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Policy
Name:
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Retroactive
Coverage and Penalty Abatement
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Policy #:
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EP-18-01
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Code/Rule
Reference
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Ohio
Administrative Code (OAC) 4123-14-03, 4123-14-06.
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Effective
Date:
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January 1,
2022
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Approved:
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Rex
Blateri, Interim Chief of Employer Services
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Origin:
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Employer
Policy
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Supersedes:
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The
Retroactive Coverage and Penalty Abatement policy dated December 12, 2019.
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History:
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Revised February
16, 2022; January 31, 2020; May 15, 2018; March 3, 2016; January 11, 2016;
July 1, 2015; September 10, 2014; August 20, 2012. New policy issued
September 1, 2008.
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Review
Date:
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October 1,
2024
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I. Policy Purpose
To
guide Ohio Bureau of Workers’ Compensation (BWC) staff in processing employer
requests for retroactive coverage and penalty abatement when the lapse in
coverage or penalty results from good cause, BWC error, or an extenuating
circumstance.
II. Applicability
This
policy applies to BWC Call Center, BWC Employer Services, employers, and
authorized representatives.
III. Definitions
A.
Default in
payment: Occurs when an
employer fails to timely pay an installment, resulting in a lapse in coverage.
The lapse effective date is the first day of the month following the
installment due date.
B.
Extenuating
circumstance: A substantial
reason, or mitigating factor, that justifies granting the employer’s request
for relief.
C.
Good cause: A substantial reason, one that affords
a legal justification or legal excuse, as defined in OAC 4123-14-03.
D.
Grace period: A time frame during which BWC will not assess
a penalty for late payments or late reporting.
E.
Lapsed: Coverage status applied to an
employer’s policy who fails to pay the required premium by the established due
date. This status indicates the workers’ compensation coverage has been
suspended.
F.
Penalty: Fee assessed by BWC to employers who
fail to pay the required premium by the expiration of applicable grace period.
G.
Policy in good
standing: The employer
is current on all payments due BWC and is in compliance with BWC laws, rules,
and regulations at the time of the request.
H.
Reinstatement: Coverage status applied to an
employer’s policy that indicates workers’ compensation coverage has been
restored effective on the date BWC received full payment for any and all
delinquent premium(s).
IV. Policy
A.
Background.
1.
An employer may
request retroactive coverage and penalty abatement to cover a claim, to qualify
for a BWC program, or to lessen the financial impact of a lapse in coverage.
2.
As set forth in OAC 4123-14-03, the BWC Administrator may for “good
cause” shown:
a.
Waive a default in
the payment of premium by an employer where workers’ compensation coverage has
lapsed for a period less than sixty (60) days. If such a waiver is granted, the
employer’s workers’ compensation coverage including elective coverage will be
reinstated retroactively.
b.
Abate penalties
imposed on an employer for failing to comply with the Ohio workers’
compensation statutes. See the Prospective Billing Installment Payments and Penalties for Late Payment and Reporting policies for additional information.
3.
As set forth in OAC 4123-14-06, unless a different time is provided by
the Revised Code or the Administrative Code for such matter, an employer must
file a protest or appeal of BWC’s decision on the request, protest, petition,
or application within two years of receipt of BWC’s determination.
B.
Employer
requirements.
1.
BWC will only
consider retroactive coverage if the period of lapsed coverage is less than
sixty (60) days; i.e., fifty-nine (59) days or less. An employer with a lapse
in coverage over fifty-nine (59) days may be granted penalty abatement,
however, the employer may not be granted retroactive coverage. For example, an
employer with a lapse period of sixty-five (65) days who can show “good cause” is
denied retroactive coverage but may be granted penalty abatement.
2.
A request for
retroactive coverage and/or penalty abatement must be submitted to BWC by the
employer or the employer’s authorized representative as required by OAC 4123-14-03. An employer may
use the Request for Retroactive Coverage and Penalty Abatement or Waiver of
Payroll True-Up Penalties (U-59) to file a request.
a.
Employers requesting
retroactive coverage cannot be granted penalty abatement unless both are
requested.
b.
All requests for
relief must fully explain the reasons for the relief sought.
c.
BWC may hold a
request in abeyance until the request is fully completed, and the employer will
be notified accordingly.
3.
Retroactive coverage
or penalty abatement may only be granted if the employer’s policy is in good
standing. Good standing means:
a.
The employer is
current on all payments due to BWC as defined in OAC 4123-17-14 and is in compliance with BWC laws,
rules, and regulations;
b.
Any outstanding
balances must not be past due, or the outstanding balances must be in an appeal
status;
c.
The employer’s
coverage must be active or reinstated;
d.
The employer must
have completed all payroll reporting requirements; and
e.
The employer must be
current on the payment schedule of any part-pay agreement it has entered for
any outstanding balances.
C. Resolution of complaints.
1.
Employer complaints are
processed under the General Employer Complaint Policy. BWC staff will refer to section IV of
the General Employer Complaint Policy for examples of extenuating
circumstances. An employer with an extenuating circumstance that does not
qualify as good cause may be eligible for the one-time violation scenario, also
referred to as One-Time Forgiveness (OTF), outlined in section IV.C.4 below.
2.
Examples of BWC errors
which would allow granting an employer’s request for relief are found in
section IV.D below.
3.
Specific extenuating
circumstances that meet the “good cause” standard for retroactive coverage and
penalty abatement are found in section IV.E below.
4.
As set forth in OAC 4123-14-03, for employer complaints filed on or
after December 12, 2019:
a.
If unable to
establish good cause as defined above, the employer may show “good cause” if
the default is a one-time violation of the payment of premium or the filing of
the annual payroll report.
b.
For additional
information about the annual payroll report, see the Payroll True-Up policy.
c.
The employer must
meet all requirements set forth in section IV.B of this policy to qualify for good
cause under the one-time violation.
d.
Once the employer
uses the one-time violation to show “good cause,” it is no longer available to
the employer.
D.
BWC and Attorney
General (AG) errors.
1.
An employer can be
granted relief based on BWC or AG error regardless of the length of the lapse
period and the employer is not required to use the relief outlined in OAC 4123-14-03.
2.
Example of a BWC
error which would allow granting an employer’s request for relief: The employer
just opened its business and contacted BWC about how to pay its premium and was
given inaccurate information. This information was in writing from BWC, relied
upon, and documented by the employer.
E.
Extenuating circumstances
that meet the “good cause” standard for retroactive coverage and penalty
abatement.
1.
Third party errors
or omissions: Bank error or delivery service error in processing an employer
payment or delivering a payment to BWC. This circumstance may also be used if
the post office did a poor job forwarding the employer’s mail.
a.
Such errors must be
documented by letter or sworn statement from the bank or delivery service.
b.
The bank or delivery
service error must be the sole reason for the untimely payment or reporting.
c.
Examples:
i.
An employer mails
the payment to BWC on August 14. However, the post office returns the envelope
and check to the employer with a letter stating the envelope was caught in a
mail machine and badly damaged. The employer immediately issues a new check and
mails it to BWC on September 4. BWC receives the payment on September 6. The
employer provides BWC with copy of the post office letter and a copy of the
damaged envelope.
ii.
An employer attempts
to make an installment payment prior to the due date, using BWC’s website.
However, the payment is deemed NSF, non-sufficient funds, even though the
employer had sufficient money in the account to cover the payment. The employer
secures a letter from its bank stating that, due to a computer error, the bank
erroneously did not honor the payment.
2.
A new employer
defaults on the first installment: The employer fails to timely pay the first
installment resulting in a lapse.
a.
The following
conditions must be met:
i.
The employer meets
all requirements set forth in sections IV.B.2 through IV.B.3 of this policy;
ii.
The employer reinstated
coverage within fifty-nine (59) days of the first invoice due date; and
iii. The employer must show good cause, or pursuant
to OAC 4123-14-03, use the one-time violation of the
payment of premium.:
b.
BWC may grant
retroactive elective coverage, when applicable. See Elective Coverage policy.