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OhioBWC - Basics: (Policy library) - File

 

Policy Name:

Penalties on Renewal of Employer Coverage

Policy #:

EP-16-01

Code/Rule Reference:

Ohio Revised Code (ORC) 4123.32 and 4123.41; Ohio Administrative Code (OAC) 4123-19-07.

Effective Date:

April 11, 2014

Origin:

Employer Policy

Supersedes:

Penalties on Renewal of Employer Coverage policy issued October 17, 2008.

History:

New policy October 17, 2008.

Review Date:

April 11, 2019

 

 

I.       Policy Purpose

 

The purpose of this policy is to ensure that BWC assesses penalties in accordance with the applicable laws and rules when private employers and public employer taxing districts pay their premiums after the due date.

 

II.     Applicability

 

This policy applies to BWC Employer Services, BWC Finance, private employers, and public employer taxing districts.

 

III.    Definitions

 

A.     Definitions: None.

IV.   Policy

A.     Private employer renewal penalties.

1.     BWC will assess penalties and interest starting from the payroll report and premium due date. Private employers who do not file their actual payroll and pay their premiums on time are subject to this assessment

2.     If a private employer fails to report actual payroll within two months after the end of the payroll period, BWC will increase the amount due by an amount equal to one percent (1%) of the unpaid premium. This increase shall not be more than fifteen dollars ($15) or less than three dollars ($3).

3.     If an employer fails to pay such premium when due, BWC will add a late fee of not more than thirty dollars ($30.00) to the premium, plus an additional penalty as follows:

a.     For a premium sixty-one (61) to ninety (90) days past due, the penalty will equal the prime interest rate multiplied by the premium due;

b.     For a premium ninety-one (91) to one hundred twenty (120) days past due, the penalty will equal the prime interest rate plus two percent (2%), multiplied by the premium due;

c.      For a premium one hundred twenty-one (121) to one hundred fifty (150) days past due, the penalty will equal the prime interest rate plus four percent (4%), multiplied by the premium due;

d.     For a premium one hundred fifty-one (151) to one hundred eighty (180) days past due, the penalty will equal the prime interest rate plus six percent (6%), multiplied by the premium due;

e.     For a premium one hundred eighty-one (181) or more days past due, the penalty will equal the prime interest rate plus eight percent (8%), multiplied by the premium due.

4.     In spite of the interest rates listed above, at no time shall the additional penalty exceed fifteen percent (15%) of the premium due.

5.     As used here, “prime interest rate” means the average bank prime rate. BWC shall determine this rate in the same manner in which a county auditor would (per ORC 929.02). BWC will use the Federal Reserve Board’s H.15 Selected Interest Rates publication twice a year to determine the prime interest rate.

6.     BWC will use the average prime rate in effect at the time of the premium payment to calculate actual penalties.

7.     Questioning a classification or rating is not a valid reason for an employer to delay premium payment. In such cases, employers should pay the full premium due or request a payment plan from BWC’s collection unit. Prompt payment allows employers to avoid the risks of lapsing coverage and adverse effects on their eligibility for BWC programs or discounts. BWC sets up payment plans in conjunction with the Office of the Attorney General of Ohio (AG).

8.     Once an employer pays the full renewal premium, BWC will issue a Certificate of Premium Payment. The certificate will list the employer’s dates of renewal and expiration of coverage. Adjustments owed by the employer will not prevent BWC from renewing the coverage.

9.     BWC will issue a Certificate of Premium Payment per an employer’s payment plan. If the employer misses a payment, coverage will lapse accordingly.

B.     Public employer taxing district (PEC) renewal penalties.

1.     BWC will assess interest starting from the premium due date. PECs that do not pay their premiums on time are subject to this assessment.

2.     ORC 4123.41 outlines the payment due dates for PECs. These employers must pay at least forty-five percent (45%) of the amount due by May 15 and any remaining amount due by September 1 of each year. BWC will impose an interest penalty for late payment of any amount past due for each month or part of a month. The state tax commissioner sets the interest rate per ORC 5703.47.

3.     Questioning a classification or rating is not a valid reason for an employer to delay premium payment. In such cases, employers should pay the full premium due or request a payment plan from BWC’s collection unit. Prompt payment allows employers to avoid the risks of lapsing coverage and adverse effects on their eligibility for BWC programs or discounts. BWC sets up payment plans in conjunction with the AG.

4.     Once an employer pays the full renewal premium, BWC will issue a Certificate of Premium Payment. The certificate will list the employer’s dates of renewal and expiration of coverage. Adjustments owed by the employer will not prevent BWC from renewing the coverage.

5.     BWC will issue a Certificate of Premium Payment per an employer’s payment plan. If the employer misses a payment, coverage will lapse accordingly.

C.    Resolution of complaints.

1.     Employer complaints should be processed under the Retroactive Coverage and Penalty Abatement policy.

2.     An employer may appeal a late fee or additional penalty through BWC’s adjudication process (ORC 4123.291). BWC may certify the amount of premium due to the AG for collection. BWC may also assess penalties on any premium the AG collects unless the AG agreement states otherwise.

D.    Private employer scenarios. For purposes of these scenarios the average prime rate of interest is assumed to be eight percent (8%).

1.     An employer reports actual payroll and pays BWC $1,000. The filing is sixty-seven (67) days late. For premium/payroll sixty-one (61) to ninety (90) days past due, the penalties include: a one percent (1%) late reporting fee; a $30 late payment penalty; and the prime interest rate penalty.

a.     One percent (1%) of premiums on $1,000 (but not less than $3 nor more than $15) is $10.

b.     $30 (late payment penalty).

c.      $1,000 times an eight percent (8%) prime interest rate is $80.

d.     The penalty on the $1,000 premium paid would be $120 ($10 + $30 + $80).

2.     An employer reports actual payroll and pays BWC $1,000. The filing is ninety-one (91) days late. For premium/payroll ninety-one (91) to one hundred twenty (120) days past due, the penalties include: a one percent (1%) late reporting fee; a $30 late payment penalty; and the prime interest rate plus two percent (2%).

a.     One percent (1%) increase on premiums on $1,000 (but not less than $3 nor more than $15) is $10.

b.     $30 (late payment fee).

c.      An eight percent (8%) prime interest rate plus two percent (2%) equals ten percent (10%). Ten percent (10%) of $1,000 is $100.

d.     The penalty on the $1,000 premium paid would be $140 ($10 + $30 + $100).

3.     An employer reports actual payroll and pays BWC $2,000. The filing is ninety-one (91) days late. For premium/payroll ninety-one (91) to one hundred twenty (120) days past due, the penalties include: a one percent (1%) late reporting fee; a $30 late payment penalty; and the prime interest rate plus 2 percent (2%).

a.     One percent (1%) increase of premiums on $2,000 is $20. Because the increase cannot be less than $3, or more than $15, the increase would be $15.

b.     $30 (late payment penalty).

c.      An eight percent (8%) prime interest rate plus two percent (2%) equals ten percent (10%). Ten percent (10%) of $2,000 is $200.

d.     The penalty on the $2,000 premium paid would be $245 ($15 + $30 + $200).

4.     An employer reports actual payroll and pays BWC $100. The filing is one hundred twenty-two (122) days late. For premium/payroll one hundred twenty-one (121) to one hundred fifty (150) days past due, the penalties include: a one percent (1%) late reporting fee; a $30 late payment penalty; and the prime interest rate plus four percent (4%).

a.     One percent (1%) increase of premiums on $100 is $1. Because the increase cannot be less than $3, or more than $15, the increase would be $3.

b.     $30 (late payment penalty).

c.      An eight percent (8%) prime interest rate plus four percent (4%) equals twelve percent (12%). Twelve percent (12%) of $100 is $12.

d.     The penalty on the $100 premium paid would be $45 ($3 + $30 + $12).

5.     An employer reports actual payroll and pays BWC $1,000. The filing is two hundred forty-five (245) days late. For premium/payroll one hundred eighty-one (181) days or more past due, the penalties include: a one percent (1%) late reporting fee; a $30 late payment penalty; and the prime interest rate plus eight percent (8%).

a.     One percent (1%) increase of premiums on $1,000 (but not less than $3 nor more than $15) is $10.

b.     $30 (late payment penalty).

c.      An eight percent (8%) prime interest rate plus eight percent (8%) equals sixteen percent (16%). Because the penalty cannot be more than fifteen percent (15%) of the premium, fifteen percent (15%) of $1,000 is $150.

d.     The penalty on the $1,000 premium paid would be $190 ($10 + $30 + $150).

6.     A sole proprietor with an active policy elects not to cover herself. Her payroll is zero since she has no employees, but she must still file a payroll report and pay the minimum administrative fee of $50. She forgets to do this on time and comes into the service office fifteen (15) days late to file the report and pay the minimum premium. For premium/payroll less than sixty-one (61) days past due include a one percent (1%) late reporting fee and a $30 late payment penalty. The prime interest rate penalty does not apply unless the employer is more than sixty (60) days past due.

a.     One percent (1%) increase of premiums on $50 is 50 cents. Because the increase cannot be less than $3, or more than $15, the increase would be $3.

b.     $30 (late payment penalty).

c.      The employer is less than sixty-one (61) days late so the prime interest rate penalty would not apply.

d.     The penalty on the $50 premium would be $33 ($3 + $30 + $0).

E.     Public employer taxing district scenarios.

1.     A county pays forty-five percent (45%) of its premium by May 15 as required by law. But, the county does not make another payment until November 15. This is seventy-four (74) days beyond the September 1 due date for payment in full. BWC renews the county’s lapsed coverage, but also applies the appropriate interest penalty.

2.     A city reports and pays its premium by May 15. BWC renews the city’s coverage on time. Plus, the city will get an early payment discount based on the calculation method in OAC 4123-17-18.1.

3.     A township reports and pays forty-five percent (45%) of its premium on June 1. This is sixteen (16) days beyond the May 15 due date. BWC renews the township’s lapsed coverage but also applies the appropriate interest penalty.


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