April 30, 2009
Is It Right for You?
State funded private employers have until May 31st, 2009 to sign-up for the Ohio Bureau of Workers' Compensation's (BWC) new deductible program.
Similar to other insurance deductible plans, an employer agrees to pay the portion of a workers' compensation injury claim that falls below their selected deductible level.
The Pros: The main benefit for taking on this degree of risk is the employer will receive a premium discount, ranging from 1.4% to 26%, depending on the employer's premium and hazard group. This discount can also be used with the group rating program. (Discounts for employers participating in the Deductible Program and a group rating plan together can't exceed the maximum credit allowable for group during that rating year.)
The Cons: Employers enrolled in the deductible plan cannot utilize retrospective rating (group or individual), the $15,000 medical-only ($15K), and salary continuation programs. $15K and salary continuation have been useful claims management programs utilized by employers to control paid medical and indemnity costs, and MIRA II reserves, which in turn reduces the experience modifier and premium. Though the employer is paying the deductible amount, BWC will still apply the entire cost of the claim to the employer's experience.
Also, there is no aggregate cap. For example, an employer has chosen a $500 deductible which gives them a $3,000 premium savings. Unfortunately they have 6 claims, so out of pocket expenses could total $3,000...the entire savings! An aggressive and safety-driven workers' compensation program is essential if you are enrolled in the deductible plan. Please work closely with your TPA and MCO to determine if the program is right for you.
The Basics: The employer chooses the per-claim deductible they will pay (e.g., $500, $1,000, $2,500, $5,000 or $10,000) and the premium discount percent they will receive from a chart provided by BWC. However, the deductible level cannot exceed 25% of the employer's premium in a policy year. The BWC pays all claims costs, then bills the enrolled employer on a monthly basis for any claims costs subject to the deductible. The employer must pay all deductible amounts billed by the BWC within 28 days of the invoice date.
Who is eligible? The BWC will review all applications to determine eligibility and accept only those employers who qualify. To participate, the employer must:
- Be a private, state-fund employer or a public employer taxing district. Note: Self-insuring employers and state agency public employers are not eligible to participate;
- Be current on all premium payments and deductible billings at the time of the employer's application;
- Be in good standing at the time the employer applies;
- Have active coverage by the application deadline;
- Cumulative lapses in coverage cannot exceed 40 days within the 12 months preceding the application deadline; and
- Meet a required credit score.
How do you apply? The BWC offers a paper and online application at www.ohiobwc.com. Deadline is May 31st, 2009 for private employers.
We are here to help! If you need an analysis done to determine the financial pros and cons of the deductible plan, do not hesitate to call as at 877-765-4200 and ask to speak with our customer service department.
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