Ohio Workers’ Compensation Insurance: Rules and Coverage

Workers’ compensation insurance pays medical expenses and lost wages when employees are injured during work. In Ohio, workers’ compensation insurance can only be purchased through the Bureau of Workers’ Compensation, not through private insurers. Rates vary based on payroll, job descriptions, and claims history, but there is a $120 application fee.

Even though Ohio is a state where shopping for workers’ compensation insurance providers isn’t an option since private carriers do not sell it, small business owners still need to be aware of how policies work, how premiums are determined, and how to file claims. Not knowing the rules is no excuse for not following them, and every business owner needs to take the time to have the right workers’ comp policies in place.

What Workers’ Compensation Insurance Is

Workers’ compensation insurance is a type of insurance policy that pays expenses for employees injured at work. Covered expenses typically include emergency care, medical expenses, rehabilitation costs, and wages. The state governs the coverage so regulations vary quite a bit. One state, Texas, doesn’t requires employers to have workers’ comp insurance. Many others mandate coverage for most business owners the moment they hire even a single, part-time employee.

When an employee is injured during the course of work duties, employers must file a claim that pays benefits until the employee is able to return to work or is deemed partially or totally disabled. Workers’ compensation pays these benefits and may also pay to retrain a disabled employee for a new type of job he is able to perform.

Ohio Is a Monopolistic State for Workers’ Compensation Insurance

Unlike states where private workers’ compensation insurance carriers provide coverage, Ohio is monopolistic. All workers’ compensation insurance in Ohio is controlled by the Bureau of Workers’ Compensation (BWC). The BWC is responsible for providing insurance, monitoring the administration of claims, and dealing with disputes.

The Ohio BWC covers approximately two-thirds of employers in the state while the other third self insure. Self insurance is when a business does not buy insurance from a carrier, or in Ohio’s case a state fund, but instead sets aside funds for potential claims. Ohio law sets up requirements for self insurance, and the BWC still oversees all claims of self-insured businesses in the state.

How to Get Ohio Workers’ Compensation Insurance

Buying Ohio workers’ compensation insurance starts with a downloadable application obtained at the Ohio Bureau of Workers’ Compensation. You’ll pay a $120 non-refundable application fee, and coverage is contingent on the receipt of the first installment payment after the application is complete.

The information required to complete the form includes:

• Primary business address: Where the business maintains its main address of record for operations and management
• Additional Ohio business locations: Other locations regularly used for sales, operations, and management by employees within the state of Ohio
• Contact information: Person in charge of all correspondence for the business’ workers’ compensation policy
• Domestic household coverage: Part-time domestic employees such as chefs or housecleaners who earn less than $160 per quarter are exempt
• Business entity information: The type of business the employer is registered as in the state of Ohio (i.e., sole proprietor, corporation, partnership, or limited liability company)
• Elective coverage options: Owners and partners allowed to elect coverage but are not mandated to be covered
• Business operations description: The type of business that is normally conducted by the company and whether there is a high risk of injury involved with heavy machinery
• Out-of-state declarations: List policies that cover any out-of-state work for employees; can be for either in-state employers who have out-of-state employees or out-of-state companies with employees in Ohio
• Premium installment plan: Annual premiums over $120 can be paid in an installment agreement over time up to 12 months
• Payroll estimates: Provides BWC with estimates for employee payroll to determine the premium amount based on work classification per $100 of payroll

The BWS is unable to process incomplete applications, so be sure to complete each section and sign the application. Failure to fully complete the form results in denied coverage and the loss of the $120 application fee, plus you will have to fill out a new application to obtain coverage.

What Ohio Workers’ Compensation Insurance Covers

Workers’ compensation insurance in Ohio covers all aspects of an injured employee getting the medical attention they need, the income they are missing while recuperating, and the training they need to get back to work. Should an employee die as a result of a work injury, Ohio also has defined benefits for survivors.

Ohio workers’ compensation insurance coverage includes:

• Medical benefits: Includes authorized, reasonable, and necessary medical expenses to treat an employee injured at work
• Lost wages: Pays up to 72% of an employee’s average weekly wage (AWW) with Ohio law capping the amount to $950 per week for up to 12 weeks for employees not receiving Social Security benefits and $633.33 for employees
• Vocational rehabilitation: Retrains employees who are unable to return to their normal work and helps them find placement in a new field
• Mileage reimbursement: Reimburses mileage for medical care that requires commutes of more than 45 round trip miles as well as potential meals and lodging for long-term circumstances
• Disability payments: Kicks in once the employee has reached the maximum medical improvement for injuries and pays partial or total disability payments for the remainder of the employee’s life
• Living maintenance: Assists injured employees enrolled in vocational rehabilitation plans with benefits up to 50% of the average weekly wage
• Survivor benefits: Pays family members a minimum of $475 and a maximum of $950 in weekly benefits for employees who have died from workplace injuries
• Funeral expenses: Provides up to $5,500 in funeral and burial expenses for employees who have died resulting from workplace accidents

Workers’ compensation insurance in Ohio does not pay for employees pain and suffering. Additionally, if an employee files an insurance claim, he or she is unable to file a lawsuit. Filing a lawsuit is relevant when the employer’s gross negligence plays a role in the injury.

Employer liability in the event of a workplace injury is not covered unless an endorsement is purchased. Small business owners who have employees traveling or working outside the state may additionally need to purchase stop-gap insurance for injuries covered outside the state boundaries.

Ohio Workers’ Compensation Insurance for Out-of-State Employees

Employers with employees working out-of-state need to understand extraterritorial rules not just for Ohio but for the state that the employees are working (and potentially injured) in. If reciprocity is not provided, employers need to obtain coverage.

The Ohio BWC coverage is recognized by limited reciprocity rules that include:

• Indiana: Recognizes the insurance with extraterritorial coverage
• West Virginia: Provides coverage for 30 calendar days in a full 365-day calendar year
• Arizona: Offers coverage for up to 90 continuous days
• California: Offers coverage for up to 90 continuous days
• Florida: Provides coverage for up to 10 continuous days but not more than 25 days in a calendar year (no reciprocity for the construction industry)
• Georgia: Covers construction industry workers for up to 90 continuous days
• Louisiana: Recognizes the insurance with extraterritorial coverage
• Maine: Provides extended coverage for five consecutive days, 10 days in a 30-day period, and 30 days in a 360-day period

Ohio Workers’ Compensation Insurance Costs

When it comes to workers’ compensation insurance, Ohio doesn’t offer a competitive market like most other states. This monopolistic structure means that the Ohio Bureau of Workers’ Compensation controls costs. However, Ohio uses the standard workers’ comp equation where payroll per $100 is multiplied by the rate assigned to job classification codes and an experience modification factor that represents claims history.

The formula for determining workers’ compensation insurance rates is:

Premium = Payroll Per $100 x Classification Code Rate x Experience Modification Rating

New small businesses hiring employees for the first time are usually “base rated,” which means their premiums are based solely on payroll and job classification. Claims history isn’t a factor because there is none. Once a company has a few years of experience as an employer, the state determines the experience modification factor and the company’s premium becomes “experience rated.”

Ohio Workers’ Compensation Rate Examples

The Ohio’s Bureau of Workers’ Compensation assigns every job class an expected loss rate (ELR) based on the percentage of workers in each job class the BWS expects to file a claim. If the BWS expect 50% of workers in a job class to have a claim, then your ELR is half of the class rate. (Sample Class Rate: $1.00 with 50% Expected Losses results in a 50 cent ELR).

Businesses with claims above the ELR can see increased premiums based on the experience modification rate found in workers’ compensation premium equation.

Ohio Workers’ Comp Cost Example

Consider a small Cleveland HVAC installation company with 10 employees. Note that the owners are exempt unless they elect coverage (for our example they elect exemption). The breakdown of employees is one office clerk (class code: 8810) who makes $35,000 per year, one outside sales representative (class code: 8742) making $50,000 annually, and a crew of installers (class code: 5537) with the total payroll for the crew at $300,000.

The initial workers’ compensation insurance premium for this business would be:

This example clearly illustrates how important it is to assign the right job class to each employee’s actual position. The crew is in the highest risk category and represents the biggest chunk of the annual payroll, so it costs the most to insure. Imagine if half of those employees classified as installers were really customer service representatives who could be insured at a much lower rate. The employer would be overpaying for workers’ compensation insurance.

Workers’ Comp Audit Requirements

The Bureau of Workers’ Compensation in Ohio requires an annual premium audit, called Payroll True-Up. This is a standard evaluation of the payroll and job classifications listed in every policy. Workers’ compensation is always pre-paid based on estimates of payroll and the job duties of employees. The audit reconciles the payroll and confirms what employees do as regular work tasks.

Underpayments in the premium result in a bill to the small business while overpayments during the year yield a refund. The audit not only reconciles the previous 12 months’ premiums, but the state insurance commissioner also uses the results to determine the renewal premium. Small business owners need to complete the Payroll True-Up process even if their payroll has dropped to zero.

Pro Tip: Businesses that have a significant increase in payroll during the year can call the BWC to update payroll. This prevents a huge premium audit bill at the end of the policy period.

Ohio Workers’ Comp Cost Reduction Programs

The Ohio BWC offers employers ways to reduce costs through various safety programs and risk assumption protocol. While not every employer qualifies for every savings program, it is worth reviewing them to save money.

Cost reductions programs offered by the Ohio BWC include:

• Grow Ohio Incentive: Reduces premium by 25% for employers hiring first employees and gives the option to apply for group experience rating
• Transitional Work Bonus: Apply for grant funds to help develop a customized transitional work program
• Safety council rebate: Garners a 4% rebate when employers are actively involved in their local safety council
• Individual-retrospective rating: Provides a potential premium reduction when employers assume part of the risk
• One Claim Program: Offers 20% discount from the base rate when employers get removed from a group-experience-rating

The employer program compatibility guide helps small business owners determine what programs they are eligible to receive.

Ohio Workers’ Compensation Insurance Laws

Ohio workers’ compensation laws mandate that an employer has coverage in place at the time the first employee starts. There are some exceptions to this rule. Homeowners with domestic employees earning less than $160 per quarter do not have to purchase workers’ compensation insurance. Volunteers are also not subject to workers’ compensation rules.

There is a $120 non-refundable application fee that is used to process the forms but coverage is contingent on the timely receipt of the first payment, whether an installment or paid in full. Ohio does allow qualified businesses to self-insure instead of obtaining a policy through the Bureau of Workers’ Compensation.

Ohio Workers’ Compensation Insurance Requirements

Workers’ compensation falls under the same types of notification practices as other human resources notices for small business owners. Employers are required to post notices to employees in a public and visible place so that they understand their rights and the employer’s under various employment laws.

Regulations for posting Ohio workers’ compensation posters include:

• Putting posters in a place where employees regularly congregate such as a lunchroom or bathroom hallway
• Listing the name and number of the Ohio Bureau of Workers’ Compensation
• Listing basic requirements for how to report a claim including time frame and required information
• Stating non-discriminatory practices for employees injured on the job
• Providing the employer’s contact information and policy number so claims can be filed in a timely manner

Posters can be ordered via the Bureau of Workers’ Compensation Customer Service division by calling 800-644-6292.

Ohio Workers’ Compensation Insurance Penalties Deadlines

Ohio laws require all employers to maintain workers’ compensation insurance and pay premiums to the Bureau of Workers’ Compensation in a timely fashion. Financial and legal actions may be taken for employers found not in compliance with these laws. Small business owners have 60 days to comply and pay any invoices for workers’ compensation.

The actions small businesses in non-compliance are subject to penalties including the following:

• Cancellation and lapse in coverage for workers’ compensation
• Pay $1,000 or the premium obligation assessment, whichever is greater
• Be subject to a lien on real property or business assets by state courts through the county recorder’s office

A non-complaint Ohio business is further subject to lawsuits, potentially paying more than the actual claim amount if an employee is injured when no effective coverage exists.

Ohio Workers’ Compensation Self-Insurance

If an employer is able to meet the requirements for Ohio workers’ compensation self-insurance, they have the option to purchase a policy or self-insure. Self-insurance means that the employer has the financial resources to pay claims and has a licensed third-party administrator (TPA) to administer claims against the policy.

The requirements for Ohio workers’ compensation self-insurance include:

• Ohio state insurance fund experience: Obtain a minimum of two years experience in workers’ compensation insurance within Ohio is required
• Financial stability: Submit a guarantee to the Ohio Department of Insurance and provide evidence of at least five years of financial stability through company records
• Administration ability: Hire an in-house administrator or contract with a licensed TPA to make sure policies and claims follow all rules and are filed timely.
• Proper financial institution accounts: Open and maintain a bank account with an Ohio financial institution or be willing to draw compensation checks from the accounts used for payroll.
• Qualified Health Plan (QHP): Must have a BWC-certified QHP or medical-management plan for employees.

How to File an Ohio Workers’ Compensation Insurance Claim

Filing an Ohio workers’ compensation insurance claim properly helps expedite processing and keeps employers in compliance. When an employee is injured, either the employer, the injured employee, or the medical provider need to complete a First Report of an Injury, Occupational Disease, or Death (FROI) form. Employers with a BWC e-account can complete this online.

As an employer, you will need the following to complete the form:

• Employee’s name, date of birth, and Social Security number
• Employee’s contact information
• Employee’s job title
• Employee’s gender
• Accident date and description
• Injury description
• Location of accident
• Employee hire date
• Date employee reported the injury to the employer
• Policy number

The injured employee will need to complete an Authorization to Release Medical Information (C-101) form to get the diagnosis entered and process the claim. Employers and employees can go to the portal to see the status of the claim. Appeals must be filed within 14 days of receiving the decision order by completing a Notice of Appeal (IC-12).

Tips on Getting Ohio Workers’ Compensation Insurance

Here are three tips on how to make busing Ohio workers’ compensation insurance easy:

Prepare All Required Documents

The Ohio State Insurance Fund application fee of $120 is non-refundable and applications cannot be processed and approved if you do not have the right information. Make sure to have business locations, corporate structure, employee job descriptions, and payroll data when completing the application.

Start Before You Hire

You are required to carry workers’ compensation insurance in force when your first employee starts. Don’t wait until the day before they are working to start the application process. Applications can take several days to process (weeks if there are questions or denial for an incomplete application) cause delays in business operations with new employees.

Clearly Write Job Descriptions

Job descriptions are a good practice for employers because they keep employees accountable for their paid tasks. When it comes to workers’ compensation, a clearly written job description helps the insurance underwriter better understand what employees do on a regular basis so they can properly rate the risk and make sure the premium is accurate.

Ohio Workers’ Comp Frequently Asked Questions (FAQs)

Buying Ohio workers’ compensation insurance is fairly straightforward since private carriers are not allowed to offer these policies within the state. However, you may have questions regarding terms and regulations. Below are the most common questions.

What is a BWC claim?

The Ohio Bureau of Workers’ Compensation (BWC) is the regulatory entity that processes and manages all workers’ compensation claims in the state. Every claim is assigned a BWC number so that business owners and employees have access to all current claim information. Medical providers and vocational training firms need the BWC claim number to properly process benefits.

How does workers’ compensation work in Ohio?

Filed Ohio workers’ compensation claims pay medical benefits on behalf of the injured employee and provide up to 72% of the average weekly wage for the first 12 weeks of injury. Benefits then drop to 66% of the employee’s average weekly wage after that until the employee is rehabilitated, retrained, or determined to have a permanent disability.

Is Ohio a monopolistic work comp state?

All resident employers in Ohio must purchase workers’ compensation insurance directly from the state. As a monopolistic state, the only private carrier policies that are allowed are for businesses that have operations extending beyond the state borders.

Bottom Line

If you have one or more employees working in the state of Ohio, you will need to buy workers’ compensation from the Bureau of Workers’ Compensation. Implement safety protocol in the office to reduce claims and keep premiums down.

If you have employees working outside of the state, you may need to obtain coverage outside of the BWC insurance program. The Hartford is a national carrier that works in states where private coverage is allowed. Get a quick, no-obligation quote today.

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