Policy
Name:
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Group
Experience Rating Program
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Policy #:
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EP-07-04
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Code/Rule
Reference
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Ohio
Revised Code (ORC) 4123.29. Ohio Administrative Code (OAC) 4123-17-61; 4123-17-61.1; 4123-17-62; 4123-17-63; 4123-17-64; 4123-17-74 including Appendices A, B, and C.
|
Effective
Date:
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July 1,
2023
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Approved:
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Rex
Blateri, Chief Employer of Services
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Origin:
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Employer
Policy
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Supersedes:
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Group
Experience Rating Program effective July 1, 2018.
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History:
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Revised October
27, 2022; January 10, 2022; July 19, 2019. New Policy issued June 13, 2014.
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Review
Date:
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July 1,
2028
|
I. Policy Purpose
The
Ohio Bureau of Workers’ Compensation (BWC) administers the Group Experience
Rating Program in accordance with all applicable laws and rules.
II. Applicability
This
policy applies to BWC Employer Programs, individual employers, sponsoring
organizations, affiliated organizations, and employer authorized
representatives.
III. Definitions
A.
Affiliated
organization: An organization
whose members are brokered, borrowed, shared, or co-opted for inclusion in a
certified sponsoring organization’s group. All affiliated organizations are
required to be certified sponsoring organizations.
B.
Coverage period: The policy year for which the Group
Experience Rating application is made. For private employers (PA employers),
the policy year is July 1 through June 30. For public employer taxing districts
(PEC employers), the policy year is January 1 through December 31.
C.
Experience period: The oldest four of the latest five
completed policy years immediately preceding the beginning of the policy year
to which a rate is applicable.
D.
Grandfathering: Allowing an individual employer to
participate in the same group as the previous year, even if the individual employer
is no longer homogeneous to that group, as long as the following criteria are
met:
1.
Same sponsoring
organization; and
2.
Same group number as
assigned from the previous Group Experience Rating program year.
E.
Green period: The time interval between the last day
of the experience period and the snapshot date.
F.
Gross
misrepresentation: An act
by an employer that would cause financial harm to the other members of the group.
Gross misrepresentation is limited to either of the following:
1.
The employer failed
to disclose its merger with one or more entities; or
2.
The employer failed
to disclose the true nature of the employer’s business pursuit in its
application for membership in the group.
G.
Group Experience
Rating: A plan that
groups individual employers for rating purposes. Employers retain their
individual identity, but are pooled and grouped for experience rating purposes
only. BWC considers an employer group a single employing entity for purposes of
the Group Experience Rating Program.
H.
Homogeneous/homogeneity: A requirement for groups that
participating employers' industrial pursuit must be substantially similar with
the other employers in the group.
I.
Industry group: Used in calculating an individual
employer’s premium rate and in some program participation, this is the main
business pursuit of an individual employer; e.g., construction, transportation.
National Council on Compensation Insurance (NCCI) classification codes are
grouped together into ten industry groups, set forth in OAC 4123-17-05, Appendix A. Employers can have
multiple NCCI classification codes assigned, but for purposes of homogeneity
may only have one primary industry group.
J.
Snapshot date: The date BWC captures or “freezes”
payroll and claims for rate making purposes, which is September 30 for PA
employers and March 31 for PEC employers.
K.
Sponsoring
organization: An entity
with governing members, which is certified by BWC to sponsor and market Group
Experience Rating and Group Retrospective Rating programs. Certification
requirements for sponsoring organizations are outlined in OAC 4123-17-61.1. See the Sponsorship Certification policy for additional information.
L.
Standard
exception classifications:
Classification codes which describe occupations that are common to many
businesses. These common occupations are not included in a basic classification
unless specified in the classification wording.
M.
Third party
administrator: Any person
or organization that works with certified sponsoring organizations to
administer and facilitate an individual employer’s application to Group Experience
Rating and Group Retrospective Rating.
IV. Policy
A.
Employer eligibility
criteria.
1.
The individual employer
must be either a PA employer or PEC employer.
2.
As of the
application deadline, the individual employer must:
a.
Be current with
respect to all payments due BWC, as defined in OAC 4123-17-14;
b.
Be current on the
payment schedule of any part-pay agreement into which the employer has entered
for payment of premiums or assessments;
c.
Not have cumulative
lapses in workers’ compensation coverage in excess of forty (40) days within
the preceding twelve (12) months;
d.
Not be a member of
more than one group;
e.
Have filed for
coverage prior to the Group Experience Rating deadline;
f.
Have been assigned
an application number;
g.
Be included on the
Group Experience Rating roster; and
h.
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.
3.
The employer must be
homogeneous with the group.
a.
A group shall be
considered homogeneous if the main operating classification codes of the
employers as determined by the premium obligations for the rating year
beginning two years prior to the coverage period are assigned to the same or
similar industry groups. Industry groups seven and nine, as well as eight and
nine and industry groups two and four as well as four and six are considered
similar.
b.
Exceptions to the
homogeneity requirement:
i.
An individual employer
grandfathered into the group from participation in the same group the previous
year.
ii.
The standard
exception rule provides an option to employers having their highest overall
premium under a standard exception classification. The employer can participate
in a group associated with another operating classification code, which better
reflects the true nature of the employer’s business.
a)
The standard
exception classification codes included in this rule are:
i)
7380 – Drivers, Chauffeurs
and their Helpers;
ii)
8742 – Salespersons,
Collectors or Messengers, Outside;
iii) 8748 – Automobile Salespersons;
iv)
8810 – Clerical Office
Employees; and
v)
8871 – Clerical Telecommuter
Employees.
b)
Typically, BWC does
not consider standard exception classifications as the main operating
classification code for homogeneity, unless 7380, 8742, 8748, 8810, or 8871 is
the only classification code that applies to the employer’s operation.
c)
The standard
exception rule does not apply in every case and is determined by the true
nature of the employer’s business.
d)
Alternate employer
organizations (AEOs), professional employer organizations (PEOs), and temporary
service agencies are ineligible for the standard exception rule.
iii. BWC may allow an individual employer to
move to a more homogenous group after the application deadline, but before the
start of the policy year, when the employer:
a)
Does not have a full
year of recorded premium;
b)
Is reclassified as a
result of an audit; or
c)
Fully or partially
combines with another employer.
B.
Group eligibility
criteria.
1.
The sponsoring
organization of the group must meet all the requirements set forth in OAC 4123-17-61.1.
2.
All individual employers
within the group must be governing members of the sponsoring organization or
the affiliated organization.
3.
The group must:
a.
Consist of at least
one hundred (100) individual employers; or
b.
Have expected
combined premiums of $150,000 or more during the coverage period.
4.
If BWC determines
that individual employers in a proposed group do not meet eligibility
requirements, BWC will notify the employers and the sponsoring organization.
The sponsoring organization may continue its Group Experience Rating
application without the ineligible employers, however, the group must meet
minimum eligibility criteria.
C.
Application
requirements.
1.
Sponsoring organization
requirements.
a.
The sponsoring
organization must make annual application for Group Experience Rating by
submitting the following to BWC by the application deadline:
i.
A completed
Application for Group-Experience Rating (AC-24); and
ii.
A completed
Group-Experience Rating Roster (AC-25) for each group sponsored.
b.
If the sponsoring
organization elects to include an individual employer in the group, the
sponsoring organization must electronically file the employer’s Employer
Statement for Group-Experience-Rating Plan (AC-26) with BWC by the application
deadline.
2.
Individual employer requirements.
The employer must submit an AC-26 to the sponsoring organization of the group
in which the employer seeks to participate.
a.
The AC-26 must be
signed and dated by the individual employer.
b.
The AC-26 is not
valid if signed by someone other than the individual employer; e.g., TPA or CPA.
3.
Application
deadlines.
a.
For PA employers,
the sponsoring organization must file all applications with BWC by the Monday
preceding the fourth Thursday in November for the upcoming policy year that
starts July 1.
b.
For PEC employers,
the sponsoring organization must file all applications with BWC by the last
business day in May for the upcoming policy year that starts January 1.
4.
A new employer may
elect to apply for Group Experience Rating through the Grow Ohio Incentive
Program. See the Grow Ohio Incentive Program policy for program eligibility and
participation requirements.
5.
A sponsoring
organization's application for Group Experience Rating is effective for a
single policy year. Continuation of a group for subsequent years requires
timely filing of an application on a yearly basis and meeting all eligibility
requirements.
6.
Once a group has
applied for Group Experience Rating, the group may not voluntarily terminate or
remove the application during BWC’s evaluation period.
7.
All changes to the
original application must be made on an AC-26 and must be filed prior to the
application deadline.
8.
Any requests to be
removed from the Group Experience Rating roster must be completed in writing,
signed by an officer of the sponsoring organization, and filed prior to the
Group Experience Rating application deadline.
9.
A sponsoring
organization must notify a participating employer if the employer will not be
included in a group for the next rating year.
a.
The sponsoring
organization must notify the employer by the following deadlines:
i.
For a PA employer,
by the last business day of October prior to the application deadline.
ii.
For a PEC employer,
by the last business day of April prior to the application deadline.
b.
If the sponsoring
organization fails to provide the required notification in a timely manner, BWC
may:
i.
Allow the individual
employer to remain in the group for the next rating year;
ii.
If the group no
longer exists, place the individual employer in a homogeneous group with the
same sponsoring organization; or
iii. Take other appropriate action as
determined by BWC.
D.
Operation of
program.
1.
An individual employer,
who sustains a claim within the green period, is required to complete one of
the following during the program year of participation:
a.
Attend two hours of
safety training; or
b.
Take BWC’s online
accident analysis training and submit a DFSP-1 accident analysis report on the claim(s) that occurred in
the green period.
2.
Individual employers
meeting the Group Experience Rating eligibility requirements may qualify for up
to the maximum discount for that program year as outlined in OAC 4123-17-05.1, Appendix A for PA employers and OAC 4123-17-33.1, Table 1, Part A for PEC employers.
3.
The Group Experience
Rating discount will be applied directly to the employer’s individual rates as
listed on the employer’s payroll report.
4.
An individual employer
participating in Group Experience Rating may participate in other compatible
BWC programs. Employer program compatibility for Group Experience Rating is
outlined in OAC 4123-17-74, Appendix C.
5.
A group will have
one authorized representative for the group, and all the individual employers within
the group, for claims and risk related matters before BWC and the Ohio
Industrial Commission (IC). See the Employer Authorized Representatives policy for more information.
E.
Removal and special
situations.
1.
An individual employer
whose coverage status becomes cancelled or combined during the rating year may
not continue to participate in Group Experience Rating. BWC will remove the
employer from Group Experience Rating effective the first day of the next
policy year. If the date of cancellation or combination is the first day of the
policy year, BWC will remove the employer from Group Experience Rating as of
the actual date of cancellation or combination.
2.
Gross misrepresentation.
Requests for removal of an individual employer pursuant to this paragraph must
be submitted within thirty (30) days of BWC’s notification to the sponsoring
organization that a rate adjustment has occurred. The sponsoring organization
must notify the employer of its request to remove the employer from the group
for gross misrepresentation. The burden of proof is on the sponsoring
organization to provide documentation. BWC will review the request, and the
employer will only be removed upon BWC’s consent. A sponsoring organization may
request removal on grounds of gross misrepresentation in the following
circumstances:
a.
The sponsoring
organization discovers the employer applying for Group Experience Rating has
recently merged with one or more entities. The merger was not disclosed on the
application for Group Experience Rating, and this merger adversely affects the group’s
experience modification (EM), as defined in OAC 4123-17-03.
b.
The sponsoring
organization discovers the employer applicant failed to disclose the true
nature of its business pursuit in its application for membership in the group
and this failure negatively impacts the group’s EM.
3.
Employer listed on a
Group Retrospective Rating roster. An employer who has been included on a Group
Experience Rating roster for the upcoming policy year cannot elect to
participate in Group Retrospective Rating after the deadline for Group
Experience Rating. An application for Group Retrospective Rating submitted by
an employer participating in Group Experience Rating is considered invalid, and
the employer will be rejected from Group Retrospective Rating consideration.
4.
BWC will remove an employer
from Group Experience Rating for the current policy year if the employer fails
to report actual payroll for the preceding policy year and pay any premium due
upon reconciliation of estimated premium and actual premium for that policy
year no later than the due date. An employer will be deemed to have met this
requirement if BWC receives the payroll report and the employer pays premium
associated with such report before the expiration of any grace period. See the Payroll True-Up policy for additional information. If
an employer fails to comply with this paragraph, the following will apply:
a.
An individual employer
removed from Group Experience Rating for failure to meet these criteria 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.
b.
The group shall
retain, for the policy year, the experience of any employer removed from Group
Experience Rating for failure to meet these criteria.
F.
Resolution of
complaints.
1.
Individual employer complaints
are processed under the General Employer Complaint Policy.
2.
Specific extenuating
circumstance involving Group Experience Rating:
a.
TPA failure to
notify employer of non-renewal for Group Experience Rating as required by OAC 4123-17-62(D).
i.
Extenuating Circumstance:
A TPA did not include on its Group Experience Rating application an individual
employer that participated in the previous policy year with the same group,
sponsoring organization, and TPA. The employer was not on the sponsoring
organization’s final Group Experience Rating roster, or the employer did not
have an AC-26 on file with the sponsoring organization.
ii.
Resolution: The
following conditions must all be met for the individual employer’s request to
be granted:
a)
The employer must
have been on the Group Experience Rating roster for the previous rating year,
and the employer is requesting to be in the same sponsoring organization’s group.
b)
The individual employer
must be in good standing with the sponsoring organization. For example, any
fees due and payable to the sponsoring organization were paid prior to the
Group Experience Rating filing deadline. Supporting documentation must be
provided, such as a copy of cancelled check or credit card statement.
c)
The individual employer
indicated to the TPA prior to the Group Experience Rating filing deadline that
the individual employer wanted to participate in the group. Supporting documentation
must be provided; e.g., signed group contract, copy of payment receipt for TPA
fees.
d)
The TPA did not send
the individual employer a non-renewal letter prior to the Group Experience
Rating deadline, and the employer is not on the non-renewal list submitted to
BWC.
b.
Individual employer without
a full year of recorded premium is not homogeneous with the group.
i.
Extenuating Circumstance:
An individual employer without a full year of recorded premium, during the
rating year beginning two years prior to the coverage period, is rejected from
Group Experience Rating because the individual employer is not homogeneous with
the group. BWC may permit the individual employer to participate in a group
that is homogeneous, if the group is with the same sponsoring organization, and
all parties agree.
ii.
Resolution: The
following conditions must be met for the individual employer’s request to be
granted:
a)
The individual employer
has no reported payroll (prior to coverage payroll is not disqualifying);
b)
The AC-25 and the AC-26
were filed timely;
c)
The individual employer
is not rejected for any other reason; and
d)
The same sponsoring
organization has another group that resolves the homogeneity issue.
c.
Individual employer applied
for Group Experience Rating with an affiliated organization, however, the
sponsoring organization did not have a homogeneous group.
i.
Extenuating Circumstance:
The individual employer applied for Group Experience Rating with an affiliated
organization, however, the sponsoring organization did not have a homogeneous group.
The individual employer is requesting Group Experience Rating with a different
sponsoring organization. BWC may allow the individual employer to participate
in a different group, if the affiliated organization shares its members with a
different sponsoring organization that has a homogeneous group.
ii.
Resolution: The following
conditions must be met for the individual employer’s request to be granted:
a)
The affiliated
organization must be listed on BOTH sponsoring organizations’ final Group
Experience Rating rosters;
b)
Both groups must be
administered by the same TPA; and
c)
The TPA agrees to
place the individual employer into the group that resolves the homogeneity
issue.
d.
Individual employer accepted
into Experience Modification (EM) Cap Program becomes eligible for Group
Experience Rating.
i.
Extenuating Circumstance:
An individual employer denied Group Experience Rating applies, and is accepted
into, the EM Cap Program. The individual employer subsequently
becomes eligible for Group Experience Rating. However, an individual employer
participating in the EM Cap Program is not eligible to participate in Group
Experience Rating. Where an individual employer’s rejection from Group
Experience Rating is reversed, the individual employer may withdraw from the EM
Cap Program and instead elect to participate in Group Experience Rating.
ii.
Resolution: BWC will
notify the individual employer, in writing, that the employer may withdraw from
the EM Cap because the individual employer is now eligible for Group Experience
Rating. The following conditions must be met for the employer’s request to be
granted. The individual employer must provide a letter to BWC that:
a)
States the individual
employer wants to withdraw from the EM Cap Program;
b)
States the individual
employer wants to participate in Group Experience Rating; and
c)
Is signed and dated
by an authorized employee.
e.
Rejection from Group
Experience Rating overturned by adjudication process.
i.
Extenuating Circumstance:
The individual employer appeals the BWC decision to reject the employer from
Group Experience Rating, and its appeal is granted by the adjudication process
for a specific rating year. Due to the timing of the hearing process, and the
issuance of the order granting relief, the individual employer is rejected from
Group Experience Rating for the same reason for the next rating year.
ii.
Resolution: Since
the individual employer’s appeal was granted, the employer is allowed into
Group Experience Rating for the next rating year without having to submit a
second appeal.
G.
Combinations and
transfers:
1.
Successor: Debtor-in-possession.
Predecessor: Files petition for
bankruptcy.
An individual employer who becomes a
debtor-in-possession during the policy year shall remain a member of the group
for the entire policy year.
2.
Successor: Entity
not having coverage.
Predecessor: Group experience rated with
employees and reported payroll.
The successor shall be considered a
member of the group, and the successor entity's rate shall be based on the group's
experience, if the successor employer is homogeneous to the group. For a
partial transfer, the effective date of the Group Experience Rating transfer
shall be on the first day of the next payroll reporting period.
3.
Successor: Group
experience rated.
Predecessor: Experience rated, either
individually or in a different group, or non-group base rated.
The successor shall remain a member of
the group, and the experience of the predecessor shall be included with the
experience of the group.
4.
Successor: Non-group
experience rated.
Predecessor: Group experience rated.
The successor shall not become a member
of the group.
5.
Successor: Group
experience rated.
Predecessor: Group experience rated,
same group.
The successor shall remain a member of
the group.
6.
Successor: Group experience
rated.
Predecessor: Non-group experience rated.
The successor shall remain a member of
the group, and the experience of the predecessor shall be included with the
experience of the group. The effective date of the Group Experience Rating
transfer shall be on the first day of the next payroll reporting period.
7.
Partial Transfers.
Successor: Non-group experience rated.
Predecessor Group experience rated.
The successor will not become a member
of the group, and the predecessor will remain a member of the group.
Successor: Group experience rated.
Predecessor: Non-group experience rated.
The successor shall remain a member of
the group. The experience of the predecessor, pertaining to the portion of the
business acquired by the successor, shall be included with the experience of
the group.
8.
Successor: Entity
not having coverage.
Predecessor: Group experience rated with
no employees and no reported payroll.
The successor shall not become a member
of the group.