Cancellation of Workers’ Compensation Coverage
Ohio Administrative Code (OAC) 4123-17-76.
November 29, 2017
All EM policies and procedures regarding the
cancellation of workers’ compensation coverage that predate the effective
date of this policy.
Revised April 4, 2018; March 13, 2017; September 22,
2017; October 31, 2016; March 18, 2015; May 7, 2014; April 15, 2014. New
Policy, October 25, 2013.
November 29, 2022
The Ohio Bureau of Workers’
Compensation (BWC) sets forth the following guidelines for processing an
employer’s request to cancel its workers’ compensation coverage and
BWC-initiated cancellation of workers’ compensation coverage.
This policy applies to BWC
Customer Assistance, BWC Collections, BWC Employer Compliance, BWC Policy
Processing, BWC Reginal Employer Services, employers and their authorized
of workers’ compensation coverage: The termination of workers’ compensation
coverage when an employer ceases operations, coverage is no longer needed, or BWC
initiates cancellation pursuant to OAC 4123-17-76.
annual premium (EAP): The annual estimate of premium utilizing the
estimated payroll and approved rates. BWC’s premium estimates are based on the most
recently completed policy year of actual payroll multiplied by the employer’s
blended rate for the policy year being estimated.
Annual reconciliation of estimated payroll and actual payroll. All employers
must file annual payroll after the conclusion of the policy year. BWC will
calculate any premium obligation or credit for the completed policy year. For
an employer cancelling coverage, true-up is due within forty-five (45) days of the
date of the BWC notice of cancellation.
An employer may cancel its workers’ compensation coverage if all of the
following criteria are met:
The employer must notify BWC in writing;
One of the following circumstances apply:
The employer ceases operations in Ohio, or
The employer no longer has employees as defined in ORC 4123.01(A)(1)(b) and the employer
agrees to cancel any elective coverage permitted under ORC Chapter 4123;
The employer must true-up for the final policy year, and any other
missing policy years, as set forth in OAC 4123-17-14.
See section IV.A.5 below.
The employer’s cancellation request must provide BWC with the following
Reason for the cancellation.
Effective date of the cancellation.
The employer may not request a cancellation date that is more than
forty-five (45) days prior to the current date, unless the employer has
documentation it ceased operations on such date.
If a new employer requests cancellation on the original effective date,
this request must be made prior to the due date of the first installment
payment. The application fee is non-refundable.
BWC will send correspondence instructing the employer to report actual payroll,
or true-up, online at www.bwc.ohio.gov through
the last date it had employees.
The employer must true-up and pay any premium that is owed within forty-five
(45) days of the date of the correspondence.
If an employer fails to true-up within forty-five (45) days of the correspondence,
BWC will increase the employer’s EAP by ten percent (10%) and bill the
Failure to pay any premium owed will result in certification of the debt
to the Attorney General.
evaluation of cancellation request.
BWC will not honor a cancellation date that is prior to a policy year
during which the employer paid premium without proper documentation supporting
the date the employer ceased operations.
The cancellation effective date must be at least one day after the last date
the employer had employees to ensure active coverage through the cancellation
date. The cancellation effective date may be extended to the day after the final
date of the policy year. The final date of the policy year is June 30 for PA
employers and December 31 for PEC employers.
Claim related issues must be resolved.
BWC staff must verify through research there are no claims filed with a
date of injury on or after the requested cancellation effective date.
If the employer has any claims with a date of injury on or after the
requested cancellation date, BWC staff will contact the employer to obtain the appropriate
cancellation date or verify the business was sold or transferred.
for cancellation of workers’ compensation coverage.
BWC will honor all current policy year cancellation date requests if the
request is received by BWC within forty-five (45) days of the date the employer
ceased operations. If more than forty-five (45) days have passed, the employer
must provide documentation to establish when operations ceased. For examples of
documentation which may establish the employer ceased operations, see section
IV.F.1.b. BWC will cancel coverage on the date the request was received if the
employer fails to provide the necessary documentation.
BWC requires documentation when the employer requests a cancellation
date falling within an expired (prior) policy year. For examples of documentation
which may establish the employer ceased operations, see section IV.F.1.b. If
the employer fails to provide the necessary documentation, BWC will cancel
coverage on the date the cancellation request was received, not the beginning
date of the current policy year.
BWC may retroactively cancel an employer’s coverage for good cause
shown. Good cause means a substantial reason, one that affords a legal
justification or a legal excuse, as set forth in OAC 4123-14-03(B).
There may be situations in which an employer’s coverage is erroneously cancelled.
The following principles will guide the voiding of an employer’s erroneously cancelled
BWC error will be corrected without penalty to the employer. This process
Updating the employer’s policy status and extending the due dates for installment
Changing the coverage status of a claim to “covered.”
Reversal of employer billings for the now covered claim.
in any program from which the employer may have been auto-removed.
Removal of liens and fees certified to the Attorney General.
Employer error will require the employer to submit a new Application for
Ohio Workers’ Compensation Coverage (U-3) with the non-refundable application
fee. This process may apply to employers identified by the Employer Compliance
Department or Special Investigations Unit as still in operation.
The first hire date on the U-3 for the new policy must be the day after
the cancellation date on the employer’s previous policy if the employer has
been in continuous operation.
BWC will charge the employer a no coverage penalty of not less than $120
for the period when coverage was not established.
BWC will bill the employer dollar for dollar for any claims that occur
during the period when coverage was not established.
may combine the employer’s cancelled policy into the recently issued policy if
deemed appropriate by BWC underwriting guidelines.
BWC will issue a warrant in the name of the employer of record as shown
in BWC systems if it is determined the employer is entitled to a refund. The
name on the warrant will not be modified. BWC recommends the employer confirm
no refund is anticipated before closing a company bank account. Financial
institutions may not honor a refund warrant on a closed account.
initiated policy cancellations.
BWC may cancel an employer’s coverage if any of the following apply:
The employer fails to pay the required premium by the annual renewal
date in accordance with OAC 4123-17-14, and the employer’s EAP is equal to the
minimum administrative charge set forth in OAC 4123-17-26;
The employer’s coverage is lapsed, and the employer’s account has a
balance of less than two hundred dollars ($200), and as of BWC’s processing
date the employer’s policy has no allowed claims filed against it within the
last two years; or
The employer is a new employer who failed to pay any estimated premium or
assessments when due.
BWC may cancel a lapsed employer’s policy if documentation or evidence is
obtained that clearly demonstrates the employer is no longer in operation in
the state of Ohio. Examples of documentation or evidence may include, but are
not limited to, some combination of three of the following:
Secretary of State cancellation.
Tax records such as Schedule C from the employer’s IRS 1040, or IRS
corporate tax forms 1120 or 1120S.
Newspaper articles showing closure, bankruptcy, or criminal conviction.
Site visits showing the business is closed or is no longer operating.
Death certificate or obituary of owner.
Internet web sites or articles indicating bankruptcy, sale, or closure.
The effective date of cancellation shall be:
For situations described in sections IV.D.1.a and b, the last date of
the most recently completed policy year.
For situations described in section IV.D.1.c, the original effective
date of the employer’s policy.
For situations described in section IV.D.2, a date based on the
evidence. If BWC cannot determine a date, the current date or the earliest date
supported by this policy will be used.
BWC staff will enter notes and save documents to the appropriate systems
to support a BWC initiated policy cancellation.
Employer complaints should be processed under the General
Employer Complaint Policy.
BWC has identified specific extenuating circumstances that apply to the
cancellation of workers’ compensation coverage. These extenuating circumstances
are outlined in section F, below.
Adjustment of the employer’s account:
Per ORC 4123.37 an
assessment or judgment does not bar the adjustment of the employer’s account
upon the employer furnishing payroll records to BWC. BWC staff retains the
ability to assist the employer to report actual payroll, through the submission
of payroll records.
BWC staff can accept actual payroll, with appropriate documentation,
even if the employer’s requested cancellation date is denied under this policy.
If the employer’s requested cancellation date is denied, BWC will nevertheless
cancel the employer’s workers’ compensation coverage. The effective cancellation
date will be the earliest date supported by this policy.
extenuating circumstances that apply to cancellation of workers’ compensation
Extenuating circumstance: Employer has not been operating.
The employer has ceased operations and failed to notify BWC to cancel
coverage, resulting in a lapsed or cancelled uncollectable status.
The employer must establish it ceased operations. The following may be
evidence the employer ceased operations:
Federal Tax Records: If the owner or officer
of the business can produce W-2s for the periods no coverage was in place, this
indicates he or she was working for another employer. This information alone
may not be conclusive as an individual can be employed and operate a business
simultaneously. This documentation along with other information obtained in
researching the employer’s complaint can assist in making the determination.
A sole proprietor would be more likely to start and stop businesses than
a larger type organization such as a corporation. A copy of the sole
proprietor’s individual tax return for the year cancellation is requested and
the subsequent year, if filed and available, should indicate if business income
IRS Transcripts: If the owner or officer does not have a copy of his/her tax
return, he/she can request tax return transcripts from the IRS by calling
1-800-829-1040, or by submitting to the IRS Form 4506T, Request for
Transcript of Tax Return. Delivery takes approximately two weeks. Information
about obtaining IRS transcripts can be found at this link.
Final Ohio State Universal Sales Tax Return (UST-1) or Ohio sales tax
report where the employer has marked to cancel its vendor license.
Ohio Department of Taxation form ST 3C where the employer requested
cancellation of its account with the Department of Taxation.
Department of Job and Family Services “Wage Detail” report from the employer’s
final Unemployment Compensation Quarterly Tax Return. This report will show the
number of weeks the employer paid wages and must support the requested cancellation
Ohio Department of Job and Family Services “Disposition of Business” form
closing the employer’s unemployment tax account.
Agreement or other Sales Documents may prove the former business or equipment was
Documents proving an operation has gone out of
business may include records from the Secretary of State’s office or release
documents from other agencies.
BWC staff member may request a site visit by BWC
Field staff for industries such as retail and manufacturing where operational
status can clearly be determined by observation of the location.
Extenuating circumstances that only apply to employers who lapsed
coverage prior to July 1, 2015 (retrospective premium).
Extenuating circumstance: The employer needed
a certificate to place a bid, but failed to notify BWC to cancel coverage when
the certificate was no longer needed, resulting in a lapse status. Many
independent contractors must obtain a workers’ compensation certificate of
coverage to bid on individual jobs.
If the employer indicates the certificate was used for bidding purposes,
the employer should be charged for the period(s) the certificate was used,
regardless if the employer was awarded the bid(s).
Cancellation can be granted for subsequent periods as long as the
employer was charged for periods the certificate was used to prove workers’
compensation coverage, and there is no evidence the employer was otherwise
amenable as an Ohio employer. A complete review of BWC systems must be
conducted to verify no payroll was ever reported.
Extenuating circumstance: The employer never had employees and its
policy is in a lapsed status.
The employer must meet ALL of the following criteria:
The employer is an entity type that can elect coverage. (See Elective
employer never had elective coverage. If the employer did elect coverage for an
individual(s) and coverage was retroactively cancelled to the effective date of
coverage through the adjudication process, the employer meets the definition of
never having elective coverage.
The employer never reported payroll for the initial payroll period of
coverage or always reported zero payroll and paid the minimum administrative
charge. An employer who reported zero payroll due to a PEO relationship does
not qualify for this extenuating circumstance.
compensable claims have been charged to the policy.
is no evidence in the employer’s file or on BWC systems that indicates the
employer ever had employees.
If the employer meets ALL of the above criteria, the policy can be
cancelled as follows:
If the employer never reported payroll for the initial payroll period of
coverage, the employer’s policy can be cancelled to the beginning date of the payroll
period following the initial payroll period of coverage. The employer’s policy
will be placed in Final Cancel status and the employer will owe the minimum
administrative charge for the initial period of coverage and any applicable
the employer always reported zero payroll and paid the minimum administrative
charge, the employer’s policy can be cancelled to the beginning date of the
payroll period immediately subsequent to the last payroll period the employer
reported zero payroll. The employer’s policy will be placed in Final Cancel
status and, if not previously paid, the employer will owe the minimum
administrative charge and any applicable penalties.