Ohio Workers Compensation in 2012 RATES, ROLES & RESPONSIBILITIES: HOW UNDERSTANDING THEM CAN MAXIMIZE SAVINGS FOR YOUR CLIENT

Transcription

1 Ohio Workers Compensation RATES, ROLES & RESPONSIBILITIES: HOW UNDERSTANDING THEM CAN MAXIMIZE SAVINGS FOR YOUR CLIENT

2 Introduction The CareWorks Family of Companies CareWorks technologies More than 900 Ohio-based associates delivering customer-focused cost control services to more than 180,000 business customers.

3 Introduction CareWorks Consultants, Inc. CareWorks Consultants, Inc. (CCI) is currently the largest third party administrator (TPA) in Ohio. Our best-in-class service and Ohio-focused solutions have allowed us to maintain one of the highest client retention rates in the industry. Claims administration and cost control strategies. Hearing representation. Risk management services. Rating analyses.

4 Responsible Parties in Workers Compensation Bureau of Workers Compensation (BWC) insurance carrier. Industrial Commission (IC) Adjudicating body on contested claim issues. Managed Care Organization (MCO) Vendor paid by BWC for medical management and medical bill payment. Third Party Administrator (TPA) Employer advocate and representative on claim and rate issues before BWC and IC.

5 Responsible Parties (continued) Sponsor Groups similar employers together to achieve savings on workers compensation. Employer. Injured Worker.

6 Workers Compensation Coverage Must arise out of the course of employment. Occupational disease, injury and death. Covers medical benefits and lost wages. No fault insurance.

7 Workers Compensation Basics Manual classifications are four-digit numbers assigned by BWC to each employer based on industry type. Reflects degree of hazard for Ohio employers in that industry. For each manual classification, there is a base rate assigned. The more hazardous the risk, the higher the base rate. Reportable payroll for premium determination. Gross wages, overtime pay, sales commission, holiday and vacation pay, tips and gratuities. Segregate payroll by manual classification.

8 Understanding Rates Base Rated. Expected losses $2,000 and less. Credit Rated. Reduction from base rates. Penalty Rated. Increase from base rates resulting from claim history. Group Rated or Individually Rated. Group rating eligibility reviewed annually. No guarantee you qualify from one year to next. How often does BWC revise rates? Survey date: December 31 on an annual basis.

9 Experience Rating What is experience rating? Rewards businesses with better than average claims history compared to industry standards. Penalizes those who are worse. What claims are evaluated when calculating your workers compensation premium? The oldest four of the last five years - four year experience period. Green year. Example: 2011 experience involves claims from 2006, 2007, 2008 and 2009 Green year is 2010.

10 What is a Blended Rate? Disabled workers relief fund (DWRF). Additional disabled workers relief fund. BWC administrative fee.

11 Calculation of Premium Injury costs = (four years) Medical + Compensation + Reserves. Limit = four years of payroll x expected loss rates Plumbing: 08 = $.0137 vs. 09 = $.0110 (-19.71%) per $1 of payroll Masonry: 08 = $.288 vs. 09 = $.0218 (-24.31%) per $1 of payroll. Rate adjustment (EM%) = (injury costs - limit)/limit.

12 Calculation of Premium (continued) Examples: Bad performance ($160,000 - $120,000)/$120,000 = (+33%). Good performance ($100,000 - $250,000)/$250,000 = (-60%). The credibility factor, which is the weight given to an individual insured s past experience in computing premiums for future coverage, has not been included for simplification of the experience rating concept.

13 Total Modified Losses & Total Limited Losses BWC totals four years of compensation, reserves and medical to arrive at the total modified losses (TML). BWC allows/expects all employer to have claim losses or total limited losses (TLL), based upon four year payroll and industry type. If TML is more than TLL the employer is penalty rated. If TML is lower than TLL the employer is credit rated.

14 Example of Premium Calculation

15 Cost Control Techniques Salary continuation. Transitional return to work. Modified duty off-site. $15K medical only. Lump sum settlements. Handicap reimbursement. Subrogation.

16 BWC Discount Programs Drug-Free Safety Program. 100% EM Cap. One Claim Program. Deductible Program. Individual Retrospective Rating. Group Retrospective Rating. Safety Council. Destination Excellence.

17 Group Rating Basics Like employers group together to realize savings. Experience calculated as group versus individual. Tiers various levels of savings based on claims experience. Sponsored by trade association or chamber of commerce. Established for at least two years. Must have purpose other than workers compensation savings. Group must demonstrate common purpose. Focus on loss control techniques to ensure high savings (safety and claims management). Maximum discount for the 2012 rate year is 53%.

18 Group Participation Criteria Current on payments to BWC. No more than 45 days past due at group application deadline. No lapses in coverage. No more than 40 days in the past 12 months effective July 1, Group members must be of a similar industry. Programs are required to focus on claims management and accident prevention. Groups must consist of at least 100 employers with $150,000 in combined premiums.

19 Dates to Remember May through January CCI receives AC-3s and sends out quotes for participation in group rating. January 31, 2013 Deadline for returning AC-3s to CCI. February 23, 2013 Deadline for returning clients group enrollment packets to CCI. February 28, 2013 Finalized groups filed with BWC. July 1, 2013 Start of 2013 rate year for private employers. February 2014 First discounted premium payment. August 2014 Second discounted premium payment.

20 BWC Programs Group Retrospective Rating Voluntary performance-based incentive program. Certified sponsors form groups of similar employers. Employers continue to pay their individual premium and will have the opportunity to receive retrospective premium adjustments based upon the combined performance of the group. Employers may receive either a premium refund or assessment (limited to pre determined risk level).

21 BWC Programs Group Retrospective Rating (continued) The group s retrospective premium will be recalculated at 12 months, 24 months and 36 months after the policy year. Refunds or assessments will be determined when the premium is recalculated. Deadlines: April 30, 2012.

22 BWC Programs Group Retrospective Rating (continued) While participating in group retrospective rating, employers cannot participate in the following programs: Individual retrospective rating; $15,000 medical only program; Deductible program; One claim program; Group rating; and, Drug free safety program; and, Destination Excellence.

23 Agent Referral Program Highlights Provides your clients with workers compensation savings, along with claims, administrative and safety services. All agents and advisors can produce no license required. Commission paid on group participants is 31.25% of CCI s annual administrative fee. Easy to manage.

24 Easy to Sell Get Your Foot in the Door! Thousands of Ohio businesses are not currently enrolled in a group rating program. Only TPAs can offer this service. Save your clients money CareWorks Consultants has some of the highest savings in the industry over $1 billion. Taken directly off BWC premiums. Association dues included in fees. Automatically re-enrolled if eligible. By saving your clients significant money, you create an environment to sell other product lines.

25 Getting Started Complete and fax to CareWorks Consultants an Agent Enrollment Form. Receive an Agent Starter Kit and AC-3s made specifically for your agency. Have your client complete the AC-3 and fax it to CareWorks Consultants. CareWorks Consultants will analyze your client s experience and send them a Group Enrollment Packet if they qualify. If they qualify for group, you receive commission.

26 Agent Commission Example A sample roofing contractor paid $129,240 in BWC Base Rated Premium for 20 employees. Normal BWC Base Rate Premium $129,240 Group Savings Rate = 51% - 65,912 Roofing Contractor s New Premium Cost $63,328 Group Savings from Above $65,912 Program Administration Fee - 4,846 Contractor s Total Net Premium Savings $61,066 Producer Commission $1,514 (31.25% of Program Administration Fee)

27 CareWorks Consultants Administrative Fee Administrative tasks. Association dues. Hearing and rates representation. RiskControl360 access safety. Claims management. Handicap reimbursement review. Lump sum settlement review. Rates reviews, rate appeals and impact studies.

28 Group Enrollment Packet Risk number. NCCI manual. Annual payroll. Individual rate. Individual premium. Group rate. Group premium. Total projected group savings. Maximum credibility. BWC s group surcharge.

29 THANK YOU