establish good cause, to use GOTF for relief from one default of a premium installment payment.

b.      The following additional conditions must be met in order to grant the employer’s request:

i.       All required installment payments must be posted to the policy account.

ii.      The lapse date must have occurred after July 1, 2015.

iii.     The request meets the two year limitations period set forth in IV.A.3 above.

F.      Extenuating circumstances that meet the “good cause” standard for retroactive coverage and penalty abatement.

1.      Third party errors or omissions: Bank error or delivery service error in processing an employer payment or delivering a payment to BWC. This circumstance may also be used if the post office did a poor job forwarding the employer’s mail.

a.      Such errors must be documented by letter or sworn statement from the bank or delivery service.

b.      The bank or delivery service error must be the sole reason for the untimely payment or reporting.

c.      Examples of extenuating circumstances:

i.       An employer mails the payment to BWC on August 14. However, the post office returns the envelope and check to the employer with a letter stating the envelope was caught in a mail machine and badly damaged. The employer immediately issues a new check and mails it to BWC on September 4. BWC receives the payment on September 6. The employer provides BWC with copy of the post office letter and a copy of the damaged envelope.

ii.      An employer attempts to make an installment payment prior to the due date, using BWC’s website. However, the payment is deemed NSF (non-sufficient funds), even though the employer had sufficient money in the account to cover the payment. The employer secures a letter from its bank stating that, due to a computer error, the bank erroneously did not honor the payment.

2.      A new employer defaults on the first installment: The employer fails to timely pay the first installment resulting in a lapse.

a.      The following conditions must be met:

i.       The employer meets all requirements set forth in sections IV.B.2 through IV.B.3 of this policy.

ii.      The employer reinstated coverage within fifty-nine (59) days of the first invoice due date.

iii.     The employer must prove good cause or use GOTF.

b.      BWC may grant retroactive elective coverage, when applicable.