OhioBWC - Basics: (Policy library) - File


Policy Name:

Self-Insuring Employer Audit Policy


Policy #:


Code/Rule Reference:

Ohio Revised Code (ORC) 4123.35(G) & Ohio Administrative Code (OAC) 4123-19-10


Effective Date:

December 1, 2015


Self-Insured Department/Employer Services



Review Date:

December 1, 2020



         I.         Policy Purpose


This policy defines oversight of Self-Insuring employers for claims and administrative compliance.

        II.         Applicability


This policy applies to active and cancelled Self-Insuring Employers and the BWC Self-Insured Department.

         III.         Definitions


A.    SI Active and Cancelled Employers: Self-insuring employers and cancelled Self-insuring employers that are responsible for active claims.

B.    Level 1 review:  Annual review of SI-40 reporting for all active and cancelled SI employers.  

C.    Level 2 audit: Compliance audit of claims handling, SI-40 reporting and Permanent Total Disability (PTD) claims processing, conducted approximately every three years for each active SI employer.

D.    Level 3 audit: Audit conducted for new SI employers and as needed based upon employer performance and random scheduling. Includes full audit of claims compliance for active and cancelled SI employers with active claims. Level 3 audits are conducted onsite at an Ohio location for active SI employer or TPA Ohio location.  

E.    Compliant- Status when an employer has met the requirements to be self-insured.

F.     NIC- Not in compliance.

G.    SIRP- Self-Insured Review Panel.

H.    SIEEB- Self-Insuring Employers Evaluation Board.

I.      SI-40 - Report of Paid Compensation and Case Reserves.

       IV.         Policy


A.    Pursuant to OAC 4123-19-10, BWC will audit programs for employers that pay compensation directly. The audits will be scheduled on a random basis, when it is determined that the employer may have compliance issues, or upon request from SIRP and SIEEB. Compliance audits will either be Level 2 or Level 3 audits. The audit can be completed by accessing the electronic files of the employer or its representative, or by reviewing scanned or faxed documentation, or hard copy files.


B.    The audit scope will include compliance with the claims and administrative requirements established by the Ohio Revised Code and the Ohio Administrative Code.

1.     Level 2 and 3 audits for Self-Insured Professional Employer Organizations (SI-PEO) will include a review by the SI-PEO unit for administrative compliance relating to UA3-SI PEO/Client Relationship notifications, PEO Client claims and payroll reporting requirements, and SI-PEO quarterly reporting.

C.    The SI department will review (Level 1) all SI-40s annually.  For active SI employers, a Level 2 or Level 3 claims compliance audit will generally occur no more than three years from the most recent audit.  Cancelled SI employers will be audited based on the number of active claims, assessment step down status referenced in the Self-Insuring Employer Semi-Annual Assessments Policy, SI complaints, and as requested by SIRP or SIEEB.

D.    Upon completion of the audit, the SI employer will receive a report outlining overall results, individual claim findings, and current status of compliance.  Additionally, any future action that may be required will be addressed. The final audit results will be based on the specific claim findings and trends relating to claims management and adherence to administrative requirements.  If the SI employer identifies and corrects errors in specific claims prior to the audit, auditors may consider whether the correction occurred within a reasonable timeframe in relation to the original error when determining if it is a finding.

E.    A single Level 2 or Level 3 audit will be conducted for SI employers with multiple entities and subsidiaries.  Audits will be conducted in Ohio, and the employer’s designated administrator must be present for all Level 3 audits and participate on all Level 2 wrap up calls.

F.     The employer will be required to provide any requested documentation and take action on any identified issue within the timeframe established in the final finding. All SI records within the statute of limitations are subject to audit.

G.    If an employer is non-compliant on a level 2 audit, BWC will require a follow-up Level 3 audit within 6-12 months with the designated administrator present.

H.    If an employer has no claims requiring review during an audit period, alternative methods will be identified to verify that the employer has adequate controls in place to manage the SI program in compliance with the statutory requirements.

I.      The SI department will issue a final letter on Level 2 and Level 3 audits indicating the employer is compliant or noncompliant. Additionally, the SI department will confirm if a requested action plan or action items are acceptable and considered resolved. Finally, the letter will identify any future action the SI department may take regarding the policy. If an employer does not appropriately resolve specific claims issues, the SI department may review the employer’s current status as an SI employer and consider referral to SIRP.

J.     Upon written request, the SI Auditing Supervisor will review requests for reconsideration of individual or overall findings.  Upon completion of the review the employer will receive a written finding regarding the request for reconsideration.

V.         Resolution of Complaints

A.    Any complaints or disputes related to this policy must be submitted in writing to the SI department via mail or email as detailed in the Self-Insured Resolution of Complaints Policy.

Ohio Bureau of Workers’ Compensation

Attn. Self-Insured Department

30 W. Spring St., 22nd Floor

Columbus, Ohio 43215-2256

Email: SIINQ@bwc.state.oh.us.

B.    The SI department will issue a formal written response to any complaint. If the complaint is not resolved as a result of the formal response issued by the SI department, a written request that the issue be referred to the Self-Insured Review Panel (SIRP) may be submitted by the SI employer or SI-PEO.