Ohio Revised Code (ORC) 4123.01; Ohio Administrative
Code (OAC) 4123-17-07,
July 1, 2015
Elective Coverage policy revised October 22, 2007.
Elective Coverage Premium Relief & Retroactive Elective Coverage
Complaint Policy revised August 20, 2012.
New policy September 12, 2007; revised October 22, 2007;
July 1, 2015.
July 1, 2020
The Ohio Bureau of Workers’
Compensation (BWC) will administer elective coverage in accordance with the
applicable laws and rules.
This policy applies to private
employers, authorized representatives, BWC Customer Assistance, Collections,
Field Operations, and Policy Processing.
An established and legally recognized church, congregation, denomination,
society, corporation, fellowship, convention, or association that is formed primarily
or exclusively for religious purposes.
coverage person: A sole proprietor, a member of a partnership, a member of
a limited partnership, an individual incorporated as a corporation (ICORP) with
no employees, an officer of a family farm corporation, or an individual member
of a limited liability company (LLC) filing a federal tax form as a sole
proprietor or partnership.
coverage entity: A sole proprietorship, partnership, limited partnership,
individual incorporated as a corporation with no employees, a family farm
corporation, or an LLC filing a federal tax form as a sole proprietor or
D. Family farm
corporation: A corporation founded for the purpose of farming agricultural
land in which the majority of the voting stock is held by, and the majority of
the stockholders are, persons or the spouse of persons related to each other.
For a complete definition see ORC 4123.01(E).
incorporated as a corporation (ICORP): A single/sole owner of a corporation,
who is excluded as an employee under Ohio workers’ compensation laws.
A duly ordained, commissioned, accredited, or licensed minister, member of the
clergy, rabbi, priest, or Christian Science practitioner. This definition
includes assistant ministers and associate ministers.
A. BWC policy
on elective coverage entities, elective coverage persons, and ministers.
employer that elects to cover an elective coverage person or minister must
notify BWC in writing, by using the Application for Ohio Workers’ Compensation
or Application for Elective Coverage (U-3S).
U-3 may only be used by an employer that is initially applying for workers’
U-3S is used by an employer that has already established a workers’
for elective coverage persons and ministers is not effective until a U-3 or
U-3S has been filed with BWC.
a new U-3 on which the employer elects coverage, elective coverage will take
effect at the same time as the effective date of the new employer’s workers’
compensation coverage. See the Application
for Coverage (U-3) policy for additional information.
with an active BWC policy:
Mail-in applications: Elective coverage will take effect at 12:01 a.m.
on the date that BWC receives the completed U-3S.
Walk-in applications: Elective coverage will take effect when BWC time
and date stamps the U-3S.
Online applications: Elective coverage will take effect upon completion
of the U-3S as indicated by the BWC website time and date indicator.
proper election, notice, and payment of premium, elective coverage persons and
ministers are entitled to receive compensation and benefits as provided in ORC Chapter 4123.
will be assigned to the National Council on Compensation Insurance (NCCI)
classification code and description that matches the duties performed. If the
employer has multiple duties, the payroll will be assigned to the
classification with the highest rate that reflects the employer’s duties.
will adjust the employer’s estimated annual premium and installment payments if
an elective coverage person or minister is added during the policy year.
will remain in effect, and the employer will be responsible for the payment of
estimated premium, until BWC receives written notice from the employer
requesting termination of coverage for the elective coverage person or minister
or if the employer fails to pay an installment timely as indicated below.
will terminate the coverage of an elective coverage person or minister if the
employer fails to pay an installment timely. See the Prospective
Billing Installment Payments policy for additional information
regarding installment payment plans, due dates, grace periods, and a default in
termination effective date will be the first day of the month of the due date
for the installment.
will adjust the employer’s estimated annual premium and installment payments
for the remainder of the policy year by prorating the elective coverage premium
for the period it was in effect.
a new employer who fails to pay its initial installment payment, BWC will
terminate elective coverage retroactive to the effective date.
BWC terminated coverage due to failure to pay a required installment timely,
the employer may reinstate elective coverage:
File a subsequent executed U-3S form with BWC and
Pay past and currently due installments to bring the policy to good standing.
will adjust the employer’s estimated annual premium and installment payments
for the remainder of the policy year.
elective coverage entity is not required to report the payroll of an elective
coverage person, unless the entity elects to cover such person for workers’
election is made, the elective coverage entity must report the payroll of the
elective coverage person.
payroll of an elective coverage person is subject to the weekly minimum and
maximum reporting requirements. See the Employer Services policy Minimum
and Maximum Private State Fund Payroll Limitations.
church employer that elects to cover a minister must report the actual payroll for
the minister. A church electing coverage for its minister is not subject to
minimum and maximum payroll reporting requirements.
10. A minister
may elect coverage as a sole proprietor. If such election is made, the minister
is subject to the minimum and maximum payroll reporting requirements.
11. ICORP: An
individual incorporated as a corporation is not considered an employee and can
elect workers’ compensation coverage ORC 4123.01(A)(2)(c).
is the responsibility of the employer to identify itself as an ICORP.
an ICORP hires an employee it is no longer an ICORP and the owner can no longer
The owner of the corporation with an employee is considered a corporate
officer and subject to the minimum and maximum payroll reporting requirements.
BWC will not permit an employer to revert back to ICORP status even if
the employer no longer has employees. The owner will remain a corporate officer
subject to minimum and maximum payroll reporting requirements.
An employer that hires periodic or seasonal employees does not qualify
for ICORP status.
coverage was elected, the ICORP must notify BWC to cancel elective coverage
upon the hiring of an employee.
B. If a
question arises regarding the proper legal entity type of an employer for
workers’ compensation purposes, BWC will use the federal tax form filed by the
employer to define legal entity type, as follows:
proprietor or LLC acting as a sole proprietor: Internal Revenue Service (IRS)
form 1040 with Schedule C.
or LLC acting as a partnership: IRS Form 1065 with Schedule K.
including family farm corporate officers, individuals incorporated as a
corporation with no employees, and ministers: IRS Form 1120 or 1120S and W-2
for employee wages.
C. Payroll true-up reporting
the conclusion of each policy year, every private employer must report actual payroll
to BWC for the full policy year, from July 1 through June 30. See the Payroll
True-Up policy for additional information.
payroll reporting requirements associated with elective coverage.
proprietors and partners, including LLC acting as sole proprietorship or
partnership: Individuals who earn between the minimum and maximum will report payroll
based on their actual net incomes as follows:
Sole proprietors: Net income is based on form 1040, Schedule C or F.
Partnerships: Net income is based on form 1065, Schedule K-1 ordinary
income minus section 179 depreciation, plus guaranteed payments.
of family farm corporations who earn between the minimum and maximum will
report payroll based on their actual W-2 wages. For S-corporations, officers
must report payroll based on wages for services they perform, which may include
W-2 wages and ordinary income from Schedule K-1.
ICORPs who earn between the minimum and maximum must report payroll
based on their actual W-2 wages. For S-corporations, ICORPs must report payroll
based on wages for services they perform which may include W-2 wages and all or
part of ordinary income from Schedule K-1.
D. Employer and
elective coverage person requests to cancel elective coverage.
cancel elective coverage the employer or the elective coverage person must
notify BWC in writing by:
and submitting a Notification of Policy Update (U-117); or
notification via www.bwc.ohio.gov for
the individual(s) listed on the policy in the personal policy information
section of elective
will require the employer to file a final payroll true-up for elective coverage.
employer must report sufficient elective coverage payroll through the last date
that elective coverage was active and pay any premium that is owed. See Payroll
True-Up policy for additional information.
will adjust the employer’s estimated annual premium and installment payments.
will cancel elective coverage effective:
date BWC receives the request from the employer or elective coverage person.
effective date of cancellation provided by the employer on the U-117.
The date the employer last operated the business. See the Employer
Services policy Cancellation
of Workers’ Compensation Coverage. The employer may be required to
provide documentation of the date the employer last operated the business.
cancellation of elective coverage. An employer or elective coverage person may
request cancellation of elective coverage to a date prior to the date BWC
receives the request. If such a request is submitted, BWC will use the
request to retroactively cancel elective coverage must be submitted in writing.
premium billing guidelines (when the requested cancellation date is prior to
July 1, 2015):
will NOT grant retroactive cancellation of elective coverage if there was
intent by the employer to have coverage. Factors that indicate an intent to
have elective coverage include, but are not limited to:
An elective coverage person or minister has filed a claim that was
allowed and the date of injury is after the requested cancellation date.
The U-3 indicates coverage was needed to bid on a job.
Elective coverage was active for more than one year after the effective
coverage payroll has been reported.
there was no intent by the elective coverage person to have elective coverage, BWC
will grant a request to retroactively cancel elective coverage.
billing guidelines when the requested cancellation date is after July 1, 2015:
Retroactive cancellation may only be requested by an employer or elective
coverage person under the following circumstance: Cancellation is requested
after receiving the first installment that includes elective coverage, but
before the installment payment is due.
employer may file a complaint with BWC if the employer has been notified it
owes premium for elective coverage or has filed a claim and has no elective
has identified specific extenuating circumstances that apply to retroactive
cancellation of elective coverage. These circumstances are outlined in section G
has identified a specific extenuating circumstance that applies to retroactive
elective coverage. This circumstance is outlined in section H below.
will investigate the employer’s complaint.
will ascertain the reasons the employer is requesting relief.
will request documentation from the employer.
will approve or deny the employer’s request for relief.
staff that processes an employer’s complaint must obtain management level
sign-off on each recommendation to approve or deny the employer’s request for
G. Specific extenuating
circumstances that apply to retroactive cancellation of elective coverage to a
date prior to July 1, 2015.
elective coverage entity mistakenly requests elective coverage for the first
elective coverage entity elects coverage. The elective coverage entity is
required to report payroll for the elective coverage person according to the
minimum and maximum reporting requirements and pay premium. However, the elective
coverage entity reports zero payroll. This situation results in BWC billing the
employer for this coverage based on the minimum/maximum rule.
for granting relief:
BWC staff will explain elective coverage to the employer.
The elective coverage entity did not desire elective coverage.
This must be the first time the elective coverage entity has had elective
policy allows an employer to make this request one time.
employer has not been operating.
employer closed operations, but failed to notify BWC to cancel elective
documentation for granting relief includes, but is not limited to:
This circumstance may involve the retroactive cancellation of the
employer’s entire policy. The elective coverage retroactive cancellation should
be addressed first. See the Employer Services policy Cancellation
of Workers’ Compensation Coverage for guidelines on retroactive
cancellation of the employer’s policy.
coverage person or minister believes he/she has elective coverage for a claim.
elective coverage person or minister has been injured and files a workers’
compensation claim. However, no elective coverage is noted. In this situation,
the elective coverage person or minister believes he/she has coverage due to
his/her payroll being reported with employee payroll for past payroll periods
or policy years. In these circumstances, BWC will go back to the payroll period
or policy year when the claim occurred and give retroactive elective coverage. If
the elective coverage person or minister recently filed a claim and never
reported elective coverage payroll until the most recent payroll period or policy
year, these requests should be denied and the premiums refunded.
employer must be reporting enough payroll for employees and the elective
coverage person or minister for past payroll periods or policy years prior to
the date of injury.
the case of a new employer, the twelve (12) month estimate on the U-3
application must include estimated elective coverage payroll and meet the
minimum reporting requirement.
The employer must submit a completed U3S form.
audit, and in certain circumstances tax records, may be required to confirm.
1. Sole proprietor not electing coverage.
A sole proprietor that does not apply for workers’
compensation coverage is not required to pay estimated premium and report
actual net income as payroll to BWC. Such sole proprietor would not be eligible
for workers’ compensation benefits in the event of an injury or illness while
on the job.
proprietor electing coverage.
A sole proprietor elects coverage when completing a
U-3. Sole proprietors are required to pay estimated premium and report actual
net income as payroll according to minimum and maximum payroll reporting
requirements. If a sole proprietor that elected coverage was injured on the
job, the claim would be a covered claim if elective coverage was active on the
date of injury.
as a partnership.
LLC is formed by individuals who operate
the LLC as a partnership for tax purposes. The partners who own the business
apply for coverage for their employees as required, but do not elect coverage
for themselves as the owners. The policy is kept in force with timely estimated
premium payments. In this case, if an employee is injured the claim would be a
a partner is injured BWC does not provide
benefits because coverage was not elected for the partners.
4. Family farm officers (requirement to update
A family farm corporation properly applies for
and maintains elective coverage on the family members that are officers of the
corporation. If a spouse is subsequently made an officer of the corporation,
BWC must be notified by the completion of a U-3S or by the completion of
the online elective
coverage form and payment of estimated premium. Without such notification and payment of estimated
premium, if the spouse were to be injured, the claim would not be covered
because the spouse is an officer whose officer status was not properly updated,
payroll not reported, and premium not paid to BWC.
5. Ordained minister electing coverage as an
“employee” under the church workers’ compensation policy.
A church opts to provide elective coverage for
the minister under its workers’ compensation policy. When a new minister
arrives to replace the minister covered previously, the church must complete
and submit a new U-3S. If a new application is not completed the new
minister will not be covered for a work related injury. All of the actual
earnings must be reported for ministers under this option.
minister as a sole proprietor with elective coverage.
A church decides not to cover its minister as an
employee under its workers’ compensation policy. In this situation, the
minister may elect to establish elective coverage as a sole proprietor by
filing a U-3. Ordained ministers who elect coverage as sole proprietors are
subject to the minimum
and maximum payroll reporting requirements.
with no employees other than the owner (including S-Corp, LLC Corp, C-Corp).
recently incorporated dentist plans to work alone until such time that his
practice will require the services of an assistant. The dentist wants to be
covered for workers’ compensation. As such he completes and submits a U-3 to establish coverage in preparation for the
practice to open. The dentist selects elective coverage on the U-3
application. Elective coverage is actively
maintained with timely estimated premium payments. Estimated premium is based
and maximum payroll reporting requirements.
an employee is hired, the status of the
employer changes from an ICORP to a regular corporation. As a regular
corporation, the dentist, still an officer of the corporation is now required
to report his earnings, subject to the minimum
and maximum payroll reporting requirements, as well as the earnings of
the employee to BWC. Because of this status change, the dentist needs to notify
BWC of the change and cancel elective coverage.
expects to have seasonal employees.
incorporated landscaper contacts BWC regarding workers’ compensation coverage.
The employer plans to work alone initially and hire employees based upon
seasonal fluctuations in business when he will also begin to pay his spouse to
keep the financial records for his business. As an employer with a periodic
need for employees the landscaper does not meet the conditions to qualify as an
ICORP with no employees. As a
result, he will complete and submit a U-3 to
establish a policy and coverage as a corporation. Wages should be
reported following requirements for a corporation.
company has two shareholders, one works for
the company and the other does not.
The company believes that it should be considered an
ICORP. Pursuant to ORC section 4123.01(A)(2)(c)
an employee is not "an individual incorporated as a
corporation", therefore it would not apply to this situation. In
addition, shareholders are owners and if there is more than one owner it is not