Policy
Name:
|
Group
Retrospective Rating Program
|
Policy #:
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EP-07-05
|
Code/Rule
Reference
|
ORC 4123.29(A)(3); OAC 4123-17-73, Appendices A, B, and C; 4123-17-61.1; 4123-17-68; and 4123-17-74, Appendices A, B, and C.
|
Effective
Date:
|
July 1,
2023
|
Approved:
|
Rex
Blateri, Chief of Employer Services
|
Origin:
|
Employer
Policy
|
Supersedes:
|
Group
Retrospective Rating Program policy effective July 1, 2022.
|
History:
|
Revised January
5, 2023; July 1, 2022; February 11, 2022; October 17, 2016; May 14, 2012;
June 28, 2011; April 8, 2010. New policy issued December 9, 2009.
|
Review
Date:
|
July 1, 2028
|
I. Policy Purpose
The
Ohio Bureau of Workers’ Compensation (BWC) provides a Group Retrospective
Rating Program in accordance with all applicable laws and rules.
II. Applicability
This
policy applies to employers, sponsoring organizations, authorized
representatives, and BWC Employer Programs.
III. Definitions
A.
Continuing retrospective
rated group: A retrospective
rated group is continuing if more than fifty percent (50%) of the members in
the prior policy year continue to be members for the current policy year. A
change in the name of a retrospective rated group will not constitute a new
group.
B.
Developed losses: A component of the retrospective rating
premium formula intended to account for the fact that total incurred losses in
claims are likely to increase over time and result in costs that would not be
covered by premium collected. This claim cost development results from a number
of factors, including, but not limited to, reactivation of claims, additional
claim awards, and claims that may be incurred but not reported for a
substantial period.
C.
Evaluation
period: The three-year
period beginning immediately after the end of the retro policy year. Annual
evaluations occur three times during the evaluation period at twelve (12),
twenty-four (24), and thirty-six (36) months after the end of the retro policy
year.
D.
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.
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 retrospective
rated group and is limited to any of the following:
1.
The sponsoring organization
discovers the employer applicant has recently merged with one or more entities
without disclosing such merger on the employer’s application for membership in
the retrospective rated group, and such merger adversely affects the employer’s
risk of future losses, or
2.
The sponsoring organization
discovers the employer applicant failed to disclose the true nature of its
business pursuit on its application for membership in the retrospective rated
group, and this failure adversely affects the loss potential of the retrospective
rated group.
G.
Group retrospective
rating: A voluntary
workers’ compensation insurance program designed to provide a financial
incentive to employer groups that, through improvements in workplace safety and
injured worker outcomes, are able to keep their claim costs below a predefined
level.
H.
Homogeneous/homogeneity: A requirement for retrospective rated groups
that employers’ businesses in the organization must be substantially similar
such that the risks which are grouped are substantially similar.
I.
Incurred losses: Compensation and medical payments paid
to date plus open case reserves on a claim. The total incurred losses, which
are the cumulative sum of all incurred losses on an employer’s policy, will not
include surplus costs, COVID-19 cost as defined in OAC 4123-17-03(G)(4), or losses where a student is a
participant of the Employers Providing Work-Based Learning Pilot Program as
defined in OAC 4123-17-03(G)(5). Incurred losses used in the group
retrospective rating premium calculation will be limited to $500,000 per claim.
J.
Industry group: Used in calculating an employer’s
premium rate and in some program participation, this is the main business
pursuit of an individual employer; e.g., construction or transportation. National
Council on Compensation Insurance classification codes are grouped into ten
industry groups, set forth in OAC 4123-17-05, Appendix A. Employers can have
multiple classification codes assigned, but for purposes of homogeneity may
only have one primary industry group.
K.
Loss development
factor (LDF):
Actuarially determined factors that are multiplied by the incurred losses,
excluding incurred losses of permanent total disability and death claims, to
produce developed losses. LDFs are unique to each retro policy year and are set
forth in OAC 4123-17-73, Appendix C.
L.
Maximum premium
ratio: A factor
pre-selected by the retrospective rated group that is multiplied by the
standard premium after application of the premium size factor to determine the
maximum retrospective premium. Options for the maximum premium ratio are set
forth in OAC 4123-17-73, Appendix A and Appendix B.
M.
Member of a retrospective
rated group: An individual
employer that participates in a group retrospective rating plan as authorized
under OAC 4123-17-73.
N.
Newly-established
successor: A new
employer entity that assumed the operations of a previous member of the retrospective
rated group, and the new employer entity has established a new BWC policy.
O.
New retrospective
rated group: A retrospective
rated group is new if there is a change in sponsoring organization, the retrospective
rated group is moved to a new sponsoring organization, or a new retrospective
rated group is formed based on the percent of employers returning to the retrospective
rated group.
P.
Reserve: BWC’s estimate of the future cost of a
claim at a specific point in time.
Q.
Retrospective
rated group: The member
employers who collectively form a group that participates in the group retrospective
rating plan of a sponsoring organization.
R.
Retro policy
year: The policy year
in which an employer is enrolled in group retrospective rating. For public
employer taxing districts (PEC employers) the retro policy year is January 1
through December 31. For private employers (PA employers) the retro policy year
is July 1 through June 30.
S.
Snapshot date: The date BWC captures or “freezes”
payroll and claim costs for rate making purposes.
T.
Sponsoring organization: An entity with governing members, which
has been certified by BWC to sponsor and market group experience rating and group
retrospective rating programs. Certification requirements for sponsoring organizations
are set for in OAC 4123-17-61.1. See the Sponsorship Certification policy for additional information.
U.
Standard premium: The total premium paid by, or on behalf
of, an employer for a given policy year including any premium size factor
adjustment, excluding charges for Disabled Workers’ Relief Fund (DWRF) and the
administrative cost fund. In determining standard premium, total premium paid
will not be reduced by any rebates or dividends issued pursuant to OAC 4123-17-10. Aggregate standard premium is the
total of standard premiums for all employers in the group.
V.
Third Party
Administrator (TPA):
Any person or organization that works with certified sponsoring organizations
to administer and facilitate an employer’s application to group programs.
IV. Policy
A.
Retrospective rated group
eligibility requirements.
1.
Each retrospective
rated group seeking participation in the program must meet the following
standards:
a.
The retrospective
rated group must be sponsored by a BWC certified sponsoring organization.
b.
The employers’
primary business pursuit as determined in section IV.A.1.b.i below must be
homogeneous with the other employers in the retrospective rated group.
i.
Homogeneity is
determined by the main operating classification codes of the employers as
determined by the predominant premium obligations for the rating year beginning
two years prior to the retro policy year. Industry groups are determined by OAC
4123-17-05, Appendix A. 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. However:
a)
Industry groups
seven and eight are not considered similar, and premium from industry group
seven or eight cannot be combined with premium from industry group nine to make
industry group seven or eight the dominant industry.
b)
Industry groups two
and six are not considered similar, and premium from industry group two or six
cannot be combined with premium from industry group four to make industry group
two or six the dominant industry.
ii.
BWC may allow an
employer to move to a more homogeneous group, after December 31, for PA
employers and June 30, for PEC employers, but before the application deadline,
if the employer is:
a)
An employer without
a full year of recorded premium;
b)
Reclassified as a result
of an audit; or
c)
Fully or partially
combined with another employer.
2.
The retrospective
rated group of eligible employers must have aggregate standard premium in
excess of $1 million as determined by BWC based upon the last full policy year for
which premium information is available.
a.
For employers
without a full year of recorded premium, BWC may use estimated premium.
b.
BWC will use the
experience modified premium of the individual employers excluding group experience
rating discounts.
3.
The retrospective
rated group must have at least two eligible employers.
4.
The sponsoring
organization must document with the group retrospective rating application its
program to improve accident prevention and claims handling for the employers in
the retrospective rated group. For existing retrospective rated groups who are reapplying,
the sponsoring organization must document the effectiveness of prior programs
and any proposed improvements to these programs. The safety program
requirements are outlined in OAC 4123-17-68. See the Sponsorship Certification policy for additional information.
B.
Employer eligibility
requirements.
1.
The employer must be
a PA employer or a PEC employer. Self-insuring employers and state agencies are
not eligible.
2.
The employer must
have active workers’ compensation coverage defined as follows. As of the
application deadline, the 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 entered for
payment of premium or assessment obligations;
c.
Not have cumulative lapses
in workers’ compensation coverage in excess of forty (40) days within the prior
twelve (12) months; and
d.
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.
3.
The employer may not
be a member of more than one retrospective rated group. Further, an employer
cannot be a member of a group retrospective rating plan and a group experience rating
plan in the same policy year.
4.
The employer’s group
retrospective rating application will be rejected if the employer has been
included on a group experience rating roster for the upcoming policy year.
5. The employer must be homogeneous with
the retrospective rated group. However, there are exceptions to the homogeneity
requirement. These exceptions include an employer:
a.
Of a continuing retrospective
rated group who initially met the homogeneity requirement. BWC will not
disqualify such employer from participating in the continuing retrospective
rated group for failure to continue to meet the homogeneity requirement;
b.
Without a full year
of recorded premium;
c.
Reclassified as a
result of an audit;
d.
Fully or partially
combined with another employer; or
e.
Having the highest
overall premium falling under the standard exception classification codes has
the option to participate in a retrospective rated group associated with
another operating classification code.
i.
The standard
exception classification codes included in this rule are:
a)
8810: Clerical
Office Employees;
b)
8871: Clerical
Telecommuter Employees;
c)
7380: Drivers,
Chauffeurs, and their Helpers;
d)
8742: Salespersons,
Collectors or Messengers, Outside; and
e)
8748: Automobile
Salespersons.
ii.
The standard
exception does not apply in every case and is determined by the true nature of
the employer’s business.
iii. Alternate employer organizations, professional
employer organizations, and temporary service agencies are ineligible for the
standard exception rule.
C.
Application
requirements / BWC evaluation of application.
1.
Application
deadlines:
a.
The application
deadline for PA employers is the last business day of January.
b.
The application deadline
for PEC employers is the last business day of July.
2.
Employer
requirements:
a.
Employers apply for group
retrospective rating through sponsoring organizations that are certified by BWC.
b.
Individual employers
who are not included on the final Employer Roster for Group Retrospective
Rating Program (U-152) or who do not have an Employer Statement for Group
Retrospective Rating Program (U-153) for the same sponsoring organization on
file by the application deadline will not be considered for the group retrospective
rating plan for that policy year. BWC may waive this requirement for good cause
shown due to clerical or administrative error, so long as no employer is added
to a retrospective rated group after the application deadline.
c.
BWC may request
additional information from individual employers, as needed, in order to
process an application and determine an employer’s eligibility for
participation.
3.
Sponsoring organization
requirements:
a.
A retrospective
rated group’s application is applicable to one policy year. The retrospective
rated group must reapply each year for group retrospective rating.
b.
Continuation of a retrospective
rated group for subsequent policy years is subject to timely filing of an
application and meeting eligibility requirements each year.
c.
The sponsoring organization
must:
i.
Apply for group retrospective
rating by submitting a completed Application for Group Retrospective Rating
Program (U-151) to BWC with all required documentation by the application
deadline. The U-151 must be signed by an officer of the sponsoring organization.
BWC will reject the application if all relevant information is not included.
ii.
Select a maximum
premium ratio on the U-151.
iii. Identify each individual employer in the
retrospective rated group by submitting the U-152 to BWC.
iv.
Submit to BWC a
U-153 for each employer participating in the sponsoring organization’s retrospective
rated group.
a)
If the employer
files a U-153 within sixty (60) days prior to the application deadline, the
presumption is the latest filed U-153 indicates the employer’s intentions for group
retrospective rating for the upcoming policy year.
b)
A U-153 will remain
in effect until the end of the policy year indicated on the form.
c)
The U-153 must be
signed by the chief executive officer, owner, partner, or designated management
representative of the employer.
d.
BWC may request
additional information from the sponsoring organization. Failure or refusal by
the sponsoring organization to provide the information on the forms or computer
formats provided by BWC is sufficient grounds for BWC to reject the application
and deny the retrospective rated group’s participation.
4.
BWC evaluation of
application:
a.
BWC takes the
following actions upon receipt of an application for group retrospective rating:
i.
Determines the
industry classification of the retrospective rated group based upon the
composition of employers in the retrospective rated group;
ii.
Screens individual
employers to ensure they fit within the retrospective rated group’s industry
classification; and
iii. If BWC determines an individual employer
does not meet the eligibility requirements, BWC notifies the individual
employer and the sponsoring organization. The retrospective rated group may
continue its application for group retrospective rating without the
disqualified employer.
b.
BWC will only honor
changes to the original application that are filed on a U-153 and filed with
BWC prior to the application deadline. BWC uses the latest application form
received in determining group retrospective rating participation.
c.
Any requests to be
removed from the group retrospective rating roster must be completed in
writing, signed by an officer of the sponsoring organization, and filed prior
to the group retrospective rating application deadline.
D.
Operation of
program.
1.
A retrospective
rated group may not voluntarily terminate a group retrospective rating plan
after application has been made.
2.
An employer who
sustains a claim within the “green period” must complete one of the following
during the retro policy year:
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.
3.
An employer
participating in group retrospective rating may participate in other compatible
BWC discount programs during its participation in group retrospective rating.
Employer compatibility for group retrospective rating is outlined in OAC 4123-17-74, Appendix C.
4.
A retrospective
rated group that has been established and accepted by BWC may select an
authorized representative as follows (see the Employer Authorized Representatives policy for additional information):
a.
One permanent
authorized representative may be selected to represent the retrospective rated group,
and the individual employers of the retrospective rated group, for all policy-related
matters relating to BWC and the Industrial Commission.
b.
The sponsoring organization
will select an authorized representative by submitting a U-151 to BWC. The
U-151 must be signed by an officer of the sponsoring organization. An
authorized representative may be changed or terminated only by the subsequent
submission of a U-151.
5.
The employer pays
its individual premium during group retrospective rating participation.
6.
BWC will consider
the retrospective rated group as one entity when calculating the group retrospective
rating premium.
7.
The group retrospective
rating premium calculation will occur three times during the evaluation period;
at twelve (12), twenty-four (24), and thirty-six (36) months following the end
of the retro policy year.
a.
On the evaluation
date, BWC will evaluate all claims with dates of injury during the retro policy
year where the policy of record was a retrospective rated group member on the
date of injury. The incurred losses and reserves for these claims will be
captured. An LDF will be applied to the total incurred losses and reserves for
the entire group. The retrospective rated group’s premium will be calculated
based on the developed losses and reserves of the group.
b.
The group retrospective
rating premium will be compared to the standard premium and all subsequent group
retrospective rating refunds and assessments.
c.
The difference
between group retrospective rating premium and standard premium will be
distributed or billed to the employers as a refund or assessment.
i.
Assessments are
limited by the maximum premium ratio selected by the retrospective rated group
at the time of application.
ii.
BWC does not apply
any reserving method that suppresses any portion of the employer’s costs for
the purpose of calculating an experience modification (EM).
iii. BWC may hold a portion of refunds or
defer assessments owed in the first and second evaluation periods to minimize
the volatility of refunds and assessments. BWC fully distributes any net refund
or assessment in the third evaluation period.
iv.
For claims of a retrospective
rated group’s members enrolled in salary continuation at the time of
evaluation, the full indemnity reserve will be included in the incurred losses,
but no amount is included for indemnity paid.
d.
Refunds and
assessments are distributed directly to eligible individual employers based on
the percentage of the total group standard premium paid by the employer at the
time of the evaluation. This percentage is multiplied by the refund or
assessment and the resulting amount distributed or billed to the employer.
i.
BWC sends premium refunds
within four months of the evaluation date to eligible participants.
ii.
If additional
premium is owed, it is included in the employer’s next invoice and must be paid
by the due date on the invoice. BWC charges penalties on additional premium not
paid when due.
iii. If an employer has an outstanding
balance with BWC, BWC deducts such monies from the refund. BWC refunds the
difference, or if a premium balance is still due, sends a bill for the balance.
iv.
Effective with
policy years beginning on or after January 1, 2022, premium refunds or premium
rebates provided to group retrospective rating employers for a policy year may
not exceed, in their cumulative total, one hundred percent of the actual
premium following reporting of actual payroll and reconciliation of estimated
premium and actual premium.
E.
Gross
misrepresentation.
1.
After the
application deadline, but before the end of the policy year, the sponsoring organization
may notify BWC it wishes to remove an employer from the retrospective rated
group.
2.
The sponsoring organization
may request the employer be removed from the retrospective rated group after
the application deadline only for the employer’s gross misrepresentation on its
application to the retrospective rated group.
3.
The sponsoring organization
must notify the employer of its request to remove the employer from the retrospective
rated group for gross misrepresentation.
4.
The burden of proof
is on the sponsoring organization to provide sufficient documentation as
determined by BWC.
5.
BWC reviews the
request and the employer will only be removed with BWC’s approval.
F.
BWC removes an
employer from the Group Retrospective Rating Program for the current policy
year for failure 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. 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 applies:
1.
Claims costs for all
injuries incurred from the beginning date of the retro policy year through the
date of removal from the program are included in the group retrospective rating
calculation, and
2.
Only premium paid
from the beginning date of the retro policy year through the date of removal is
included in the group retrospective rating calculation for the retro policy
year.
G.
Resolution of
complaints.
1.
Employer complaints are
processed under the General Employer Complaint Policy.
2.
The following are
examples of extenuating circumstances BWC applies to the Group Retrospective
Rating Program:
a.
A new employer is
not homogeneous with the retrospective rated group to which it applied.
i.
Extenuating circumstance:
An employer, having no reported payroll and premium during the period
specifically mentioned in the group retrospective rating rules, is rejected
because the employer is not homogeneous with the retrospective rated group to
which it applied. BWC may permit the employer to participate in a retrospective
rated group that is homogeneous with the employer’s operation as long as the retrospective
rated group is with the same sponsoring organization. The employer, sponsoring organization,
and TPA must agree with the decision.
ii.
Supporting
documentation required:
a)
The employer has no
reported payroll;
b)
All appropriate group
retrospective rating forms were timely filed;
c)
The employer is not
rejected for any other reason; and
d)
The same sponsoring organization
has another group the employer could be placed into that would resolve the
homogeneity issue.
b.
Employer rejected
from group retrospective rating after being accepted into group experience rating
for the same policy year.
i.
Extenuating circumstance:
An employer is listed on a group experience rating roster that is submitted to
BWC. After the application deadline for group experience rating, the employer
requests removal from group experience rating in order to apply for group retrospective
rating for the same policy year. BWC denies the employer request to be removed
from group experience rating because the request was made after the application
deadline. BWC denies the employer’s application for group retrospective rating
because the employer is enrolled in group experience rating.
ii.
BWC will grant the
employer’s request to be removed from group experience rating after the
application deadline date and to be placed in group retrospective rating if all
of the following requirements are met.
a)
The employer, group experience
rating sponsoring organization, and group retrospective rating sponsoring organization
provide BWC with a written request to remove the employer from group experience
rating and add the employer to group retrospective rating. All three requests
must be submitted on company letterhead and be signed by an authorized
representative.
b)
All letters must be
received by BWC no later than thirty (30) days after the notification of the
denial to group retrospective rating.
c)
The removal of the
employer from group experience rating does not change the group experience rating
group’s calculated EM. The removal of the employer must result in no financial
impact to the balance of the group experience rating group participants.
d)
The employer must
meet all other eligibility requirements of the Group Retrospective Rating
Program.
H. Successorship, coverage cancellation,
and bankruptcy; as set forth in OAC 4123-17-73(S).
1.
Rights and
obligations.
a.
Successor wholly
succeeds predecessor: The successor is responsible for all existing or future
rights and obligations stemming from predecessor’s current or past
participation in group retrospective rating, as outlined in OAC 4123-17-02(C).
b.
Successor partially
succeeds predecessor: If predecessor has any retro policy years in the
evaluation period, predecessor retains rights, liabilities, and obligations set
forth in OAC 4123-17-73.
2.
Program
participation.
a.
Successorship involving
a newly-established successor.
i.
A single,
newly-established successor wholly succeeds predecessor: Predecessor’s
eligibility for group retrospective rating transfers to successor.
ii.
A single,
newly-established successor partially succeeds predecessor: Predecessor’s
eligibility for group retrospective rating transfers to successor; successor
determines whether it will participate.
iii. A single, newly-established successor
wholly succeeds predecessor during the current policy year, or sixty (60) days
prior to the application deadline: The successor may be considered a member of group
retrospective rating if agreed to by both the successor and sponsoring organization.
The successor and the sponsoring organization must submit a written agreement
to BWC within thirty (30) days of the date BWC updates the predecessor’s policy
status to combine.
b.
Successor participation
is dependent on meeting group retrospective rating eligibility requirements.
c.
Successorship
involving an already established successor that wholly or partially succeeds
predecessor: Predecessor’s eligibility for group retrospective rating does not
transfer to successor. Predecessor’s group retrospective rating plan(s)
terminate as of the ending date of the evaluation period.
3.
Employer cancels coverage: The employer’s premium and losses remain with the retrospective
rated group. The resulting refunds or assessments are disbursed to or collected
from the remaining members of the retrospective rated group. The sponsoring organization
and its authorized representative have the right to represent the interest of
the cancelled employer on behalf of the retrospective rated group for claims
which occurred during the year(s) the cancelled employer was in the sponsoring organization’s
retrospective rated group.
4.
Employer files bankruptcy: If a current or past group retrospective rating
employer with retro policy years in the evaluation period files a petition for
bankruptcy, the employer must notify BWC Legal by certified mail within five
working days from the date of the bankruptcy filing. BWC will petition the
bankruptcy court to take appropriate action to protect the state insurance fund
and other related funds.