OAC 4123-17-72, Appendices
OAC 4123-17-74, Appendices
March 26, 2018
The Deductible Program policy dated July 1, 2016.
Revised November 27, 2018; August 11, 2016; July 25,
2015; April 6, 2015; March 18, 2010. New policy issued September 22, 2009.
March 26, 2023
The Ohio Bureau of Workers’
Compensation (BWC) will permit employers to participate in the Deductible
Program in accordance with applicable laws and rules.
This policy applies to employers,
authorized representatives, BWC Employer Programs, and BWC Regional Employer Management
A. Base rate:
The rate that employers who are not experience rated pay as a percentage of
period: The twelve (12) month period beginning July 1 through June 30 for
private employers, and January 1 through December 31 for public employers. The
deductible selected by the employer will apply only to claims with a date of
injury within the coverage period defined in the deductible agreement.
The maximum amount an employer participating in the Deductible Program must
reimburse BWC for each claim that occurs during the policy year.
Small deductible: A deductible less than or equal to $10,000.
Large deductible: A deductible greater than $10,000.
rated premium: The premium obligations of an employer for the policy year, excluding
Disabled Workers’ Relief Fund (DWRF) and administrative cost assessments. This
may include any experience rated premium related to policy combinations.
Money paid (due) from an employer for workers’ compensation insurance. Premium
does not include money paid as fees, deductibles, fines, penalties or deposits.
Criteria: To qualify the employer must:
Be a private employer (PA employer) or public employer – taxing district
(PEC employer) in the State Insurance Fund.
Have active coverage as of the application deadline.
Be current as of the application deadline with respect to all payments
due BWC as defined in OAC 4123-17-14.
Meet lapse requirements for the deductible level selected:
If the employer selects a small deductible, the employer must not have
cumulative lapses in workers’ compensation coverage in excess of forty (40)
days within the twelve (12) months preceding the application deadline.
If the employer selects a large deductible, the employer must not have
cumulative lapses in workers’ compensation coverage in excess of fifteen (15)
days within the five years preceding the application deadline.
As of the application deadline, timely report actual payroll for the
preceding policy year and pay any premium due upon reconciliation of estimated
premium with actual premium. An employer will be deemed to have met this
requirement if BWC receives the payroll report and the employer pays premium associated
with such report before the expiration of any grace period. See the Payroll
True-Up policy for additional information.
Demonstrate the financial strength and ability to make payments based
upon in-depth credit and financial reviews.
B. The following
employers are not eligible for the Deductible Program:
and renewal requirements.
The application deadline for PA employers is the last business day of January,
preceding a policy year that begins July 1. The Deductible Program runs for a
single policy year (July 1 to June 30).
The application deadline for PEC employers is the last business day of July
preceding a policy year that begins January 1. The Deductible Program runs for
a single policy year (January 1 to December 31).
New applicants must submit an Application for Deductible Program (U-148) to BWC
along with any other documentation required for enrollment in the Deductible
Program by the application deadline. An employer may also apply online at www.bwc.ohio.gov.
BWC will not permit an employer to enroll in the Deductible Program
outside the established deadlines, except that BWC will allow an employer
establishing a policy in Ohio for the first time to submit a deductible
application to BWC within thirty (30) days of obtaining coverage.
Renewal in the Deductible Program at the same deductible level for each
subsequent policy year is automatic, subject to review by BWC of the employer’s
continued eligibility and creditworthiness. An employer participating in Large
Deductible must submit an annual updated financial statement by the application
An employer may change its chosen deductible level for a subsequent
policy year by submitting a written application or by applying on-line through www.bwc.ohio.gov by the application deadline.
The change in deductible level is subject to review by BWC of the employer’s
eligibility and creditworthiness.
An employer that is participating in the Deductible Program will not be
automatically renewed if the employer applies for Group Experience Rating or
Group Retrospective Rating for the upcoming policy year. If the employer does
not pass eligibility requirements for Group Experience Rating or Group
Retrospective Rating for the upcoming policy year, BWC will evaluate the
employer for re-enrollment in the Deductible Program.
evaluation of application.
Employer’s ability to make payments.
An employer that applies for the Deductible Program may request that a
parent company’s financial strength be utilized in evaluating the employer’s
financial strength and ability to make payments. The parent company must meet
financial criteria for the Deductible Program and execute a contract of
guaranty with respect to the employer’s participation in the Deductible Program.
BWC may require an employer to adopt additional risk mitigation measures
as a precondition for participation in the Deductible Program. These measures
may include, but are not limited to:
An alternative payment plan.
Providing securitization in the form of a letter of credit or surety
bond. A cash deposit, certificate of deposit, or private express trust is not security.
For employers electing a large deductible, selection of an aggregate
Obtain credit scores.
Employers satisfying BWC’s eligibility criteria will be submitted to Dun
and Bradstreet (D&B) to obtain credit and financial stress scores. For an
employer applying for the Large Deductible Program, BWC may obtain additional
D&B’s commercial credit score identifies businesses that are likely
to become delinquent in their payments, while the financial stress score
identifies businesses likely to cease operations over the next twelve (12)
months. Credit and financial stress scores are rated on a numeric scale of 1
1 = Low Risk.
2 = Low-Medium Risk.
3 = Medium Risk.
= Medium-High Risk.
5 = High Risk.
1, 2, or 3
4 or 5
1, 2, or 3
Healthy companies that are
prompt payers, less likely to experience financial distress.
Companies that are less
likely to experience financial insolvency, but are not prompt in paying
obligations. These companies appear to have the financial wherewithal to pay
4 or 5
SHORT TERM RISK
Companies with some negative
information that may pose a short term risk.
Unhealthy companies that are
not prompt payers and are more likely to experience financial distress.
Small Deductible Program.
For employers applying for a small deductible, the following criteria
will be used in evaluating their financial ability to participate in the Deductible
Employers in the Low Risk Classification will be approved for all small deductible
Employers in the Short Term Risk Classification will be approved for
$500 and $1,000 per claim deductible levels.
Employers in the Long Term Risk Classification will be approved for
deductible levels up to and including $2,500 per claim.
in the Watch List Classification will be denied participation for all small deductible
Large Deductible Program.
Employers participating in the Large Deductible Program represent
increased financial risk to the State Insurance Fund (SIF). Employers that
choose a large deductible will undergo in-depth credit and financial review to
help mitigate the increased financial risk to the SIF and avoid losses
associated with the Deductible Program.
Employers enrolling in a Large Deductible Program must submit financial
information to BWC during the enrollment period preceding each policy year the
employer elects to participate. For the initial application, the employer must
submit financial statements prepared in accordance with GAAP for the three most
recent fiscal years.
Employers choosing a deductible level of $25,000 or $50,000 must submit reviewed
or audited financial statements.
Employers choosing a deductible level of $100,000 or $200,000 must
submit audited financial statements.
Employers must submit their most recent financial statements for each subsequent
year to be considered for renewal in the Deductible Program.
The submitted financial statements will be further reviewed and analyzed
to identify indicators of any increased financial risk that an employer might
represent to the system, including, but not limited to:
Violation of debt covenants;
Disclosure of contingent liabilities;
assets and the composition of assets; and
Trends in profitability, leverage, debt coverage, liquidity, and growth.
All information from the financial analysis and the D&B scoring will
be considered in assessing the employer’s application for participation in the Large
The deductible is the maximum amount an employer participating in the Deductible
Program must reimburse BWC for each claim that occurs during the policy year.
The employer will choose one deductible amount for all claims with dates
of injury during a one year coverage period, subject to the deductible
limitations of its D&B commercial credit score.
Per claim deductible amounts:
Small Deductible: $500; $1,000; $2,500; $5,000; and $10,000.
Large Deductible: $25,000; $50,000; $100,000; and $200,000.
For an employer selecting a small deductible, the employer cannot choose
a deductible amount that exceeds 25% of the experience rated premium obligation
for the most recent full policy year.
For an employer selecting a large deductible, the employer cannot choose
a deductible amount that exceeds 40% of the experience rated premium obligation
for the most recent full policy year.
For self-insuring employers re-entering the SIF, BWC will use the paid
workers’ compensation benefits from the last full policy year in place of
experience rated premium.
An employer establishing a policy in Ohio for the first time may apply
for the Small Deductible Program. The employer’s deductible shall not exceed
25% of the employer’s expected premium. The estimated payroll from the Application
for Ohio Workers’ Compensation Coverage (U-3) will be used to calculate the
employer’s expected premium.
BWC may estimate a full year’s premium if only a partial year is
available or if no premium is available for the most recent full policy year.
Annual aggregate stop-loss limit.
An employer may request an annual aggregate stop-loss limit in
combination with large deductible levels. However, BWC may reject the
employer’s request if the employer would receive a credit that exceeds the
maximum aggregate stop-loss liability. If the employer’s request for the
aggregate stop-loss limit option is approved, BWC will limit deductible
billings for injuries which occur during the associated policy year to three
times (3X) the deductible level chosen.
Selection of the annual aggregate stop-loss limit will reduce the
premium credit. BWC may require an employer in a Large Deductible Program to
adopt an annual aggregate stop-loss limit as an additional risk mitigation
measure. See section IV.D.1.b of this policy.
BWC will apply the premium reduction directly to the base rate established
for the policy year for base rated employers or after the modified premium rate
is established for experience-rated employers.
Small deductible premium credits are set forth in OAC 4123-17-72,
(PA employers) and Appendix B
Large deductible premium credits are set forth in OAC 4123-17-72,
(PA employers) and Appendix F
The premium reduction will be applied prior to any other premium adjustments.
The premium reduction does not apply to the Disabled Workers’ Relief Fund
(DWRF) or administrative expenses.
BWC will calculate the premium reduction according to the deductible
amount chosen by the employer, the applicable National Council on Compensation
Insurance (NCCI) hazard group, and the primary manual classification of the
employer as of the end of the enrollment period for that year. NCCI hazard
groups are set forth in OAC 4123-17-72, Appendix C
(PA employers) and Appendix E
BWC will use payroll and the associated experience premium for the
rating year beginning two years prior to the period the employer is seeking to
enroll in the Deductible Program to determine the primary manual classification
and hazard group.
For an employer establishing a policy in Ohio for the first time, BWC
will use estimated payroll to determine primary manual classification and
BWC pays all medical and indemnity claims costs.
The employer will be billed monthly for all claim costs paid by BWC,
including costs charged to the surplus fund, up to the deductible level.
The employer must pay all deductible amounts billed by the invoice due date.
Deductible billings are subject to the same provisions as other monies owed to
BWC, including interest, penalties, and amounts certified to the Ohio Attorney
General’s office for collection.
Regardless of when payment was made by BWC and even if the claim is out
of the employer’s experience period, the employer will continue to be
billed for claim costs incurred until:
The deductible amount is reached; or
The aggregate stop-loss limit is reached, if applicable.
The employer is liable for the full deductible on any claim that arises
during a policy year in which the employer was in the Deductible Program.
For small deductible levels, the amount to be included in the employer’s
experience for a policy year will be any claims costs for injuries incurred in
that policy year, less any deductible billed to the employer. For large
deductible levels, BWC will include the entire cost of the claim in the
employer’s experience for the appropriate policy year.
An employer participating in the Deductible Program may participate in
other compatible BWC rate programs. Employer program compatibility is outlined
in OAC 4123-17-74, Appendix
/ Exit from program.
BWC will remove an employer from the Deductible Program during the
current policy year for failure to file an annual payroll report or pay any
premium due within any grace period (see OAC 4123-17-16(D)(1)(a)). If removed
from the Deductible Program, BWC will require the employer to:
Continue to pay claim costs for all injuries incurred from the beginning
of the policy year through the date of removal from the Deductible Program,
until the selected deductible amount is reached.
Be experience-rated, without the deductible credit, from the date of
removal from the Deductible Program through the remainder of the policy year.
BWC may remove an employer from the Deductible Program with thirty (30)
days written notice to the employer for any of the following reasons:
The employer participates in any plan or program that is not compatible
with the Deductible Program.
BWC certifies a balance due from the employer to the Attorney General,
unless the employer is current on the payment schedule for any part-pay
agreement that was entered into for payment of premiums or assessment
The employer makes direct payments to any medical provider or to any
injured worker for compensation associated with a workers’ compensation claim. Effective
with the policy year that starts July 1, 2012, an employer that is
participating in the Deductible Program may pay salary continuation on claims
incurred on or after July 1, 2012.
The employer engages in misrepresentation or fraud in conjunction with
the Deductible Program application process.
BWC Employer Programs Unit will investigate allegations or documentation
that the employer engaged in any of the actions listed in IV.F.2.a to IV.F.2.d.
If removed from the Deductible Program, the employer may file a formal
complaint through BWC’s adjudication process. See section IV.G.
An employer is not permitted to withdraw from the Deductible Program
during the policy year, and no changes shall be made with respect to any
deductible amount selected by the employer within the policy year.
Employers wishing to withdraw from the Deductible Program for the
upcoming policy year must notify BWC in writing by submitting notice prior to
the start of the policy year.
Employer complaints should be processed under the General
Employer Complaint Policy.
Specific extenuating circumstances that apply to the Deductible Program:
Inaccurate information on employer’s credit report or financial data.
Extenuating Circumstance: Employer protests BWC’s denial into the Deductible
Program, or where BWC limits the amount of deductible
the employer is eligible for, due to inaccurate information in the employer’s
credit report obtained by BWC or in the financial data submitted by the
employer to BWC. It is the employer’s responsibility to correct any errors by
either contacting the credit reporting service or providing BWC with accurate
financial data. If BWC subsequently approves the employer, the employer will be
entered into the Deductible Program retroactive to the beginning of the
current policy year.
Supporting documentation: The employer bears
sole responsibility to provide BWC with the corrected information (e.g. a new
credit report or corrected financial data).
Employer applies for the Deductible Program after being denied
participation in a non-compatible program.
Extenuating Circumstance: Employer applied, and was denied,
participation in a non-compatible program, and subsequently applied for, and is
accepted in, the Deductible Program. The employer then appeals its rejection
for the non-compatible program.
If the employer’s appeal for the non-compatible program is granted, the
program at issue in the adjudication decision will be considered the employer’s
choice of program participation and the employer will be removed from the
Deductible Program. Any monies the employer reimbursed to BWC will be returned
to the employer.
Employer has applied for Group Retrospective Rating or Individual Retrospective
Rating, and the employer has concurrently applied for the Deductible Program.
Extenuating Circumstance: Employer has applied for, and been accepted
into, the Deductible Program but has also applied for either Group Retrospective
Rating or Individual Retrospective Rating, and BWC delays issuing a final
decision on the employer’s eligibility in these retrospective rating programs
until after the start of the rating year. The employer must not have
contributed to BWC’s delay in issuing its decision.
If an employer’s application for either of these retrospective rating
plans is approved after the start of the rating year, the employer will be
offered the opportunity to choose which program it desires to participate in
(Deductible Program or Retrospective Rating).
Supporting Documentation: The employer will have thirty (30) days from
date of notification by BWC to provide BWC a written decision as to which
program it desires to participate in. Failure to provide BWC with a written
decision within thirty (30) days will result in the employer remaining in the
Deductible Program for the remainder of the current rating year.
New employer succeeds a predecessor that was a participant in the Deductible
Extenuating Circumstance: A new employer, having coverage in Ohio for
the first time, succeeds a predecessor employer that was a participant in the Deductible
Program in either the current or prior policy year(s). Per OAC 4123-17-72(L)(1),
the successor employer is responsible for any and all existing or future
liabilities arising from the predecessor’s participation in the Deductible Program.
In this situation, BWC will allow the successor employer thirty (30)
days from the postmark date on the BWC notice to apply for the Deductible Program.
Notice to the successor employer includes, but is not limited to, any of the
A letter from BWC notifying the succeeding employer that it is not a
participant in the Deductible Program and must apply for the Deductible Program.
first payroll report issued to the succeeding employer where there is no credit
given for participation in the Deductible Program.
Note: the successor employer must still meet all other eligibility
requirements at the time of application in order to qualify for the Deductible Program.
and experience transfers.
Predecessor: Enrolled in Deductible Program currently, or in prior
will send notice to the successor employer outlining options and
responsibilities for the Deductible Program. The successor may apply for the Deductible
Program within thirty (30) days of the notice. The successor is liable for all
of predecessor’s liabilities while predecessor was enrolled in the Deductible
Predecessor: Not enrolled in Deductible Program.
Enrolled in Deductible Program
automatically remains in the Deductible Program and any claims incurred
on/after the combine date are in the Deductible Program.
Predecessor: Enrolled in Deductible Program
Not enrolled in Deductible Program
policy is not enrolled in the Deductible Program. The successor is liable for
all of predecessor’s liabilities while predecessor was enrolled in the Deductible
Partial Transfer: If the predecessor is enrolled in the Deductible
Program currently, or in prior policy years, the predecessor remains liable for
deductible billings for claims incurred prior to the date of the partial
transfer. The successor is liable for any claims incurred for the manual(s) of
the predecessor which was transferred, beginning on the date of the partial
transfer. The successor will continue to be rated in the same manner as prior
to the partial transfer, unless the successor is a new entity which elects to
enroll in the Deductible Program under provision IV.H.1.
The employer receives a deductible bill invoice for a claim with a date
of injury which has passed out of the employer’s experience. Does the employer
still owe the deductible?
employer is liable for the entire amount of the deductible limit, regardless of
when BWC pays the medical or compensation.
An employer was billed and paid deductible billings on a claim where the
claim allowance was subsequently overturned. How will this be handled?
The amount of
deductible paid by the employer will be refunded to the employer. Note:
The claim must be in a final denied status. The refund will be credited to the
employer’s policy and offset by any billings that are due. If BWC owes the
employer, a refund will be issued.
An injured worker is set up overpaid on a claim that is in the Deductible
Program. What is the impact to the employer?
refund the overpaid amount to the employer. The refund will be credited to the
employer’s policy and offset by any billings that are due.
An employer was billed and paid deductible billings on a claim where a
subrogation amount was recovered from a third party. How will this be handled?
BWC will consider subrogation collections from a third party under the
The amount collected from a third party exceeds total incurred cost
(actual claim cost if the claim is closed); and
The claim is inactive by reserving standards – twenty-four (24) months
with no payments.
The amount refunded to the employer may not exceed the total deductible
amount paid on the claim.
The employer fails to pay the deductible billings. What is the impact to
its coverage status?
BWC will not
lapse an employer if it fails to pay deductible billings. However, the employer
will be subject to any interest or penalty provisions to which premiums are
subject, including certification to the Attorney General’s Office for
collection. BWC will not lapse the employer for the Deductible Program in the
current policy year, but the employer’s eligibility for the Deductible Program
in future policy years may be adversely affected.
Does the employer have to reimburse BWC for the full amount of the
chosen deductible before any amounts are charged to the surplus fund for
vocational rehabilitation or for handicap reimbursement?
Yes, per OAC
4123-17-72(J), BWC pays
all claims costs and the employer is responsible for reimbursing BWC for all
claims costs until the deductible amount is reached.
The employer was in a PEO agreement, but has terminated this
relationship. When the employer applies for the Deductible Program, how will
its premium be calculated and the maximum deductible amount determined?
of the PEO relationship, payroll will be moved back to the client employer for
experience purposes. The employer’s qualifying deductible will be based on the
premium the employer would have paid, based on experience payroll.