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Policy Name:
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Group Experience Rating Program
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Policy #:
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EP-07-04
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Code/Rule Reference
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Ohio Revised Code (ORC) 4123.29.
Ohio Administrative Code (OAC) 4123-17-61;
4123-17-61.1;
4123-17-62;
4123-17-63;
4123-17-64;
4123-17-65;
4123-17-74
including Appendices A, B, and C.
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Effective Date:
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July 1, 2024
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Approved:
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Rex Blateri, Chief of Employer Services
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Origin:
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Employer Policy
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Supersedes:
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Group Experience Rating Program effective July 1, 2023.
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History:
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Revised October 2, 2024; October 27, 2022; January 10,
2022; July 19, 2019. New Policy issued June 13, 2014.
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Review Date:
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July 1, 2029
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I.
Policy Purpose
The Ohio Bureau of Workers’
Compensation (BWC) administers the Group Experience Rating Program in
accordance with all applicable laws and rules.
II.
Applicability
The policy
applies to BWC Employer Programs, individual employers, sponsoring
organizations, affiliated organizations, and employer authorized
representatives.
III. Definitions
A. Affiliated
organization: An organization whose members are brokered, borrowed, shared,
or co-opted for inclusion in a certified sponsoring organization's group. All
affiliated organizations are required to be certified sponsoring organizations.
B. Coverage
period: The policy year for which the Group Experience Rating application
is made. For private employers (PA employers), the policy year is July 1
through June 30. For public employer taxing districts (PEC employers), the
policy year is January 1 through December 31.
C. Experience
period: The oldest four of the latest five completed policy years
immediately preceding the beginning of the policy year to which a rate is
applicable.
D. Grandfathering:
Allowing an individual employer to participate in the same group as the
previous year, even if the individual employer is no longer homogeneous to that
group, as long as the following criteria are met:
1.
Same sponsoring organization; and
2.
Same group number as assigned from the previous Group Experience Rating
program year.
E. Green
period: The time interval between the last day of the experience period and
the snapshot date.
F. Gross
misrepresentation: An act by an employer that would cause financial harm to
the other members of the group. Gross misrepresentation is limited to either of
the following:
1.
The employer failed to disclose its merger with one or more entities; or
2.
The employer failed to disclose the true nature of the employer's
business pursuit in its application for membership in the group.
G. Group
Experience Rating: A plan that groups individual employers for rating
purposes. Employers retain their individual identity, but are pooled and
grouped for experience rating purposes only. BWC considers an employer group a
single employing entity for purposes of the Group Experience Rating Program.
H. Homogeneous
or homogeneity: A requirement for groups that participating employers'
industrial pursuit must be substantially similar with the other employers in
the group.
I.
Industry group: Used in calculating an individual employer's
premium rate, and in some program participation, which is the main business
pursuit of an individual employer; e.g., construction, transportation. National
Council on Compensation Insurance (NCCI) classification codes are grouped
together into ten industry groups, set forth in OAC 4123-17-05,
Appendix A. Employers can have multiple NCCI classification codes assigned, but
for purposes of homogeneity may only have one primary industry group.
J. Initial
rating year: The rating year including the date on which a new employer’s
Ohio workers’ compensation coverage becomes effective.
K. New
employer: An employer creating one or more jobs in the state of Ohio for
which any of the following is true:
1.
The employer is a new business entity made amenable to Ohio workers’
compensation laws by such job creation; or
2.
The employer is an out of state employer that has not had prior
operations in Ohio and has not had prior workers’ compensation coverage in
Ohio.
L. Snapshot
date: The date BWC captures or "freezes" payroll and claims for
rate making purposes, which is September 30 for PA employers and March 31 for
PEC employers.
M. Sponsoring
organization: An entity with governing members, which is certified by BWC
to sponsor and market Group Experience Rating and Group Retrospective Rating
programs. Certification requirements for sponsoring organizations are outlined
in OAC 4123-17-61.1.
See the Sponsorship
Certification policy for additional information.
N. Standard
exception classifications: Classification codes which describe occupations
that are common to many businesses. These common occupations are not included
in a basic classification unless specified in the classification wording.
O. Third
party administrator: Any person or organization that works with certified
sponsoring organizations to administer and facilitate an individual employer's
application to Group Experience Rating or Group Retrospective Rating.
IV. Policy
A. Employer
eligibility criteria.
1.
The individual employer must be either a PA employer or PEC employer.
2.
As of the application deadline, the individual employer must:
a.
Be current with respect to all payments due BWC, as defined in OAC 4123-17-14;
b.
Be current on the payment schedule of any part-pay agreement into which
the employer has entered for payment of premiums or assessments;
c.
Not have cumulative lapses in workers' compensation coverage in excess
of forty (40) days within the preceding twelve (12) months;
d.
Not be a member of more than one group;
e.
Have filed for coverage prior to the Group Experience Rating deadline;
f.
Have been assigned an application number;
g.
Be included on the Group Experience Rating roster; and
h.
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.
3.
The employer must be homogeneous with the group.
a.
A group shall be considered homogeneous if the main operating classification
codes of the employers, as determined by the premium obligations for the rating
year beginning two years prior to the coverage period, are assigned to the same
or similar industry groups. Industry groups seven and nine as well as eight and
nine, and industry groups two and four as well as four and six, are considered
similar.
b.
Exceptions to the homogeneity requirement.
i.
An individual employer grandfathered into the group from participation
in the same group the previous year.
ii.
The standard exception rule provides an option to employers having their
highest overall premium under a standard exception classification. The employer
can participate in a group associated with another operating classification
code, which better reflects the true nature of the employer's business.
a)
The standard exception classification codes included in this rule are:
i)
7380 – Drivers, Chauffeurs and their Helpers;
ii)
8742 – Salespersons, Collectors or Messengers, Outside;
iii) 8748
– Automobile Salespersons;
iv) 8810
– Clerical Office Employees; and
v)
8871 – Clerical Telecommuter Employees.
b) Typically,
BWC does not consider standard exception classifications as the main operating
classification code for homogeneity, unless 7380, 8742, 8748, 8810, or 8871 is
the only classification code that applies to the employer's operation.
c)
The standard exception rule does not apply in every case and is
determined by the true nature of the employer's business.
d) Alternate
employer organizations (AEOs), professional employer organizations (PEOs), and
temporary service agencies are ineligible for the standard exception rule.
iii. BWC
may allow an individual employer to move to a more homogenous group after the
application deadline, but before the start of the policy year, when the
employer:
a)
Does not have a full year of recorded premium;
b) Is
reclassified as a result of an audit; or
c)
Fully or partially combined with another employer.
B. Group
eligibility criteria.
1.
The sponsoring organization of the group must meet all the requirements
set forth in OAC 4123-17-61.1.
2.
All individual employers within the group must be governing members of
the sponsoring organization or the affiliated organization.
3.
The group must:
a.
Consist of at least one hundred (100) individual employers; or
b.
Have expected combined premiums of $150,000 or more during the coverage
period.
4.
If BWC determines that individual employers in a proposed group do not
meet eligibility requirements, BWC will notify the employers and the sponsoring
organization. The sponsoring organization may continue its Group Experience
Rating application without the ineligible employers, however, the group must
meet minimum eligibility criteria.
C. Application
requirements.
1.
Sponsoring organization requirements.
a.
The sponsoring organization must make annual application for Group
Experience Rating by submitting the following to BWC by the application
deadline:
i.
A completed Application for Group-Rating Plan
(AC-24); and
ii.
A completed Employer Roster for Group-Experience-Rating Program (AC-25)
for each group sponsored.
b.
If the sponsoring organization elects to include an individual employer
in the group, the sponsoring organization must electronically file the
employer's Employer Statement for Group-Experience-Rating Plan (AC-26) with BWC
by the application deadline.
2.
Individual employer requirements. The employer must submit an AC-26 to
the sponsoring organization of the group in which the employer seeks to
participate.
a.
The AC-26 must be signed and dated by the individual employer.
b.
The AC-26 is not valid if signed by someone other than the individual
employer; e.g., TPA or CPA.
c.
The AC-26 may be signed electronically by using electronic signature
verification software meeting BWC requirements.
3.
Application deadlines.
a.
For PA employers, the sponsoring organization must file all applications
with BWC by the Monday preceding the fourth Thursday in November for the
upcoming policy year that starts July 1.
b.
For PEC employers, the sponsoring organization must file all
applications with BWC by the last business day in May for the upcoming policy
year that starts January 1.
4.
A sponsoring organization's application for Group Experience Rating is
effective for a single policy year. Continuation of a group for subsequent
years requires timely filing of an application on a yearly basis and meeting
all eligibility requirements.
5.
Once a group has applied for Group Experience Rating, the group may not
voluntarily terminate or remove the application during BWC's evaluation period.
6.
All changes to the original application must be made on an AC-26 and
must be filed prior to the application deadline.
7.
Any requests to be removed from the Group Experience Rating roster must
be completed in writing, signed by an officer of the sponsoring organization,
and filed prior to the Group Experience Rating application deadline.
8.
A sponsoring organization must notify a participating employer if the
employer will not be included in a group for the next rating year.
a.
The sponsoring organization must notify the employer by the following
deadlines:
i.
For a PA employer, by the last business day of October prior to the
application deadline; and
ii.
For a PEC employer, by the last business day of April prior to the
application deadline.
b.
If the sponsoring organization fails to provide the required
notification in a timely manner, BWC may:
i.
Allow the individual employer to remain in the group for the next rating
year;
ii.
If the group no longer exists, place the individual employer in a
homogeneous group with the same sponsoring organization; or
iii. Take
other appropriate action as determined by BWC.
D. Operation
of program.
1.
An individual employer, who sustains a claim within the green period, is
required to complete one of the following during the program year of
participation:
a.
Attend two hours of safety training; or
b.
Take BWC's online accident analysis training and submit a DFSP-1
accident analysis report on the claim(s) that occurred in the green period.
2.
Individual employers meeting the Group Experience Rating eligibility
requirements may qualify for up to the maximum discount for that program year
as outlined in OAC 4123-17-05.1,
Appendix A for PA employers and OAC 4123-17-33.1,
Table 1, Part A for PEC employers.
3.
The Group Experience Rating discount will be applied directly to the
employer's individual rates as listed on the employer's payroll report.
4.
An individual employer participating in Group Experience Rating may
participate in other compatible BWC programs. Employer program compatibility
for Group Experience Rating is outlined in OAC 4123-17-74,
Appendix C.
5.
A group will have one authorized representative for the group, and all
the individual employers within the group, for claims and risk related matters
before BWC and the Ohio Industrial Commission (IC). See the Employer
Authorized Representatives policy for more information.
E. New
employers electing to apply for Group Experience Rating.
1.
If a new employer elects to apply for Group Experience Rating, BWC will
waive the application deadlines and allow the new employer to apply for Group
Experience Rating.
2.
To apply for Group Experience Rating, the new employer must file an
AC-26 for the group with the sponsoring organization.
3.
Upon receipt of a new employer’s AC-26, the sponsoring organization
will:
a.
Not permit the new employer to participate in a group unless the new
employer meets homogeneity requirements set forth in this policy;
b.
Notify BWC of the addition of the new employer to the group within
thirty (30) days of the date BWC assigns a policy number to the new employer;
and
c.
Electronically submit the new employer’s AC-26 to BWC with a statement
identifying the group in which the new employer is being placed for the initial
rating year.
4.
For new employers electing to apply for Group Experience Rating between
twenty-nine days before the application deadline and the last day of the
initial rating year, inclusive, the sponsoring organization will, within thirty
(30) days of the date BWC assigns a policy number to the new employer, comply
with the requirements set forth in policy section IV.E.3. above. Moreover, the sponsoring
organization will submit to BWC a statement identifying the group in which the
new employer is being placed for the rating year immediately following the new
employer’s initial rating year.
5.
The new employer’s participation in Group Experience Rating in rating
years subsequent to the initial rating year the new employer was admitted to a
group pursuant to BWC’s waiver of the application deadline is subject to all of
the requirements set forth in OAC 4123-17-61 through OAC 4123-17-68.
F. Removal
and special situations.
1.
An individual employer whose coverage status becomes cancelled or
combined during the rating year may not continue to participate in Group
Experience Rating. BWC will remove the employer from Group Experience Rating
effective the first day of the next policy year. If the date of cancellation or
combination is the first day of the policy year, BWC will remove the employer
from Group Experience Rating as of the actual date of cancellation or
combination.
2.
Gross misrepresentation. Requests for removal of an individual employer
pursuant to this paragraph must be submitted within thirty (30) days of BWC's
notification to the sponsoring organization that a rate adjustment has
occurred. The sponsoring organization must notify the employer of its request
to remove the employer from the group for gross misrepresentation. The burden
of proof is on the sponsoring organization to provide documentation. BWC will
review the request, and the employer will only be removed upon BWC's consent. A
sponsoring organization may request removal on grounds of gross
misrepresentation in the following circumstances:
a.
The sponsoring organization discovers the employer applying for Group
Experience Rating has recently merged with one or more entities. The merger was
not disclosed on the application for Group Experience Rating, and this merger
adversely affects the group's experience modification (EM), as defined in OAC 4123-17-03.
b.
The sponsoring organization discovers the employer applicant failed to
disclose the true nature of its business pursuit in its application for
membership in the group and this failure negatively impacts the group's EM.
3.
Employer listed on a Group Retrospective Rating roster. An employer who
has been included on a Group Experience Rating roster for the upcoming policy
year cannot elect to participate in Group Retrospective Rating after the
deadline for Group Experience Rating. An application for Group Retrospective
Rating submitted by an employer participating in Group Experience Rating is
considered invalid, and the employer will be rejected from Group Retrospective
Rating consideration.
4.
BWC will remove an employer from Group Experience Rating for the current
policy year if the employer fails to report actual payroll for the preceding
policy year and pay any premium due upon reconciliation of estimated premium
and actual premium for that policy year no later than the due date. An employer
will be deemed to have met this requirement if BWC receives the payroll report
and the employer pays premium associated with such report before the expiration
of any grace period. See the Payroll
True-Up policy for additional information. If an employer fails to
comply with this paragraph, the following will apply:
a.
An individual employer removed from Group Experience Rating for failure
to meet these criteria 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.
b.
The group shall retain, for the policy year, the experience of any
employer removed from Group Experience Rating for failure to meet these
criteria.
5.
If an individual employer leaves the group, the experience of that
individual employer will be used in the group’s experience rating calculation
only the rating years the individual employer was in the group. The group is
not liable for the individual employer’s claim experience incurred after the
employer left the group. The individual employer will retain its own experience
incurred while a member of the group for the balance of the experience period.
G. Resolution
of complaints.
1.
Individual employer complaints are processed under the General
Employer Complaint Policy.
2.
Specific extenuating circumstance involving Group Experience Rating.
a.
TPA failure to notify employer of non-renewal for Group Experience
Rating as required by OAC 4123-17-62(D).
i.
Extenuating Circumstance. A TPA did not include on its Group Experience
Rating application an individual employer that participated in the previous
policy year with the same group, sponsoring organization, and TPA. The employer
was not on the sponsoring organization's final Group Experience Rating roster,
or the employer did not have an AC-26 on file with the sponsoring organization.
ii.
Resolution. The following conditions must all be met for the individual
employer's request to be granted:
a)
The employer must have been on the Group Experience Rating roster for
the previous rating year, and the employer is requesting to be in the same
sponsoring organization's group.
b) The
individual employer must be in good standing with the sponsoring organization. For
example, any fees due and payable to the sponsoring organization were paid
prior to the Group Experience Rating filing deadline. Supporting documentation
must be provided, such as a copy of cancelled check or credit card statement.
c)
The individual employer indicated to the TPA prior to the Group
Experience Rating filing deadline that the individual employer wanted to
participate in the group. Supporting documentation must be provided; e.g.,
signed group contract, copy of payment receipt for TPA fees.
d) The
TPA did not send the individual employer a non-renewal letter prior to the
Group Experience Rating deadline, and the employer is not on the non-renewal
list submitted to BWC.
b.
Individual employer without a full year of recorded premium is not
homogeneous with the group.
i.
Extenuating Circumstance. An individual employer without a full year of
recorded premium, during the rating year beginning two years prior to the
coverage period, is rejected from Group Experience Rating because the
individual employer is not homogeneous with the group. BWC may permit the
individual employer to participate in a group that is homogeneous, if the group
is with the same sponsoring organization, and all parties agree.
ii.
Resolution. The following conditions must be met for the individual
employer's request to be granted:
a)
The individual employer has no reported payroll (prior to coverage
payroll is not disqualifying);
b) The
AC-25 and the AC-26 were filed timely;
c)
The individual employer is not rejected for any other reason; and
d) The
same sponsoring organization has another group that resolves the homogeneity
issue.
c.
Individual employer applied for Group Experience Rating with an
affiliated organization, however, the sponsoring organization did not have a
homogeneous group.
i.
Extenuating Circumstance. The individual employer applied for Group
Experience Rating with an affiliated organization, however, the sponsoring
organization did not have a homogeneous group. The individual employer is
requesting Group Experience Rating with a different sponsoring organization.
BWC may allow the individual employer to participate in a different group, if
the affiliated organization shares its members with a different sponsoring
organization that has a homogeneous group.
ii.
Resolution. The following conditions must be met for the individual
employer's request to be granted:
a)
The affiliated organization must be listed on BOTH sponsoring
organizations' final Group Experience Rating rosters;
b) Both
groups must be administered by the same TPA; and
c)
The TPA agrees to place the individual employer into the group that
resolves the homogeneity issue.
d.
Individual employer accepted into Experience Modification (EM) Cap
Program becomes eligible for Group Experience Rating.
i.
Extenuating Circumstance. An individual employer denied Group Experience
Rating applies, and is accepted into, the EM
Cap Program. The individual employer subsequently becomes eligible for
Group Experience Rating. However, an individual employer participating in the
EM Cap Program is not eligible to participate in Group Experience Rating. Where
an individual employer's rejection from Group Experience Rating is reversed,
the individual employer may withdraw from the EM Cap Program and instead elect
to participate in Group Experience Rating.
ii.
Resolution. BWC will notify the individual employer, in writing, that
the employer may withdraw from the EM Cap because the individual employer is
now eligible for Group Experience Rating. The following conditions must be met
for the employer's request to be granted. The individual employer must provide
a letter to BWC that:
a)
States the individual employer wants to withdraw from the EM Cap
Program;
b) States
the individual employer wants to participate in Group Experience Rating; and
c)
Is signed and dated by an authorized employee.
e.
Rejection from Group Experience Rating overturned by adjudication
process.
i.
Extenuating Circumstance. The individual employer appeals the BWC
decision to reject the employer from Group Experience Rating, and its appeal is
granted by the adjudication process for a specific rating year. Due to the
timing of the hearing process, and the issuance of the order granting relief,
the individual employer is rejected from Group Experience Rating for the same
reason for the next rating year.
ii.
Resolution. Since the individual employer's appeal was granted, the
employer is allowed into Group Experience Rating for the next rating year
without having to submit a second appeal.
H. Combinations
and transfers.
1.
Successor: Debtor-in-possession.
Predecessor:
Files petition for bankruptcy.
An
individual employer who becomes a debtor-in-possession during the policy year
shall remain a member of the group for the entire policy year.
2.
Successor: Entity not having coverage.
Predecessor:
Group experience rated with employees and reported payroll.
The
successor shall be considered a member of the group, and the successor entity's
rate shall be based on the group's experience, if the successor employer is
homogeneous to the group. For a partial transfer, the effective date of the
Group Experience Rating transfer shall be on the first day of the next payroll
reporting period.
3.
Successor: Group experience rated.
Predecessor:
Experience rated, either individually or in a different group, or non-group
base rated.
The
successor shall remain a member of the group, and the experience of the
predecessor shall be included with the experience of the group.
4.
Successor: Non-group experience rated.
Predecessor:
Group experience rated.
The
successor shall not become a member of the group.
5.
Successor: Group experience rated.
Predecessor:
Group experience rated, same group.
The
successor shall remain a member of the group.
6.
Successor: Group experience rated.
Predecessor:
Non-group experience rated.
The
successor shall remain a member of the group, and the experience of the
predecessor shall be included with the experience of the group. The effective
date of the Group Experience Rating transfer shall be on the first day of the
next payroll reporting period.
7.
Partial Transfers.
Successor:
Non-group experience rated.
Predecessor
Group experience rated.
The
successor will not become a member of the group, and the predecessor will
remain a member of the group.
Successor:
Group experience rated.
Predecessor:
Non-group experience rated.
The
successor shall remain a member of the group. The experience of the
predecessor, pertaining to the portion of the business acquired by the
successor, shall be included with the experience of the group.
8.
Successor: Entity not having coverage.
Predecessor:
Group experience rated with no employees and no reported payroll.
The
successor shall not become a member of the group.