Policy Name:	Experience Modification (EM) Cap
Policy #:	EP-05-01
Code/Rule Reference	Ohio Administrative Codes (OAC) 4123-17-03, 4123-17-03.2, 4123-17-14, and 4123-17-74, Appendix C.
Effective Date:	July 1, 2024
Approved:	Rex Blateri, Chief of Employer Services
Origin:	Employer Policy
Supersedes:	Experience Modification (EM) Cap effective July 1, 2022.
History:	Revised September 17, 2024; December 28, 2023; August 2, 2022; September 21, 2021; July 29, 2020; July 17, 2019; November 14, 2016; December 2, 2014. New policy issued July 21, 2009.
Review Date:	January 1, 2028

 

I.       Policy Purpose

 

The Ohio Bureau of Workers’ Compensation (BWC) provides a 25% Experience Modification (EM) Cap to minimize the effects of a significant premium increase stemming from changes to an employer’s EM. BWC manages the EM Cap in accordance with all applicable laws and rules.

II.     Applicability

This policy applies to BWC Employer Programs, Employer Management Services, employers, and their authorized representatives.

III.   Definitions

A.      Experience modification (EM): The EM is a percentage credit or debit applied to the employer’s base rate and is used in calculating the employer’s premium. The EM is determined under OAC 4123-17-03.

B.      Eligibility determination date: The snapshot date individual employer EMs are calculated, and employers are evaluated for, EM Cap eligibility. Private employers (PA employers) are evaluated on March 1, immediately preceding the policy year for which the EM is being calculated, and public employer taxing districts (PEC employers) are evaluated on September 1, immediately preceding the policy year for which the EM is being calculated.

IV.   Policy

A.      Purpose. BWC shall limit the increase in EM of an employer meeting the eligibility requirements of OAC 4123-17-03.2 to 25% of the initial EM calculated for that employer in the preceding policy year if the employer is individually experience rated or base rated in both the current and preceding policy year for any policy years for PA employers beginning July 1, 2023, and ending June 30, 2027, or for any policy years for PEC employers beginning January 1, 2023, and ending December 31, 2027.

B.      Eligibility criteria.

1.      There is no specific application requirement for the EM Cap. BWC automatically evaluates an employer’s eligibility as of the eligibility determination date.

2.      To qualify, the employer must:

a.      Be either a PA employer or a PEC employer;

b.      Be current with respect to all payments due BWC as set forth in OAC 4123-17-14;

c.       Be current on the payment schedule of any part-pay agreement into which it has entered for the payment of premiums or assessments;

d.      Not have cumulative lapses in workers’ compensation coverage in excess of forty (40) days within the prior twelve (12) months; and

e.      Have reported actual payroll for the preceding policy year and paid any premium due upon reconciliation of estimated premium with actual premium for that policy year no later than the eligibility determination date.

3.      The following employers are not eligible for the EM Cap:

a.      Alternate employer organizations (AEOs);

b.      Professional employer organizations (PEOs);

c.       State agencies; and

d.      Self-insuring employers.

C.      Compatibility. An employer receiving the EM Cap may participate in compatible BWC programs as outlined in OAC 4123-17-74, Appendix C.

D.     Removal/exit from EM Cap.

1.      BWC will remove the EM Cap if the employer fails to true-up as required by OAC 4123-17-14. See the Payroll True-Up policy for additional information.

2.      The consequences of failure to comply with the required true-up are:

a.      The employer will be rerated for the full policy year at the employer’s base-rate or experience-modified rate as determined by their expected losses for the policy year; and

b.      Any remaining installment payments will be adjusted to reflect the new estimated annual premium.

E.      Combinations and transfers.

1.      When BWC processes a combination or transfer, the successor’s resulting EM is not subject to limitation by the EM Cap, unless one of the following apply:

a.      The transfer is a combination as a result of bankruptcy proceedings, when the transaction is a change in policy number without any change in exposure; or

b.      A base-rated successor wholly or partially succeeds a single policy.

2.      If either of these conditions is met, the predecessor’s published EM in the prior policy year will be the EM published for the successor in the same policy year for purposes of determining whether the cap applies as referenced in OAC 4123-17-03.2.

F.      Resolution of complaints.

1.      Employer complaints are processed under the General Employer Complaint Policy.

2.      BWC has not identified any specific extenuating circumstances that apply to the EM Cap.