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OhioBWC - Basics: (Policy library) - File

 

Policy Name:

Prospective Billing Installment Payments

Policy #:

EP-16-02

Code/Rule Reference:

Ohio Administrative Code (OAC) 4123-17-13, 4123-17-14, 4123-17-14.2, 4123-17-16, 4123-14-03.

Effective Date:

July 1, 2015

Origin:

Employer Policy

Supersedes:

N/A

History:

New Policy July 1, 2015.

Review Date:

July 1, 2017

 

 

I.       Policy Purpose

 

The Bureau of Workers’ Compensation (BWC) provides coverage to an insured only after the payment of required premium. BWC will permit customers to pay premium obligations in installments as outlined in the applicable laws and rules.

 

II.     Applicability

A.     This policy applies to BWC Finance, Employer Services, Field Operations, Call Center, private employers (PA), public employer taxing districts (PEC), and authorized representatives.

B.     This policy does not apply to self-insuring (SI), public state (PES), Black Lung, Marine Industry employers, or professional employer organizations (PEOs).

 

III.    Definitions

 

A.     Prospective billing: A workers’ compensation insurance practice that provides coverage to the insured only after the payment of premium.

B.     Estimated annual premium (EAP): The annual estimate of premium utilizing the estimated payroll and approved rates.  BWC’s premium estimates are based on the most recently completed policy year of actual payroll multiplied by the employer’s blended rate for the policy year being estimated. New employers applying for coverage on or after July 1, 2015, are required to provide twelve (12) months estimated payroll on the U-3 application.

C.    Notice of estimated annual premium: A letter sent annually, in late spring to private employers and late fall to public employers, in which BWC documents the estimated payroll (exposure) for the upcoming policy year.  Using the estimated payroll, assigned manual classifications, and approved rates, BWC provides the employer with the estimated annual premium, a premium installment schedule, and a certificate of Ohio workers’ compensation coverage for the upcoming policy year.

D.    Installment payments: A series of premium amounts to be paid at regular intervals.

E.     Invoice: A statement BWC mails to employers to bill for premium and non-premium charges that are owed.  BWC will use invoices to bill installment payments.

F.     Bill date: Always the first day of a month. BWC will “bill” the employer on the first day of the month for each installment payment that is due.

G.    Grace period: A time frame during which BWC will not impose a penalty for installment payments and true-up payroll reports received after established due dates.

IV.   Policy

A.     BWC will provide a credit to PA and PEC employers as the agency transitions to prospective billing. See the Transition Credit policy for complete details.

1.     Eligible PA employers will receive a credit of 1/6 of the calculated blended premium for the policy year beginning July 1, 2015.

2.     Eligible PEC employers will receive a credit of fifty percent (50%) of the calculated blended premium for the policy year beginning January 1, 2016. A PEC employer must pay the premium invoice by the following due dates:

a.     On or before May 15, 2016, no less than fifty percent (50%) of the premium due.

b.     On or before September 1, 2016, the total premium due.

B.     Estimated annual premium.

1.     BWC will estimate annual premium based on payroll from the most recently completed policy year. BWC will estimate payroll for employers without a full year of payroll.

2.     BWC will allow an employer to revise estimated payroll for the policy year if the employer can demonstrate “good cause.” Good cause means a substantial reason, one that affords a legal justification or a legal excuse.

a.     Examples of good cause include, but are not limited to:

i.       Furlough days, layoffs, division closings, and relocations out-of-state.

ii.      Combinations and partial transfers.

iii.     Significant expansions or reductions in payroll, with supporting documentation.

b.     BWC will revise the estimated annual premium and the balance of installments for the remainder of the policy year to reflect the new estimated payroll.

c.      BWC will not accept requests to revise estimated payroll for the policy year after the following dates:

i.       PA: Last business day of March of the current policy year.

ii.      PEC: Last business day of September of the current policy year.

C.    BWC will provide PA and PEC employers with an annual notice of EAP.

1.     PA employers will receive the annual notice:

a.     No later than May 31, 2015, for the policy year commencing July 1, 2015.

b.     No later than the first day of May preceding the policy year for which such premium is due for all policy years commencing on or after July 1, 2016.

2.     PEC employers will receive the annual notice:

a.     No later than the first day of January for the policy year commencing January 1, 2016.

b.     No later than the last day of October preceding the start of the policy year, for policy years commencing on or after January 1, 2017.

3.     The notice shall include all of the following:

a.     The estimated payroll used by BWC to calculate the employer’s estimated premium due.

b.     Individuals who have elected coverage.

c.      The classification codes in which the employer’s payroll is segregated and the blended rates for each of the classifications identified.

d.     The employer’s applied EM (experience modifier) used in determining premium due.

e.     The employer’s estimated premium due for the applicable policy year.

f.       An installment schedule that outlines installment due dates and installment amounts.

D.    Operation of installment payment plans.

1.     BWC will offer employers premium installment options consisting of one, two, four, six, or twelve payments.

2.     Employers paying the minimum administrative charge are not eligible for an installment plan. The minimum administrative charge must be paid in full prior to the start of the policy year.

3.     There is no penalty for employers paying in advance of the installment payment schedule.

4.     Private employers with pure premium above the minimum administrative charge will initially default to a bi-monthly six (6) payment installment plan for the policy year beginning July 1, 2015.

5.     Public employer taxing districts with pure premium above the minimum administrative charge will initially default to a monthly twelve (12) payment installment plan for the policy year beginning January 1, 2017.

6.     Beginning January 1, 2017, BWC will permit PEC employers to defer installment payments due prior to April 30 of the policy year.

a.     The employer must elect to defer payments by the November 15 preceding the beginning date of the policy year.

b.     BWC will charge an administrative fee equal to the discount rate set by the BWC Board of Directors times the total dollar amount of the deferred payments.

7.     Effective with the policy year that starts July 1, 2015, for PA employers, and January 1, 2017, for PEC employers, BWC will establish an installment plan for a new employer if the prorated pure premium for the remainder of the current policy period is greater than the minimum administrative charge. BWC will not prorate the minimum administrative charge.

a.     BWC will require the new employer to estimate total payroll for twelve (12) months and select an installment payment plan on the Application for Ohio Workers’ Compensation Coverage (U-3).

b.     For partial policy years, BWC will match, as closely as possible, the installment plan selected by the employer.

8.     BWC will create an invoice on the bill date for each installment payment that is due.

9.     Installment payment due dates.

a.     First installment payment due dates.

i.       PA employers:  By the June 30 preceding the policy year, i.e. twenty-nine (29) days after the June 1 bill date.

ii.      PEC employers: By the December 31 preceding the policy year, i.e., thirty (30) days after the December 1 bill date.

iii.     If either of the above due dates falls on a weekend or holiday, the first installment payment due date will be the next business day.

b.     All subsequent installment payment due dates: Thirty (30) days after the first of the month bill date, unless such date falls on a weekend or holiday. In such case the installment payment due date will be the next business day after the weekend or holiday.

E.     Changes in installment payment plans.

1.     A private employer may change its installment payment plan by logging on to its account on www.bwc.ohio.gov, and making the change, by the following deadlines:

a.     For the policy year beginning July 1, 2015, the deadline is July 15, 2015.

b.     For policy years beginning on or after July 1, 2016, the deadline is the May 15 preceding the beginning date of the policy year.

2.     For policy years beginning on or after January 1, 2017, a public employer taxing district may change its installment plan by logging on to its account on www.bwc.ohio.gov, and making the change, by the November 15 preceding the beginning date of the policy year.

3.     An employer requesting a change to its installment payment plan after the deadlines set forth above must contact BWC.

4.     BWC will not consider changes to installment payment plans after the following dates:

a.     PA employers: Last business day of March of the current policy year.

b.     PEC employers: Last business day of September of the current policy year.

5.     BWC may alter an installment payment plan if it determines such change is appropriate.

F.     Default in installment payment.

1.     An employer paying an installment after the due date, but prior to the expiration of any grace period, will not have its coverage lapsed. The payment must be posted to the employer’s account prior to the expiration of the grace period.

2.     An employer paying an installment after the grace period will have its coverage lapsed. Such lapse will be effective the first day of the month following the bill date, regardless if such date occurs prior to the installment due date.

3.     A new employer that fails to pay its initial installment payment before the expiration of any grace period will have its coverage lapsed back to the initial date of coverage.

4.     BWC will assess penalties for installment payments made after the grace period. Penalties will be assessed at the interest rate established by the state tax commissioner.

5.     BWC will certify installment payments to the Ohio Attorney General seventy-five (75) days after the payroll true-up due date. See the Payroll True-Up policy for additional information.

G.    Combinations and installment payments.

1.     BWC will recalculate an employer’s EAP when it becomes the successor in a combination.

2.     The successor employer’s estimated payroll and remaining installment payments will be adjusted for the remainder of the policy year.

3.     BWC will transfer the experience of the predecessor to the successor effective the beginning date of the following policy year.

H.    Resolution of complaints.

1.     BWC has not identified any extenuating circumstances that apply to installment payment plans.

2.     Employer complaints related to installment payment plans should be processed under the General Employer Complaint Policy.

3.     Employer complaints related to the default of an installment payment should be processed under the Retroactive Coverage and Penalty Abatement policy.


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