BWC, Governor Propose $1 Billion Rebate to Employers

Proposal Includes Tripling Safety Grants and Lower Rates from Modernizing Operations

OBWCThe Ohio Bureau of Workers’ Compensation (BWC) and Governor John Kasich have proposed that the BWC give back $1 billion to private employers and local governments in the form of rebates. The proposal also triples investments in worker safety grants and lowers all rates by modernizing workers’ comp operations. The $1.9 billion proposal is made possible by larger-than-expected fund balances at BWC generated by strong investment management.

The $1 billion in rebates equals about 56 percent of the most recent annual premium of the approximately 210,000 private and public sector employers. The BWC would send the rebates to employers by check.

The rebate proposal is expected to be submitted to the BWC Board of Directors for approval at its meeting in late May. The proposed rebates will apply to employers who are in discount programs as well as those who are not.

According to the proposal, companies and government employers that pay premiums into the state fund for injured workers and have up-to-date policies are eligible for a rebate of 56 percent of what they were billed for their last policy year. In addition to the rebates, the bureau wants to require employers to pay premiums upfront instead of after a coverage period.

The proposed switch to prospective premium payments requires legislative approval, which the bureau hopes to gain this year. The switch would not go into effect until 2014 at the earliest.

The bureau wants to give employers a credit equal to their previous six months’ premium as part of the transition to a new payment system. To do so, the BWC would issue a credit to employers totaling $900 million to help offset the costs associated with the transition. The switch would lead to rate reductions of two percent for private employers and four percent for public employers.

Along with the request for rebates, the proposal also increases the Ohio’s Safety and Wellness Grant Program from $5 million to $15 million. The state’s program has proven effective. In companies receiving grants, claims frequency has decreased 66 percent and claims costs per full time employee has decreased 86 percent.

Furthermore, the proposal lowers rates 2 percent for private employers and 4 percent for public employers by modernizing BWC’s payment system.

Details on the proposal are still being finalized. All three elements would be funded from BWC’s net assets, which have grown to  $8.3 billion and are far in excess of the target funding ratio of assets to liabilities established by the BWC board in 2008.