Effective July 1, 2015, the Ohio Bureau of Workers Compensation will be changing to a prospective billing system.  All Ohio employers should have received two communications from the Bureau that outline some of the new programs. Also sent from the Bureau was a communication regarding the transition credit that will apply to your first half 2015 statements.

Historically, BWC has billed Ohio employers in arrears or ‘retrospectively’. Employers currently report their actual payroll and pay their premium on a semi-annual basis for the previous six months of coverage. Prospective billing is a national industry standard and builds upon ongoing efforts by BWC to modernize its operation. Under prospective billing, BWC will, like most insurance companies, collect employer premiums at the beginning of and throughout the policy period. The transition is expected to become effective July 1, 2015 for private employers and January 1, 2016 for public employers.

Private Employers

As they switch to the new prospective billing process, BWC will offer two transition credits that will cover the employer’s actual premium expenses for an eight month period of time.  These credits will prevent employers from paying two premiums at once, one for the period in arrears and one for the prospective period.  The first transition credit will be a full one-time premium credit for the period January 1, 2015 through June 30, 2015. The second credit will be for the next two months (July and August of 2015) out of the first annual prospective premium payment. Employers will be billed premium payments in August for the remaining 10 months of the rate year, paid in installments throughout the period. In subsequent years, employers will receive their invoice in June and begin paying premiums before July.  This premium will be based on estimated payroll.  At the end of the rate year, employers will need to ‘true-up’ their actual payroll with the estimation.

True-up Process

With these changes, BWC will be extending coverage to employers based on estimated payroll figures. In order to adjust to actual, they will also require employers to report their actual payroll for the prior coverage periods and pay any shortage or receive a refund of any overage in actual premium.