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) 4123-17-61; 4123-17-61.1; 4123-17-62; 4123-17-63; 4123-17-64; 4123-17-74 including Appendices A, B, and C.

Effective Date:

July 1, 2018

Origin:

Employer Policy

Supersedes:

Group Experience Rating Program effective June 13, 2014.

History:

Revised July 19, 2019. New Policy issued June 13, 2014.

Review Date:

July 1, 2023

 

 

I.        Policy Purpose

 

The Ohio Bureau of Workers’ Compensation (BWC) administers the Group Experience Rating Program (Group) in accordance with all applicable laws and rules.

 

II.      Applicability

 

This policy applies to BWC Employer Programs, employers, sponsoring organizations, affiliated organizations, and employer authorized representatives.

 

III.    Definitions

 

A.      Affiliated organization: An organization whose members are brokered, borrowed, shared, or co-opted for inclusion in a certified sponsoring organization’s Group. All affiliated organizations are required to be certified sponsoring organizations.

B.      Coverage period: The policy year for which the Group application is made. For private employers (PA employers), the policy year is July 1 through June 30. For public employer taxing districts (PEC employers), the policy year is January 1 through December 31.

C.      Experience period: Has the same meaning as defined in OAC 4123-17-03(A)(1).

D.      Grandfathering: Allowing an employer to participate in the same Group as the previous year, even if the employer is no longer homogeneous to that Group, as long as the following criteria are met:

1.       Same sponsoring organization; and

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

E.       Green period: The time interval between the last day of the experience period and the snapshot date.

F.       Gross misrepresentation: An act by an employer that would cause financial harm to the other members of the Group. Gross misrepresentation is limited to either of the following:

1.       The employer failed to disclose its merger with one or more entities; or

2.       The employer failed to disclose the true nature of the employer’s business pursuit in its application for membership in the Group.

G.      Group Experience Rating: A plan that groups employers for rating purposes. Employers retain their individual identity, but are pooled and grouped for rating purposes only, specifically with respect to experience rating. BWC considers an employer group a single employing entity for purposes of Group rating.

H.      Homogeneous/homogeneity: A requirement for Groups that participating employers' industrial pursuit must be substantially similar with the other employers in the Group.

I.         Industry group: National Council on Compensation Insurance (NCCI) codes are grouped together into ten industry groups (see, OAC 4123-17-05 Appendix A).  Employers can have multiple NCCI codes assigned, but for purposes of homogeneity, employers may only have one primary industry group.

J.        Snapshot date: The date BWC captures or “freezes” payroll and claims for rate making purposes, which is September 30 for PA employers and March 31 for PEC employers.

K.       Sponsoring organization: An entity, usually a business entity, with governing members which is certified by BWC to sponsor and market Group and Group Retrospective Rating programs through BWC. Certification requirements for sponsoring organizations are outlined in OAC 4123-17-61.1.

L.       Standard exception classifications: Manual classifications which describe occupations that are common to many businesses. These common occupations are not included in a basic classification unless specified in the classification wording.

M.    Third party administrator: Any person or organization that works with certified sponsoring organizations to administer and facilitate an employer’s application to Group programs.

IV.    Policy

A.      Employer eligibility criteria.

1.       The employer must be either a PA employer or PEC employer risk type.

2.       As of the application deadline, the employer must:

a.       Be current with respect to all payments due BWC, as defined in OAC 4123-17-14;

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

c.       Not have cumulative lapses in workers’ compensation coverage in excess of forty (40) days within the preceding twelve (12) months;

d.       Not be a member of more than one Group;

e.       Have filed for coverage prior to the Group deadline;

f.        Have been assigned an application number;

g.       Be included on the Group roster; and

h.       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. 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.

3.       The employer must be homogeneous with the Group.

a.       A Group shall be considered homogeneous if the main operating manual classifications of the employers as determined by the premium obligations for the rating year beginning two years prior to the coverage period are assigned to the same or similar industry groups. Industry groups seven and nine, as well as industry groups eight and nine, are considered similar.

b.       Exceptions to the homogeneity requirement:

i.         An employer grandfathered to the Group from participation in the same Group the previous year.

ii.       The standard exception rule provides an option to employers having their highest overall premium under a standard exception classification. The employer can participate in a group associated with another operating manual classification, which better reflects the true nature of the employer’s business.

a)       The standard exception classifications included in this rule are:

i)        7380 - Drivers, Chauffeurs and their Helpers;

ii)       8742 - Salespersons, Collectors or Messengers, Outside;

iii)     8748 - Automobile Salespersons;

iv)     8810 - Clerical Office Employees; and

v)       8871 – Clerical Telecommuter Employees.

b)      Typically, BWC does not consider standard exception classifications as the main operating classification for homogeneity, unless 7380, 8742, 8748, 8810, or 8871 is the only classification that applies to the employer’s operation.

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

d)      Professional employer organizations (PEOs) and temporary service agencies are ineligible for the standard exception rule.

iii.     BWC may allow an employer to move to a more homogenous group when the employer:

a)       Does not have a full year of recorded premium;

b)      Is reclassified as a result of an audit; or

c)       Fully or partially combines with another employer.

B.      Group eligibility criteria.

1.       The sponsoring organization of the Group must meet all the requirements set forth in OAC 4123-17-61.1.

2.       All employers within the group must be governing members of the sponsoring organization or the affiliated organization.

3.       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.

4.       If BWC determines that employers in a proposed Group do not meet eligibility requirements, BWC will notify the employers and the sponsoring organization. The sponsoring organization may continue its Group application without the ineligible employers, however, the Group must meet minimum eligibility criteria.

C.      Application requirements.

1.       Sponsoring organization requirements.

a.       The sponsoring organization must make annual application for Group by submitting the following to BWC by the application deadline:

i.         A completed Application for Group-Experience Rating (AC-24); and

ii.       A completed Group-Experience Rating Roster (AC-25) for each group sponsored.

b.       If the sponsoring organization elects to include an employer in the Group, the sponsoring organization must electronically file the employer’s Employer Statement for Group-Experience-Rating Plan (AC-26) with BWC by the application deadline.

2.       Employer requirements. The employer must submit an AC-26 to the sponsoring organization of the group in which the employer seeks to participate.

a.       The AC-26 must be signed and dated by the employer.

b.       The AC-26 is not valid if signed by someone other than the employer (e.g., TPA or CPA).

3.       Application deadlines:

a.       For PA employers, the sponsoring organization must file all applications with BWC by the Monday preceding the fourth Thursday in November for the upcoming policy year that starts July 1.

b.       For PEC employers, the sponsoring organization must file all applications with BWC by the last business day in May for the upcoming policy year that starts January 1.

4.       Group Grow Ohio: See the Grow Ohio Incentive Program policy for program eligibility and participation requirements.

5.       A sponsoring organization's application for Group is effective for a single policy year. Continuation of a Group for subsequent years requires timely filing of an application on a yearly basis and meeting all eligibility requirements.

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

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

8.       Any requests to be removed from the Group roster must be completed in writing, signed by an officer of the sponsoring organization, and filed prior to the Group Experience Rating application deadline.

9.       A sponsoring organization must notify a participating employer if the employer will not be included in a Group for the next rating year.

a.       The sponsoring organization must notify the employer by the following deadlines:

i.         For a PA employer, by the last business day of October prior to the application deadline.

ii.       For a PEC employer, by the last business day of April prior to the application deadline.

b.       If the sponsoring organization fails to provide the required notification in a timely manner, BWC may:

i.         Allow the employer to remain in the group for the next rating year;

ii.       If the group no longer exists, place the employer in a homogeneous group with the same sponsoring organization; or

iii.     Take other appropriate action as determined by BWC.

D.      Operation of program.

1.       An employer, who sustains a claim within the green period, is required to complete one of the following during the program year of participation:

a.       Attend two hours of safety training; or

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 period.

2.       Employers meeting the Group 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 employers and 4123-17-33.1, Table 1, and Part A for PEC employers.

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

4.       An employer participating in the Group may participate in other compatible BWC programs. Employer program compatibility for Group is outlined in OAC 4123-17-74, Appendix C.

5.       A Group will have one authorized representative for the Group, and all the individual employers within the Group, for claims and risk related matters before BWC and the Ohio Industrial Commission (IC). See the Employer Authorized Representatives policy for more information.

E.       Removal and special situations.

1.       An employer whose coverage status becomes cancelled or combined during the rating year may not continue to participate in Group. BWC will remove the employer from Group effective the first day of the next policy year. If the date of cancellation or combination is the first day of the policy year, BWC will remove the employer from Group as of the actual date of cancellation or combination.

2.       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. 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. A sponsoring organization may request removal on grounds of gross misrepresentation in the following circumstances:

a.       The sponsoring organization discovers the employer applying for Group has recently merged with one or more entities. The merger was not disclosed on the application for Group, and this merger adversely affects the Group’s experience modification (EM), as defined in OAC 4123-17-03.

b.       The sponsoring organization discovers the employer applicant failed to disclose the true nature of its business pursuit in its application for membership in the Group and this failure negatively impacts the Group’s EM.

3.       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.  An application for Group Retrospective Rating submitted by an employer participating in Group Experience Rating is considered invalid, and the employer will be rejected from Group Retrospective Rating consideration.

4.       BWC will remove an employer from Group for the current policy year if the employer fails to comply with section IV.A.2.h. of this policy, and the following will apply:

a.       An employer removed from Group for failure to meet these criteria will be rerated 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.

b.       The Group shall retain, for the policy year, the experience of any employer removed from Group for failure to meet these criteria.

F.       Resolution of complaints.

1.       Employer complaints will be processed under the General Employer Complaint Policy.

2.       Specific extenuating circumstance involving Group:

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

i.         Extenuating Circumstance: A TPA did not include on its Group application an employer that participated in the previous policy year with the same Group, sponsoring organization, and TPA. The employer was not on the sponsoring organization’s final Group roster, or the employer did not have an AC-26 on file with the sponsoring organization.

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

a)       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.

b)      The employer must be in good standing with the sponsoring organization.  For example, any fees due and payable to the sponsoring organization were paid prior to the Group filing deadline. Supporting documentation must be provided, such as a copy of cancelled check or credit card statement.

c)       The employer indicated to the TPA prior to the Group filing deadline that the employer wanted to participate in the Group. Supporting documentation must be provided; e.g., signed Group contract, copy of payment receipt for TPA fees.

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

b.       Employer without a full year of recorded premium is not homogeneous with the Group.

i.         Extenuating Circumstance: An employer without a full year of recorded premium, during the rating year beginning two years prior to the coverage period, is rejected from Group because the employer is not homogeneous with the Group. BWC may permit the employer to participate in a Group that is homogeneous, if the Group is with the same sponsoring organization, and all parties are in agreement.

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

a)       The employer has no reported payroll (prior to coverage payroll is not disqualifying);

b)      All appropriate Group forms were filed timely;

c)       The employer is not rejected for any other reason; and

d)      The same sponsoring organization has another Group that resolves the homogeneity issue.

c.       Employer applied for Group with an affiliated organization, however, the sponsoring organization did not have a homogeneous Group.

i.         Extenuating Circumstance: The employer applied for Group with an affiliated organization, however, the sponsoring organization did not have a homogeneous Group. The employer is requesting Group with a different sponsoring organization. BWC may allow the employer to participate in a different Group, if the affiliated organization shares its members with a different sponsoring organization that has a homogeneous Group.

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

a)       The affiliated organization must be listed on BOTH sponsoring organizations’ final Group rosters;

b)      Both Groups must be administered by the same TPA; and

c)       The TPA agrees to place the employer into the Group that resolves the homogeneity issue.

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

i.         Extenuating Circumstance: An employer denied Group applies, and is accepted into, the EM Cap Program. The employer subsequently becomes eligible for Group. However, an employer participating in the EM Cap Program is not eligible to participate in Group.  Where an employer’s rejection from Group is reversed due to error, the employer may withdraw from the EM Cap Program and instead elect to participate in Group.

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

a)       States the employer wants to withdraw from the EM Cap Program;

b)      States the employer wants to participate in Group; and

c)       Is signed and dated by an authorized employee.

e.       Rejection from Group overturned by adjudication process.

i.         Extenuating Circumstance: The employer appeals the BWC decision to reject the employer 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 order granting relief, the employer is rejected from Group for the same reason for the next rating year.

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

G.      Combinations and transfers:

1.       Successor: Debtor-in-possession.

Predecessor: Files petition for bankruptcy.

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.

2.       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, if 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.

3.       Successor: Group rated.

Predecessor: Experience rated, either individually or in a different Group, or non-Group base rated.

The successor shall remain a member of the Group, and the experience of the predecessor shall be included with the experience of the Group.

4.       Successor: Non-Group rated.

Predecessor: Group rated.

The successor shall not become a member of the Group.

5.       Successor: Group rated.

Predecessor: Group rated, same Group.

The successor shall remain a member of the Group.

6.       Successor: Group rated.

Predecessor: Non-Group rated.

The successor 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.

7.       Partial Transfers.

Successor: Non-Group rated.

Predecessor: Group rated.

The successor will not become a member of the Group, and the predecessor will remain a member of the Group.

 

Successor: Group rated.

Predecessor: Non-Group rated:

The successor shall remain a member of the Group. The experience of the predecessor, pertaining to the portion of the business acquired by the successor, shall be included with the experience of the Group.

 

8.       Successor: Entity not having coverage.

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

The successor shall not become a member of the Group.