Current through all regulations passed and filed through September 16, 2024
(A) Definitions.
As used in this rule:
(1) "Coverage period" means the twelve month
period beginning July first through June thirtieth for private employers, and
January first through December thirty-first for public employers. The
deductible selected by the employer will apply only to claims with a date of
injury within the coverage period defined in the deductible
agreement.
(2) "Deductible" means
the maximum amount an employer participating in the deductible program must
reimburse the bureau for each claim that occurs during the policy year.
(a) "Small deductible" means a deductible
less than or equal to ten thousand dollars.
(b) "Large deductible" means a deductible
greater than ten thousand dollars.
(3) "Experience rated premium" means the
premium obligations of an employer for the policy year excluding
the disabled workers' relief fund ("DWRF")
assessment. Experience rated premium may include any
experience rated premium related to policy combinations. The premium is subject
to the premium sized adjustment described in rule
4123-17-03.3 of the
Administrative Code.
(4) "Modified
rate" means the rate that employers who are experience rated pay as a
percentage of their payroll. This rate is calculated by taking the base rate
and multiplying it by the employer's experience modification ("EM")
factor.
(5) "Base rate" means the
rate that employers who are not experience rated pay as a percentage of their
payroll.
(6) "Policy in good
standing" means the employer is current on all payments due to the bureau and
is in compliance with bureau laws, rules, and regulations at the time of
enrollment or reenrollment.
(7)
"Premium" means money paid and due from an employer for workers' compensation
insurance. Premium does not include money paid as fees, fines, penalties or
deposits.
(8) "Qualified employer"
means an employer that has a state insurance fund policy that is in good
standing at the time of enrollment or reenrollment. Although the employer may
be a qualified employer, the bureau may not accept the employer into the
deductible program for other reasons set forth in this rule.
(B) Eligibility requirements.
(1) An employer shall be eligible to
participate in the deductible program only if the employer meets all of the
following requirements:
(a) As of each
continuing eligibility evaluation date, the employer holds active workers'
compensation coverage as of the original application deadline or anniversary
date of participation as follows:
(i) The
employer must be current with respect to all payments due the bureau, as
defined in paragraph (A)(1)(b) of rule
4123-17-14 of the Administrative
Code.
(ii) The employer must be
current on the payment schedule of any part-pay agreement into which it has
entered for payment of premiums or assessment obligations.
(iii) If the employer selects a small
deductible, the employer may not have cumulative lapses in workers'
compensation coverage in excess of forty days within the preceding twelve
months.
(iv) If the employer
selects large deductible, the employer may not have cumulative lapses in
workers' compensation coverage in excess of fifteen days within the preceding
five years.
(v) The employer must
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 application deadline date set forth in rule
4123-17-74 of the Administrative
Code.
(b) The employer
shall demonstrate the ability to make payments under the deductible program
based upon a credit score established by the bureau on an annual basis which
will be applicable to all applicants for the program year. The bureau shall
obtain the credit reports from an established vendor of such information. An
employer that is a subsidiary of another corporate entity may use the parent
corporate entity's credit score in meeting this requirement if the parent
corporate entity meets financial criteria for the deductible program and
executes a contract of guaranty with respect to the subsidiary's participation
in the program.
(c) The bureau may
require an employer to adopt additional risk mitigation measures as a
prerequisite for participation in the program. These measures may include, but
are not limited to, either individually or in combination, the following:
(i) Adoption of an alternative payment
plan;
(ii) Providing securitization
in the form of a letter of credit or surety bond; or
(iii) For employers electing a large
deductible, selection of an aggregate stop-loss limit.
(2) The following employers shall
not be eligible to participate in the deductible program:
(a) State agencies; and
(b) Self-insuring employers providing
compensation and benefits pursuant to section
4123.35 of the Revised
Code.
(C) In
selecting an employer deductible program under this rule, the employer must
select, on an application provided by the bureau, a per claim deductible
amount, which shall be applicable for all claims with dates of injury within a
one-year coverage period. The employer shall choose one deductible level from
the following:
(1) Five hundred
dollars;
(2) One thousand
dollars;
(3) Two thousand five
hundred dollars;
(4) Five thousand
dollars;
(5) Ten thousand
dollars;
(6) Twenty-five thousand
dollars;
(7) Fifty thousand
dollars;
(8) One hundred thousand
dollars; or
(9) Two hundred
thousand dollars.
(D) In
choosing a small deductible, the employer may not choose a deductible amount
that exceeds twenty-five per cent of their experience rated premium obligation
during the most recent full policy year. For a new employer policy, the
deductible amount shall not exceed twenty-five per cent of the employer's
expected premium. In choosing a large deductible, the employer may not choose a
deductible amount that exceeds forty per cent of their experience rated premium
obligation for the most recent full policy year. For self-insuring employers
re-entering the state insurance fund, the bureau will use the paid workers'
compensation benefits from the last full policy year in place of experience
rated premium. The bureau may estimate a full year's premium should only a
partial year be available or if no premium is available in the most recent full
policy year.
(E) An employer
selecting a large deductible will undergo additional credit analysis and must
submit financial information to the bureau during the enrollment period
preceding each policy year they elect to participate in the program.
(1) An employer choosing a deductible level
of twenty-five thousand dollars or fifty thousand dollars must submit reviewed
or audited financials for at least the three most recent fiscal years. The
financials must be prepared in accordance with generally accepted accounting
principles (GAAP).
(2) An employer
choosing a deductible level of one hundred thousand dollars or two hundred
thousand dollars must submit audited financials for at least the three most
recent fiscal years. The financials must be prepared in accordance with
GAAP.
(F) An employer
may request an annual aggregate stop-loss limit option in combination with
large deductible levels. If the employer requests the aggregate stop-loss limit
option, the bureau shall limit the employer's deductible billings for injuries
which occur during the associated policy year to three times the deductible
level chosen. The bureau may reject the employer's request to participate in
the aggregate stop-loss limit option if the bureau determines that, because of
the employer's premium or estimated premium size, the employer would receive a
credit under this rule that would exceed the employer's maximum aggregate
stop-loss liability.
(G) The
employer shall file the application provided by the bureau and any other
documentation required for enrollment in the deductible program by the
applicable application deadline set forth in appendix A or appendix B to rule
4123-17-74 of the Administrative
Code.
The bureau shall not permit an employer to enroll in a
deductible program outside of the application deadline, except that the bureau
will consider an employer establishing a policy in Ohio for the first time for
participation where the employer submits its deductible program application to
the bureau within thirty days of obtaining coverage.
(H) Renewal in the deductible program at the
same level for each subsequent year shall be automatic, subject to review by
the bureau of the employer's continued eligibility under paragraph (B) of this
rule, unless the employer notifies the bureau in writing that the employer does
not wish to participate in the program or that the employer wants to change the
deductible amount for the next coverage period. The employer shall provide such
notice to the bureau within the time and in the manner provided in paragraph
(G) of this rule.
(I) Except as
provided in paragraph (M) of this rule, an employer shall not be permitted to
withdraw from the deductible program during the policy year, and no changes
shall be made with respect to any deductible amount selected by the employer
within the policy year.
(J) The
bureau shall pay the claims costs under a deductible program and the employer
shall reimburse to the bureau the costs under the deductible program as
follows:
(1) The bureau shall pay all claims
costs in accordance with the laws and rules governing payment of workers'
compensation benefits. For small deductible levels, the amount to be included
in the employer's experience for a policy year shall be any claims costs for
injuries incurred in that policy year less any deductible billed to the
employer under this rule. For large deductible levels, the bureau shall include
the entire claims cost for injuries incurred in a policy year in the employer's
experience for that policy year. Any qualifying claims in accordance with
paragraphs (G)(4) and (G)(5) of rule
4123-17-03 of the
Administrative Code shall be excluded from the
employer's experience.
(2) The
bureau shall bill the employer on a monthly basis for any claims costs paid by
the bureau for amounts subject to the deductible as elected by the employer for
the policy year. In addition to amounts paid by the bureau for which the bureau
is seeking reimbursement from the employer, such monthly billings shall also
reflect the payments to date for any claims to which a deductible is
applicable.
(3) The employer shall
pay all deductible amounts billed by the bureau by the invoice due date. The
employer will be subject to any interest or penalty provisions to which other
monies owed the bureau are subject, including certification to the attorney
general's office for collection.
(4) The employer shall continue to be liable
beyond any deductible program period for billings covered under a deductible
program for injuries that arose during any period for which a deductible is
applicable, regardless of when payment was made by the bureau.
(K) The bureau will apply the
premium reduction calculation under the deductible program directly to the base
rate established for the policy year for base-rated employers, or after the
modified premium rate is established for experience-rated employers, but prior
to any other premium adjustments, as well as the
DWRF assessment. The bureau will calculate the premium
reduction in accordance with the appendices of this rule, which takes into
account both the deductible amount chosen by the employer and the applicable
hazard group based upon the most current version of the national council on
compensation insurance's hazard groupings as established by the hazard group
with the largest percentage of premium, as determined at the end of the
enrollment period for that year.
(1) In
determining the primary classification code and appropriate hazard group, the
bureau shall utilize payroll and the associated experience premium for the
rating year beginning two years prior to the period in which the employer is
seeking to enroll in the deductible program.
(2) For new employers, the bureau shall base
the appropriate primary classification code and hazard group upon estimated
payroll.
(L) Where there
is a combination or experience transfer of an employer within a deductible
program policy period, following the application of any other rules applicable
to a combination or experience transfer, the employer may be eligible to remain
in a deductible program as follows:
(1)
Successor: entity not having coverage.
Predecessor: enrolled in deductible program currently or in
prior policy years.
Where there is a combination or experience transfer, where the
predecessor was a participant in the deductible program and the successor is
assigned a new policy with the bureau, the successor shall make application for
the deductible program within thirty days of obtaining a bureau policy, as set
forth in paragraph (L)(3) of this rule. Notwithstanding this election, the
successor shall be responsible for any and all existing or future liabilities
stemming from the predecessor's participation in the deductible program prior
to the date that the bureau was notified of the transfer as provided under
paragraph (C) of rule
4123-17-02 of the Administrative
Code.
(2) Successor:
enrolled in the deductible program.
Predecessor: not enrolled in the deductible program.
Where there is a combination or experience transfer involving
two or more entities, each having Ohio coverage at the time of the combination
or experience transfer, and the successor policy is enrolled in the deductible
program for the program year, the successor shall automatically remain in the
deductible program for the program year and is subject to renewal in accordance
with paragraph (H) of this rule.
(3) Successor: not enrolled in deductible
program.
Predecessor: enrolled in deductible program.
Where there is a combination or experience transfer involving
two or more entities, each having Ohio coverage at the time of the combination
or experience transfer, and the successor policy is not enrolled in the
deductible program, the predecessor shall not be automatically entitled to
continue in the deductible program. The successor may make a formal application
should it desire to participate in the deductible program for the next policy
year. Whether or not the successor chooses or is otherwise eligible to
participate in a deductible program, under paragraph (C) of rule
4123-17-02 of the Administrative
Code, the successor remains liable for any existing and future liabilities
resulting from a predecessor's participation in the deductible program.
(M) The bureau may
remove an employer participating in the deductible program from the program
with thirty days written notice to the employer for any of the following
reasons:
(1) The employer participates in any
plan or program that is not compatible with the deductible program under rule
4123-17-74 of the Administrative
Code
(2) The bureau certifies a
balance due from the employer to the attorney general;
(3) The employer makes direct payments to any
medical provider for services rendered, to any medical provider for supplies or
to any injured worker for compensation associated with a workers' compensation
claim;
(4) The employer engages in
misrepresentation or fraud in conjunction with the deductible program
application process; or
(5) The
employer fails to report actual payroll for the preceding policy year or fails
to pay any premium due upon reconciliation of estimated premium and actual
premium for that policy year, no later than the due date set forth in rule
4123-17-14 of the Administrative
Code. An employer will be deemed to have complied with this requirement if the
bureau receives the payroll report, and the employer pays any premium
associated with the payroll report, prior to the expiration of any grace period
established by the administrator pursuant to paragraph (B) of rule
4123-17-16 of the Administrative
Code.
(N) An employer
removed from the deductible program for failure to comply with paragraph (M) of
this rule will be required to pay:
(1) Claims
costs up to the deductible selected under paragraph (C) of this rule for all
injuries incurred from the beginning of policy year in which the employer
participated in the deductible program through the date of removal from the
program; and
