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Policy Name:
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Experience Modification (EM) Cap
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Policy #:
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EP-05-01
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Code/Rule Reference
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Ohio Administrative Codes (OAC) 4123-17-03, 4123-17-03.2, 4123-17-14, and 4123-17-74 Appendix C.
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Effective Date:
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July 1, 2023
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Approved:
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Rex Blateri, Chief of Employer Services
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Origin:
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Employer Policy
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Supersedes:
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Experience Modification (EM) Cap effective July 1, 2022.
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History:
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Revised December 28, 2023; August 2, 2022; September
21, 2021; July 29, 2020; July 17, 2019; November 14, 2016; December 2, 2014.
New policy issued July 21, 2009.
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Review Date:
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July 1, 2028
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I.
Policy Purpose
The Ohio Bureau of Workers’
Compensation (BWC) provides a 25% Experience Modification (EM) Cap and a 100%
EM Cap to minimize the effects of a significant premium increase stemming from
changes to an employer’s EM. BWC manages the EM Cap in accordance with all
applicable laws and rules.
II.
Applicability
This policy
applies to BWC Employer Programs, Employer Management Services, employers, and
their authorized representatives.
III. Definitions
A. Experience
modification (EM): The EM is a percentage credit or debit applied to the
employer’s base rate and is used in calculating the employer’s premium. The EM
is determined under OAC 4123-17-03.
B. Eligibility
determination date: The snapshot date individual employer EMs are
calculated, and employers are evaluated for, EM Cap eligibility. Private
employers (PA employers) are evaluated on March 1, immediately preceding the
policy year for which the EM is being calculated, and public employer taxing
districts (PEC employers) are evaluated on September 1, immediately preceding
the policy year for which the EM is being calculated.
C. First-year
employer: An employer receiving a cap on its EM where its previous policy
year’s published EM was not capped. For example, an employer had a 0.47 EM in
the preceding policy year; the EM for the next policy year is capped at 0.94 if
the 100% EM Cap is applied to the employer’s EM.
IV. Policy
A. Purpose.
BWC shall limit the increase in EM of an employer meeting the eligibility
requirements of OAC 4123-17-03.2
to:
1.
25% of the initial EM calculated for that employer in the preceding
policy year if the employer is individually experience rated or base rated in both
the current and preceding policy year for any policy years for PA employers
beginning July 1, 2023, and ending June 30, 2027, or for any policy years for
PEC employers beginning January 1, 2023, and ending December 31, 2027; and
2.
100% of the initial EM calculated for that employer in the preceding
policy year for all other employers.
B. Eligibility
criteria.
1.
There is no specific application requirement for the EM Cap. BWC
automatically evaluates an employer’s eligibility as of the eligibility
determination date.
2.
To qualify, the employer must:
a.
Be either a PA employer or a PEC employer;
b.
Be current with respect to all payments due BWC as set forth in OAC 4123-17-14;
c.
Be current on the payment schedule of any part-pay agreement into which
it has entered for the payment of premiums or assessments;
d.
Not have cumulative lapses in workers’ compensation coverage in excess
of forty (40) days within the prior twelve (12) months; and
e.
Have reported actual payroll for the preceding policy year and paid any
premium due upon reconciliation of estimated premium with actual premium for
that policy year no later than the eligibility determination date.
3.
The following employers are not eligible for the EM Cap:
a.
Alternate employer organizations (AEOs);
b.
Professional employer organizations (PEOs);
c.
State agencies; and
d.
Self-insuring employers.
C. Operation
of the EM Cap.
1.
Employers receiving the 25% EM Cap are not required to complete safety
training requirements.
2.
Employers receiving the 100% EM Cap are required to complete safety
training requirements as determined by the Superintendent of the Division of
Safety and Hygiene (DSH). Employers receiving the 100% EM Cap must complete one
of the following:
a.
Three hours of e-courses offered by DSH;
b.
One half-day in-person classroom course offered by DSH;
c.
Three one-hour in-person training sessions at the annual All-Ohio Safety
Congress and Expo;
d.
Three one-hour webinars offered by DSH; or
e.
One half-day virtual training class offered by DSH.
3.
Training requirements must be satisfied by the employer on a policy
number basis because each policy number is considered a separate entity.
4.
Training must be completed by the last business day of March of the
policy year for PA employers and by the last business day of September of the
policy year for PEC employers.
D. Compatibility.
An employer receiving an EM Cap may participate in compatible BWC programs as
outlined in OAC 4123-17-74,
Appendix C.
E. Removal/exit
from EM Cap.
1.
BWC will remove the 100% EM Cap for the policy year if the employer
fails to complete the required safety training for that policy year.
2.
BWC will remove the EM Cap if the employer fails to true-up as required
by OAC 4123-17-14.
See the Payroll
True-Up policy for additional information.
3.
The consequences of failure to comply with either the required safety
training or true-up are:
a.
The employer 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; and
b.
Any remaining installment payments will be adjusted to reflect the new
estimated annual premium.
4.
Opt-out provision.
a.
An employer may voluntarily remove the EM Cap by providing notice to BWC.
b.
The employer’s uncapped EM will be used to recalculate the estimated
annual premium, and any remaining installment payments will be adjusted to
reflect the new estimated annual premium.
F. Combinations
and transfers.
1.
When BWC processes a combination or transfer, the successor’s resulting
EM is not subject to limitation by the EM Cap, unless one of the following
apply:
a.
The transfer is a combination as a result of bankruptcy proceedings,
when the transaction is a change in policy number without any change in
exposure; or
b.
A base-rated successor wholly or partially succeeds a single policy.
2.
If either of these conditions is met, the predecessor’s published EM in
the prior policy year will be the EM published for the successor in the same
policy year for purposes of determining whether the cap applies as referenced
in OAC 4123-17-03.2.
G. Resolution
of complaints.
1.
Employer complaints are processed under the General
Employer Complaint Policy.
2.
BWC has not identified any specific extenuating circumstances that apply
to the EM Cap.