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OhioBWC - Basics: (Policy library) - File

 

Policy Name:

Group Experience Rating Program

Policy #:

EP-07-04

Code/Rule Reference

Ohio Revised Code (ORC)  4123.29(A)(3) Ohio Administrative Code (OAC) 4123-17-05 Appendix A, 4123-17-61; 4123-17-61.1; 4123-17-62; 4123-17-63; 4123-17-64; 4123-17-74 (Appendices A, B, and C);

Effective Date:

June 13, 2014

Origin:

Employer Policy

Supersedes:

All policies and procedures regarding the Group Experience Rating Program that predate the effective date of this policy.

History:

New Policy

Review Date:

July 1. 2019

 

I.       Policy Purpose:

The purpose of this policy is to ensure that the Ohio Bureau of Workers’ Compensation (BWC) administers the Group Experience Rating Program in accordance with the applicable laws and rules.

II.     Applicability:

This policy applies to BWC employer programs, BWC field operations, employers, Sponsoring Organizations and authorized employer representatives. 

III.    Definitions:

A.    Coverage period: The twelve (12) month period beginning July 1 through June 30 for private employers, or the twelve (12) month period beginning January 1 through December 31 for public employer taxing district employers. 

B.    Grandfathering:  Allowing an employer  to participate in the same Group as the previous year, even if it is not homogeneous to that Group, as long as the following criteria are met:

1.    Same Sponsoring Organization.

2.    Same Group number as assigned from the previous Group program year.

C.   Green Year:  The calendar year preceding the beginning date of the policy year.

D.   Gross misrepresentation:   When an employer fails to disclose:

1.    That it has merged with one (1) or more entities; or

2.    The true nature of its business practice in its application for Group coverage; and this failure to disclose would cause financial harm to the other members of the Group.

E.    Group Experience Rating:  Employers joined together under a Sponsoring Organization in order to be evaluated as one (1) employer for the purpose of workers' compensation premium calculation and for receiving up to the maximum discount for that program year on their payroll rate.

F.    Homogeneous:  The employers' business in the Group must be substantially similar such that the risks which are grouped are substantially similar.

G.   Industry Group:  National Council on Compensation Insurance (NCCI) Codes are grouped together into ten (10) Industry Groups ORC 4123-17-05, Appendix A.  Employers can have multiple NCCI codes assigned but for purposes of homogeneity may only have one (1) primary Industry Group. 

H.   Sponsoring Organization:  An entity (usually a business entity) with governing members who has been certified by BWC to sponsor and market Group Experience Rating and Group Retrospective Rating programs through BWC. Certification Requirements for Sponsoring Organizations are outlined in OAC 4123-17-61.1.

I.      Standard Exception Classifications:  Standard exceptions are the classifications for employees that are common to most businesses and are available to all employers with certain exceptions. Employees assigned to these classifications cannot have any other duties within an employer’s operation.

J.     Third Party Administrator (TPA): Any person or organization that works with certified Sponsoring Organizations to administer and facilitate an employer’s application to Group programs.

IV.   Employer Eligibility Criteria: to be eligible for participation in Group Rating, an employer must:

A.    Be either a private employer (PA) or public employer taxing district (PEC) risk type.

B.    As of the application deadline:

1.    Be current with respect to all payments due BWC, as defined in OAC 4123-17-14(A)(3).

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

3.    Not have cumulative lapses in workers’ compensation coverage in excess of forty (40) days within the preceding twelve (12) months except for the following two exceptions.

a.    For the policy year commencing July 1, 2015, PA employers must not have cumulative lapses in workers’ compensation in excess of forty (40) days within the preceding nine (9) months.

b.    For the policy year commencing January 1, 2016, PEC employers must not have cumulative lapses in workers’ compensation in excess of forty (40) days within the preceding nine (9) months.

4.    Not be a member of more than one (1) Group.

5.    Have filed for coverage prior to the Group deadline.

6.    Have been assigned an application number.

7.    Be included on the Group roster.

C.   Be homogeneous with the Group.

1.    A Group shall be considered substantially homogeneous if the main operating manual classifications of the employers as determined by the premium obligations for the rating year beginning two (2) years prior to the coverage period are assigned to the same or similar industry groups.

2.    Exceptions to the homogeneity requirement;

a.    An employer grandfathered to the Group from participation in the same Group the previous year. See definition of Grandfathering (III.B.)

b.    The standard exception rule provides employers having the highest overall premium falling under the standard exception manual classification(s) the option to participate in a Group associated with another operating manual classification.

                                                          i.   The Standard exception manuals included in this rule are:

·         8810 - Clerical Office Employees;

·         8871 - Clerical Telecommuter Employees;

·         7380 - Drivers, Chauffeurs and their Helpers;

·         8742 - Salespersons, Collectors or Messengers, Outside

·         8748 - Automobile Salespersons

                                                         ii.   The standard exception does not apply in every case and is determined by the true nature of the employer’s business.

                                                        iii.   Professional Employer Organizations and temporary service agencies are ineligible for the standard exception rule.

                                                       iv.   Industry Groups seven (7) IG7 and nine (9) IG9 as well as eight (8) IG8 and IG9 are considered similar. However, Industry Groups IG7 and IG8 are not considered similar and premium from IG7 or IG8 cannot be combined with premium from IG9 to make IG7 or IG8 the dominant industry.

V.         Group Eligibility Criteria: The Group must:

A.    Consist of at least one hundred (100) individual employers; or;

B.    Have expected combined premiums of $150,000 or more during the coverage period.

VI.         Application Requirements / BWC Evaluation of Application:

A.    Employers new to a Group or Sponsoring Organization will be required to submit an Employer Statement for Group-Experience-Rating Plan (AC-26), to the Sponsoring Organization prior to the Group application deadline.

1.    BWC will accept an AC-26 form electronically. The form must be:

a.    Signed by the employer.

b.    Dated and submitted to its TPA before the application deadline.

2.    The AC-26 will not be considered valid if signed by somebody other than the employer. (e.g. TPA, CPA)

B.    Application Deadlines:

1.    For PA employers, applications must be filed by the Monday preceding the fourth Thursday in November preceding a policy year that starts July 1.

2.    For PEC employers, applications must be filed by the last Friday of August preceding a policy year that starts January 1.

C.   Group Grow Ohio: See the Grow Ohio Incentive Program Policy for program eligibility and participation requirements.

D.   The application for any Group to participate in Group Experience Rating is optional with the Group, subject to acceptance by BWC.

E.    Once a Group has applied for Group Experience Rating, the Group may not voluntarily terminate or remove the application during BWC’s evaluation period.

F.    All changes to the original application must be done on an AC-26 and must be filed prior to the application deadline.

G.   Any requests to be removed from the Group roster must be completed in writing, signed by an officer of the Sponsoring Organization to which the members of the Group belong, and filed prior to the Group Experience Rating application deadline.

VII.         Training Requirements:  An employer, who sustains a claim within the “green year”, is required to complete one (1) of the following during the program year of participation:

A.    Attend two (2) hours of safety training. 

A.     

B.    Take BWC’s online accident analysis training and submit a DFSP-1 accident analysis report on the claim(s) that occurred in the green year.

VIII.         Operation of Program:

A.    Employers meeting the Group Experience Rating eligibility requirements may qualify for up to the maximum discount for that program year as outlined in OAC 4123-17-05.1, Appendix A for PA and 4123-17-33.1, Table 1, and Part A for PEC.

B.    The Group Experience Rating Program discount will be applied directly to the employer’s individual rates as listed on the employer’s payroll report.

C.   An employer participating in the Group Experience Rating Program may participate in other compatible BWC rate programs during its participation in the Group Experience Rating Program.  Employer program compatibility for Group Experience Rating Program is outlined in OAC 4123-17-74, Appendix C.  Programs that may be compatible with concurrent participation in Group Experience Rating Program:

1.    Destination: Excellence.

2.    Drug Free Safety Program.

3.    $15K Medical-Only Program.

4.    Safety Council.  (Performance bonus only.)

5.    Early Payment Discount. (Except it cannot be combined with Go Green Discount portion of Destination: Excellence)

D.   Authorized Representatives: A Group that has been accepted by BWC will have one (1) permanent authorized representative of the Group and the individual employers within the Group for any and all risk-related matters before BWC and the Industrial Commission (IC). (See Authorized Rep Policy for more information)

 

IX.         Removal and Special Situations:

A.    An employer whose coverage status becomes cancelled or combined during the rating year shall be removed from the Group on the first day of the next payroll reporting period (January 1 or July 1) or in cases where the date of cancellation or combination is determined to be January 1 or July 1, the employer shall be removed from Group as of the actual date of cancellation or combination.

B.    Gross Misrepresentation. Requests for removal of an employer pursuant to this paragraph must be submitted within thirty (30) days of BWC’s notification to the Sponsoring Organization that a rate adjustment has occurred. The Sponsoring Organization must notify the employer of its request to remove the employer from the Group for gross misrepresentation. A Sponsoring Organization may request removal on grounds of gross misrepresentation in the following circumstances:

1.    The Sponsoring Organization or TPA discovers the employer applying for Group Rating has recently merged with one (1) or more entities.  The employer did so without disclosing such merger on the application for membership in the Group, and such merger adversely affects the Group’s experience modification (EM), as defined in OAC 4123-17-03.

2.    The Sponsoring Organization or TPA discovers the employer applicant has failed to disclose the true nature of its business pursuit in its application for membership in the Group.  This failure negatively impacts the EM of the Group.

3.    The burden of proof is on the Sponsoring Organization to provide documentation.  BWC will review the request and the employer will only be removed upon BWC’s consent.

C.   Employer listed on a Group Retrospective Roster: An employer who has been included on a Group rating roster for the upcoming policy year cannot elect to participate in Group Retrospective Rating after the deadline for Group experience rating as outlined in OAC 4123-17-74 (Appendices A and B).  An application for Group Retrospective Rating submitted by an employer participating in the Group experience rating program will be considered invalid and the employer will be rejected from Group Retrospective Rating consideration.

X.         Resolution of Complaints.

A.    Employer complaints should be processed under the General Employer Complaint Policy.

B.    Specific extenuating circumstance involving the Group Experience Rating Program:

1.    TPA Failure to notify employer of non-renewal for Group as required by OAC 4123-17-62 (D) .

a.    Extenuating Circumstance: TPA DID NOT include an employer that participated in Group the previous rating year with the same sponsor / TPA to Group (the employer was not on the Sponsoring Organization’s final Group roster or the employer did not have an individual employer application (AC-26) on file with one (1) of the Sponsoring Organizations).

b.    Resolution: The following conditions must all be met for the employer’s request to be granted.

                                                   i.         The employer must have been on the Group roster for the previous rating year and the employer is requesting to be in the same Sponsoring Organization’s Group.

                                                  ii.         The employer must be in good standing with the Sponsoring Organization.  For example, fees were paid to the Sponsoring Organization prior to the Group filing deadline. (supporting documentation must be provided – copy of cancelled check, credit card statement, etc.)

                                                 iii.         The employer positively indicated to the TPA prior to the Group filing deadline that it wanted to participate in the Group. (supporting documentation must be provided – e.g., signed Group contract, copy of payment receipt for TPA fees)

                                                iv.         The TPA did not send the employer a non-renewal letter prior to the Group rating deadline and is not on non-renewal list submitted to BWC.

2.    Employer without a full year of recorded premium that is NOT homogeneous with the Group.

a.    Extenuating Circumstance: An employer without a full year of recorded premium, or having no reported payroll and premium during the period specifically mentioned in the Group rating rules, is rejected from Group because it is not homogeneous with the Group to which it applied.  In certain situations where the supporting documentation listed below is provided, the employer may be permitted to participate in a Group that is homogeneous with the employer’s operation as long as the Group is with the same Sponsoring Organization, assuming all parties are in agreement with the decision.

b.    Resolution: The following conditions must be met for the employer’s request to be granted.

                                                   i.         The employer is an employer without a full year of recorded premium having no reported payroll. (other than perhaps Prior to Coverage payroll)

                                                  ii.         All appropriate Group rating forms were filed timely.

                                                 iii.         The employer is not rejected for any other reason.

                                                iv.         The same Sponsoring Organization has another Group the employer could be placed into that would resolve the homogeneous issue.

3.    Employer is applied to Group with an affiliate sponsor but the main sponsor does not have a more homogeneous Group,

a.    Extenuating Circumstance: The employer applied to Group with an affiliate sponsor but the main sponsor does not have a more homogeneous Group. BWC may consider if the affiliate sponsor is affiliated with another main sponsor with a more homogeneous Group.

b.    Resolution: The following conditions must be met for the employer’s request to be granted.

                                                   i.         The affiliate must be listed as an affiliate sponsor on BOTH main Sponsoring Organizations’ final Group roster.

                                                  ii.         Both Groups must be administered by the same TPA.

                                                 iii.         The TPA agrees to place the policy into the Group that will resolve the homogeneity issue.

4.    Employer accepted into Experience Modification (EM) Cap Program becomes eligible for Group Rating.

a.    Extenuating Circumstance: An employer rejected from Group Rating applies and is accepted into the EM Cap. The employer subsequently, becomes eligible for Group Rating. However, an employer participating in the EM Cap is not also eligible to participate in Group Rating.  Where an employer’s rejection from Group is reversed due to error or mistake, the employer may withdraw from the Capping Program and instead choose to participate in Group Rating.

b.    Resolution: BWC will notify the employer, in writing, that the employer may withdraw from the EM Cap because it is now also eligible for Group Rating. The following conditions must be met for the employer’s request to be granted. The employer must provide a letter to BWC that:

                                                   i.         States the employer wants to withdraw from the Capping Program.

                                                  ii.         States the employer wants to participate in the Group Rating Program to which it was originally applied.

                                                 iii.         Is signed and dated by an authorized employee.

5.    Rejection from Group Rating Overturned by Adjudicating Process.

a.    Extenuating Circumstance: The employer appeals BWC decision to reject it from Group and its appeal is granted by the adjudication process for a specific rating year. Due to the timing of the hearing process and the issuance of the Hearing Order, the employer is rejected from Group for the same reason for the next rating year. 

b.     Resolution: Since the employer’s appeal was granted, the employer should be allowed into Group for the next rating year without having to submit a second appeal.

c.     Documentation: letter granting employer’s complaint or Adjudicating Committee order, Administrator’s Designee order, or court decision.

6.    Employer reported $0 payroll and was rejected from Group due to a lapse in coverage less than sixty (60) days.

a.    Extenuating Circumstance: Employer reported $0 payroll and was rejected from Group due to a lapse in coverage less than sixty (60) days.

b.    Resolution:  The following conditions must all be met for the employer’s request to be granted:

                                                   i.         The employer must have reported $0 payroll for the payroll period associated with the lapse. (e.g., lapse 9/1/2013, must have reported $0 payroll for the 1/1/2013 to 6/30/2013 reporting period)

                                                  ii.         The employer was not a client employer reporting zero $0 payroll due to a Professional Employer Organization (PEO) relationship.

                                                 iii.         Employer must be up-to-date on reporting payroll and paying premium to BWC.

                                                iv.         No employees were left uncovered. (e.g., lapse 9/1/2013 to 10/1/2013 and no employees worked for the employer during the lapse timeframe)

XI.         Predecessor – Successor Combination and/or Partial Experience Transfer Scenarios.

A.    Successor: Files petition for bankruptcy.

Predecessor: No predecessor.

An individual employer which becomes a debtor-in-possession during the policy year shall remain a member of the Group for the entire policy year.

B.    Successor: Entity not having coverage.

Predecessor: Group rated with employees and reported payroll.

The successor shall be considered a member of the Group and the successor entity's rate shall be based on the Group's experience, as long as the successor employer is homogeneous to the Group. For a partial transfer, the effective date of the Group experience transfer shall be on the first day of the next payroll reporting period. (January 1 or July 1)

C.   Successor: Group rated.

Predecessor: Experience rated (either individually or in a different Group), or non-Group base rated. The successor entity shall remain a member of the Group and the experience of the predecessor shall be included with the experience of the Group.

D.   Successor: Non-Group rated.

Predecessor: Group rated.

The successor entity shall not become a member of the Group.

E.    Successor: Group rated.

Predecessor: Group rated, same Group.

The successor entity shall remain a member of the Group for the purpose of experience rating.

F.    Successor: Group rated.

Predecessor: Self-insured. (SI)

An individual employer returns to the state insurance coverage fund from SI status. They have used their SI experience in calculating their experience rate and become a member of a Group. The SI experience shall not be included in the experience of the Group for experience rating purposes.

G.    Successor: Group rated.

Predecessor: Non-Group rated.

The successor entity shall remain a member of the Group and the experience of the predecessor shall be included with the experience of the Group. The effective date of the Group experience transfer shall be on the first day of the next payroll reporting period. (January 1 or July 1)

H.   Successor: Non-Group rated.

Predecessor: Group rated.

Where a legal entity succeeds in the operation of a portion of a business the successor entity will not become a member of the Group and the predecessor will remain a member of the Group.

I.      Successor: Entity not having coverage.

Predecessor: Group rated with no employees and no reported payroll.

The successor entity shall not become a member of the Group unless and until the entity applies for membership in a Group the next available Policy Year.


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