Significant and Costly Changes to BWC’s Group Rating Program

*By Steve P. Dlott

Under the guise of “rate reform,” the Bureau of Workers’ Compensation (“BWC”) has implemented significant changes to the group-rating program. According to the BWC these “adjustments” are necessary to achieve greater “premium equity” between the group and non-group employers. Highlights of the changes include:

• A reduction of the maximum group-rating discount from 85% to 77%.
• A proposed assessment of 31% on all group-rated employers. This assessment is essentially a tax on all group-rated employers. The net effect of this assessment, if enacted, would eliminate the group discount for any employer in a 35% percent group or below discount tier.
• Group-rated employers would no longer be entitled to Drug Free Workplace Program discounts. In addition, the BWC also has discussed eliminating Safety Council discounts for group-rated employers. However, to date, this policy has not been implemented.
• A 100% cap in premiums for non-group rated employers. This cap is in response to the sky-rocketing premium increases-over 1000% in some cases-for employers disqualified from the group rating program.

As apparent, these changes are a mixed bag for Ohio employers. Group rating discounts will still be available but only for those employers with a sterling claims history. Even then, these employers will see their maximum discount reduced from 85% to 54% and possibly less than that for these same employers also participating in the Drug Free Workplace Program. At the same time, these adjustments will offer a significant break to non-group rated employers, who may have seen double, triple, or even quadruple digit premium increases after losing their group discount.

Employers are strongly encouraged to immediately contact their third party administrators to discuss these changes. At the same time, aggressive claims management is the best defense against costly premium increases.