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OhioBWC - Basics: (Policy library) - File

Policy Name:

100% Experience Modification (EM) Cap

Policy #:

EP-05-01

Code/Rule Reference:

Ohio Administrative Codes (OAC) 4123-17-03, 4123-17-03.2, 4123-17-14(D), 4123-17-74 Appendix C

Effective Date:

July 1, 2016

Origin:

Employer Policy

Supersedes:

All policies and procedures regarding the 100% EM Cap Program that precede the effective date of this policy.

History:

Initially effective July 1, 2009, revised August 6, 2012, replaced by this policy.

Review Date:

July 1, 2021

I.         Policy Purpose

 

The Ohio Bureau of Workers’ Compensation (BWC) provides a 100% Experience Modification (EM) Cap to limit an individual employer's experience modifier (EM) to minimize the effects of a significant premium increase for employers that become penalty rated. BWC will manage the program in accordance with the applicable laws and rules.

II.         Applicability

 

This policy applies to BWC Employer Programs, Field Operations, employers and authorized employer representatives.

III.         Definitions

A.    Eligibility determination date: The April 1 immediately is preceding the policy year for which the EM is being calculated for private employers (PA), and the October 1 immediately preceding the policy year for which the EM is being calculated for public employer taxing districts (PEC).

B.    Experience modification (EM): The EM is an adjustment applied to the base rate as defined in OAC 4123-17-03(D).

C.    First year employer: An employer receiving a 100% cap on its EM where its previous policy year’s published EM was not capped. (Example: An employer had a .47 EM in 2015; the EM for the next policy year is capped at .94.)

D.    Second/subsequent year employer: An employer previously approved to participate in its initial year of eligibility that meets the criteria to participate in a second or subsequent year.

E.    Initial published experience modification (EM): An employer’s EM as established on January 1 of the policy year for PEC employers and July 1 for PA employers.

F.     Safety requirement completion dates: Means the last business day of March for PA employers and the last business day of September for PEC employers as set forth in OAC 4123-17-03.2.

IV.         Policy

A.    BWC shall limit the increase in EM of an employer meeting the eligibility requirements of OAC 4123-17-03.2 to 100% of the initial EM calculated for that employer in the preceding rating year. The prior year's EM could be an individual EM or Group EM if the employer was participating in a Group Experience Rating program that year.

B.    Eligibility Criteria: There is no specific application requirement for the 100% EM Cap program. BWC automatically evaluates an employer’s eligibility for the program as of the eligibility determination date. To qualify the employer:

1.     Must be either a PA or PEC employer.

2.     Must be current with respect to all payments due BWC as set forth in OAC 4123-17-14.

3.     Must be current on the payment schedule of any part-pay agreement into which it has entered for the payment of premiums or assessments.

4.     Must not have cumulative lapses in workers’ compensation coverage in excess of forty (40) days within the prior twelve (12) months, except:

a.     For the policy year beginning July 1, 2015, a PA employer must not have cumulative lapses of workers’ compensation coverage in excess of forty (40) days within the prior nine months.

b.     For the policy year beginning January 1, 2016, a PEC employer must not have cumulative lapses of workers’ compensation coverage in excess of forty (40) days within the prior nine months.

5.     Must have reported actual payroll for the preceding policy year and paid any premium due upon reconciliation of estimated premium with actual premium no later than the due date (True-up). An employer will be deemed to have met this requirement if BWC receives the payroll report and the employer pays premium associated with the payroll report before the expiration of any grace period.

C.    An employer participating in the 100% EM Cap program may participate in other compatible BWC rating plans and discount programs as outlined in OAC 4123-17-74, Appendix C.

D.    The following employers are not eligible for the 100% EM  Cap program:

1.     Professional employer organizations (PEO).

2.     State agencies.

3.     Self-insuring employers.

E.    Operation of Program: Employers are required to complete safety training requirements as determined by the Superintendent of the Division of Safety and Hygiene (DSH).

1.     An employer participating in its first year in the 100% EM Cap program must complete a one-half day, three hour industry-specific safety classroom course through BWC's DSH.

2.     A first year employer that has an uncapped individual EM of 1.00 (base rated) or less (credit rated) must complete one of the following:

a.     Three hours of online safety training courses offered by DSH; or,

b.     Three one-hour safety training courses at the annual All-Ohio Safety Congress and Expo.

3.     An employer participating in its second/subsequent year in the 100% EM Cap program, must complete any one of the following:

a.     One half-day industry-specific safety classroom course offered by the DSH; or,

b.     Three hours of online safety training courses offered by DSH; or,

c.     Three one-hour safety training courses at the annual All-Ohio Safety Congress and Expo.

4.     Training requirements must be satisfied by the employer on a policy number basis because each policy number is considered its own separate entity.

a.     An employer with one policy number who is participating in multiple programs may use one training to fulfill the requirements for multiple programs because each policy number:

i.       May participate in multiple compatible programs.

ii.     May attend classes relevant to multiple safety disciplines, thus multiple programs.

b.     An employer with multiple policy numbers who is participating in a single program may use one training credit to fulfill the requirement for one policy number because each policy number:

i.       Has separate responsibilities to complete the requirements set forth in the programs chosen.

ii.     Receives discounts separately.

5.     Training must be completed by the safety requirement completion dates as set forth in OAC 4123-17-03.2.

6.     An employer re-entering the 100% EM Cap program will be required to meet the first year safety training requirements outlined in section IV.E.1.-2. of this policy.

F.     Removal/Exit from Program:

1.     BWC will remove an employer from the 100% EM Cap program if:

a.      The employer fails to complete the required training for its policy year of participation; or,

b.     The employer fails to True-up.

2.     The consequences of failure to comply with either the required safety training or True-up are:

a.     The employer will be re-rated for the full policy year at the employer’s base-rate or experience-modified rate as determined by their expected losses for the policy year as set forth in OAC 4123-17-14; and,

b.     Any remaining installment payments will be adjusted to reflect the new estimated annual premium.

3.      Opt-out Provision:

a.     An employer may voluntarily withdraw from the 100% EM Cap program by providing written notice to BWC.

b.     The employer’s uncapped EM will be used to recalculate the estimated annual premium and any remaining installment payments will be adjusted to reflect the new estimated annual premium.

G.    Resolution of Complaints: Employer complaints should be processed under the General Employer Complaint Policy.

H.    Combinations and transfers: BWC will only transfer a predecessor’s 100% EM Cap from the prior policy year to a successor employer when one of the following apply:

1.     The transfer is a combination as a result of bankruptcy proceedings, when the transaction is a change in policy number without any change in exposure; or,

2.     A base-rated successor wholly or partially succeeds a single policy.

3.     If either of these conditions is met, the predecessor’s published EM in the prior rating year will be the EM published for the successor in the same policy year for purposes of determining whether the cap applies as referenced in OAC 4123-17-03.2.


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