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, 4123-17-26, and 4123-14-03.

Effective Date:

March 26, 2018

Origin:

Employer Policy

Supersedes:

Prospective Billing Installment Payments policy effective July 1, 2015.

History:

Revised January 16, 2019. New Policy July 1, 2015.

Review Date:

March 26, 2023

 

 

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, Call Center, private employers (PA employers), public employer taxing districts (PEC employers), and authorized employer representatives.

B.     This policy does not apply to: self-insuring (SI), public state (PES), Black Lung, and 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 Application for Ohio Workers’ Compensation Coverage (U-3).

C.      Notice of estimated annual premium (Notice of EAP): A letter sent annually, to PA employers and PEC employers, in which BWC documents the estimated payroll (exposure) for the upcoming policy year. Using the estimated payroll, assigned class codes, and approved rates, BWC provides the employer with the estimated annual premium.

D.     Installments: 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. An employer may opt to receive an electronic notification instead of a mailed invoice. Such employer will receive an email when a new invoice is issued and may review the invoice online through a BWC e-account.

F.      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.     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; or

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

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

B.     BWC will provide PA employers and PEC employers with a notice of EAP.

1.      PA employers will receive the notice of EAP no later than the first day of May preceding the policy year for which such premium is due.

2.      PEC employers will receive the notice of EAP no later than the last day of October preceding the start of the policy year.

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.

C.      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.      PA employers with pure premium above the minimum administrative charge will initially default to a bi-monthly six (6) payment installment plan.

5.      PEC employers with pure premium above the minimum administrative charge will initially default to a monthly twelve (12) payment installment plan.

6.      BWC will permit PEC employers to defer installment payments due prior to April 30 of the policy year until April 30.

a.      Such election must occur on or before November 15 of the previous policy year.

b.      BWC will apply a deferment fee of 0.94 per cent to the total amount of the installments that are deferred.

7.      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.

8.      BWC will create an invoice for each installment payment that is due.

9.      Each installment payment is due by the date indicated on the invoice.

D.     Early payment discount: Effective January 1, 2017, for PEC employers, and effective July 1, 2017, for PA employers, BWC will provide an early payment discount of 2.0 per cent to employers that pay the full twelve (12) month estimated annual premium by the due date for the first installment for the policy year.

1.      BWC will only grant the early payment discount for the current policy period if the full twelve (12) month estimated annual premium is paid by the due date.

2.      The employer must be in an active status as of the due date for the first installment to be eligible for the discount. Active status does not include:

a.      A policy that is a no coverage policy; or

b.      A policy that is lapsed.

3.      The discount cannot reduce the total amount due below the minimum administrative charge as provided in rule OAC 4123-17-26.

4.      The early payment discount will be applied to any outstanding balance and any remaining credit will be refunded to the employer through standard business processes.

E.      Changes in installment payment plans.

1.      A PA employer may change its installment payment plan by logging on to its account on www.bwc.ohio.gov, and making the change, by the May 15 preceding the beginning date of the policy year.

2.      A PEC employer 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 from the first day of the month which falls nearest the due date of the payment. For example, an installment with a due date of June 21 will have a corresponding lapse effective date of July 1.

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 in accordance with the Penalties for Late Payment and Reporting policy.

5.      BWC will certify past-due 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 the employer 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 must be processed under the General Employer Complaint Policy.

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