The Ohio Bureau of Workers’ Compensation (BWC) Board of Directors on April 24 approved a plan to allow private employers to pay for their annual workers’ compensation premiums in two, four, six or 12 installments as part of its move to a new prospective billing system. 

Under the new system, businesses will be billed prior to receiving coverage instead of the previous system of billing employers after they have received coverage. The signing of 130-HB493 (Sears-Henne) allowed for the transition to the new system. 

“Prospective billing is not only the standard across the insurance industry, it will bring a number of benefits to Ohio employers, including the $1.2 billion in premiums BWC will pay on their behalf as we make the transition,” BWC Administrator Steve Buehrer said. “We’re pleased to offer more flexibility as part of our ongoing efforts to modernize our operations and provide the quality service that Ohio employers expect.”

Businesses can expect to receive their first notice of estimated annual premium in early June for the 2015 policy year, according to a news release from BWC.  

“Beginning July 1, businesses will pay an estimated premium for the upcoming coverage year and undergo a payroll ‘true-up’ process after the policy year ends to ensure the proper premium was paid,” BWC said. “As part of the previously announced $1.2 billion premium credit to ease transition costs for employers, BWC will pay businesses’ previous six months coverage, or final payroll report, under the old system, as well as one-sixth of the policy year 2015 premium due. Therefore, their first payment under prospective billing won’t be due until Aug. 31.”

In addition to payment flexibility, the switch to prospective billing is expected to provide a number of benefits to Ohio employers, according to an executive summary of the plan. Those include an overall base rate reduction of 2 percent for private employers and 4 percent for public employers, as well as an increased ability for BWC to detect employer non-compliance and fraud.

Buehrer said BWC’s “strategic direction” staff has been working to educate employers on the upcoming changes, noting 1,898 attendees representing 1,502 distinct employers have signed up for training. 

“This is a huge accomplishment,” he said. “Furthermore, our staff has conducted our first employer seminar in Spanish to a group of Spanish-speaking employers. We are excited to be reaching out to as many employer as possible, and even going the extra mile to speak to them in their own language when we can.”

Also discussed at the meeting was a new initiative to provide workers’ compensation coverage for Ohio employers who have employees temporarily or regularly working outside the state. Kendra DePaul, special assistant to Buehrer, explained that BWC’s extraterritorial coverage generally covers claims of Ohio employees temporarily working out of state as long as the claim is filed in Ohio, but cannot cover claims filed in other states.

“For example, if I was going to a conference up and Michigan, and got in car accident in Michigan, as long as filed the claim back in Ohio, there would be no issue. BWC would process like any other claim,” DePaul said. “If I filed that claim in Michigan, BWC can’t respond to it, they’re not a licensed insurer there, so Michigan would not recognize BWC’s coverage in that state.

“That can lead to some issues for employers,” she continued. “If an employee files a claim in another state, and the employer doesn’t have coverage there, they’re considered uninsured for the purposes of workers’ comp by that state. That can lead to some great fines and penalties and generally they have to pay the claim dollar-for-dollar. So it’s an exposure risk for the employer.” 

She said the plan is to offer two types of coverage: limited other states’ coverage, for Ohio employers who have employees temporarily working outside the state; and other states’ coverage, for Ohio employers who have regular or full-time employees working outside the state. 

She said the new plan will include the following components:

– Employer would apply directly to BWC.
– BWC would determine eligibility by the following criteria: the employer must be in good standing; have an experience modifier under two; and have 80 percent of its payroll in Ohio.
– Vendor will issue a policy to cover out-of-state exposures.
– Vendor will respond to any claims filed out-of-state.

She said more details would be forthcoming after BWC finds a vendor to respond to the RFP, which is expected to be issued Tuesday, April 28.

Board Chairman Nicholas Zuk said this is an important issue to address, as it was the “No. 1 question” at recent board forums.

“This will allow our employers to bid on jobs out-of-state that they are now prohibited from bidding on because they don’t have group coverage,” Zuk said.