OhioBWC - Basics:  Elective Coverage

Optional supplemental coverage for employers

All employers with one or more employees must carry workers’ compensation coverage. It’s the law. However, Ohio law makes coverage optional for owners or ministers in one of the following categories:

  • Sole proprietor;
  • Partnership;
  • Limited liability company acting as a sole proprietor;
  • Limited liability company acting as a partnership;
  • Family farm corporate officers;
  • Individual incorporated as a corporation with no employees;
  • Ordained or associate ministers of a religious organization.
Remember, if you choose not to cover yourself and you are injured at work, BWC will not provide coverage. And other insurance may not cover your work-related disability or medical bills. Contact your insurance carrier if you have questions.

If you do elect to cover yourself, this coverage is in addition to or is supplemental to their current policy. Employers can apply for optional supplemental coverage within the initial application, Application for Ohio Workers’ Compensation Coverage (U-3), or at a later date with the Application for Optional Supplemental Coverage (U-3S). You must complete an additional application for optional supplemental coverage to cover owners or ministers you wish to add at a later date. Supplemental coverage is effective the date BWC receives the application.

If you elect supplemental coverage, you do not report your payroll under the same manual category as your employees. Report optional supplemental coverage payroll only to manuals with the suffix SN (Supplemental NCCI), and report employees' payroll under manuals with the suffix RN (Regular NCCI).

Listed below are the other rules for reporting payroll for optional supplemental coverage.

Sole proprietor or partner coverage
Employers electing optional supplemental coverage must report their income or net payroll at a minimum of $419 per week ($21,788 annually) up to a maximum of $1,256 per week ($65,312 annually). The maximum salary limit is subject to change by a yearly review. In the case of partnerships, coverage is available to one or all of the partners.

We will cancel the supplemental coverage if you fail to report at least the minimum required amount of payroll for any reporting period that the coverage is in effect. Employers are responsible for the payment of premiums up to the date they ask to terminate their supplemental coverage.

Independent contractors and subcontractors
Independent contractors and subcontractors may elect coverage for themselves if they are sole proprietors or partners. If an independent contractor or subcontractor controls the selection of materials, traveling routes and quality of performance of another worker, that independent contractor or subcontractor is considered an employer and, as such, is required to provide workers' compensation coverage for that worker.

Limited liability companies (LLC)
These companies can be considered corporations, sole proprietorships or partnerships for tax purposes. Whatever the LLC considers itself for tax purposes determines whether the LLC owner must have workers’ compensation coverage. If the LLC considers itself a sole proprietorship or partnership, coverage is optional for the owner. If the LLC considers itself a corporation, the owner must cover himself or herself.
Note: There is an exception in which coverage is optional for the owner. In these cases the LLC acting as a corporation meets the requirement to be considered an individual incorporated as a corporation (i.e., single/sole owner with no employees).

Ministers or associate ministers
BWC provides two coverage options for ministers. First, churches may provide optional supplemental coverage for ministers by submitting a signed U-3S. They must submit a new U-3S each time they want to add coverage for a new minister. They also must submit the form in writing when a minister leaves. Ministers are considered employees, so churches must report all remuneration for them. No minimum or maximum payroll limits exist.

Second, if a church decides not to cover its ministers, the ministers may elect to establish their own coverage as sole proprietors using the U-3. Payroll reporting guidelines are the same as for sole proprietors.

Family farm corporate officers
Family farm corporate officers are not considered employees for purposes of reporting payroll and assessing premiums, but they may elect coverage. To qualify as a family farm corporation the following criteria must be met:

  • The family farm must be founded for the purpose of farming animal or plant products intended for consumption by human beings or animals (excluding nurseries and flower production enterprises);
  • A majority of the shareholders must be related within the fourth degree of kinship (siblings, parents, grandparents, aunts, uncles, great aunts, great uncles or first cousins) or be the spouse of such persons;
  • No shareholder may be a corporation;
  • At least one of the related persons within the corporation must reside on or actively operate the farm.

Individual incorporated as a corporation
Recent legislation has changed the definition of employee in Section 4123.01(A)(2)(c) of the Ohio Revised Code to eliminate required coverage for an individual incorporated as a corporation when there is a sole owner and no employees. As described above, individuals incorporated as a corporation may elect to cover themselves by completing and filing a U-3S.

An individual incorporated as a corporation is defined as a sole owner corporation and refers only to the owner of the corporation in terms of being excluded as an employee. This includes any corporation (S-Corp, LLC Corp, C-Corp) as long as there is a sole owner with no employees.

An individual incorporated as a corporation, sole owner, zero employees does NOT have to establish or maintain an Ohio workers’ compensation policy unless the employer is required by another authority to show proof of workers’ compensation coverage (in which case having optional supplemental coverage would be sufficient) or if, at any time, coverage becomes required such as when the employer hires an employee or is no longer sole owner.

Payroll reporting guidelines are the same as those for proprietors in that they must report their income or net payroll based on the minimum and maximum payroll reporting requirements.If the employer fails to report at least the minimum reportable supplemental payroll for any reporting period, we will cancel the coverage.

Viewing and updating existing optional supplemental coverage Those of you who have optional supplemental coverage in addition to your regular policies can view information about the coverage in Optional supplemental coverage. You also can view and update information for the other individuals enrolled, such as Social Security number, address and contact information, and add or cancel coverage online.

Request to cancel optional supplemental coverage
To cancel supplemental coverage you must do one of the following:

  • Request to cancel when submitting your payroll report;
  • Send the request in a letter to BWC, including the policy number;
  • Select to cancel coverage online for the individual(s) listed on the policy in the personal policy information section of optional supplemental coverage.