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Ohio BWC Update

Ohio BWC Update. Paul Flowers – Director, Self-Insured Department Dave Sievert – Auditing Supervisor . Ohio BWC Update. General Updates Self-Insured Security Requirements Assessment Rates Current Status of Obtaining Security Next Steps for Determining Security Requirements.

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Ohio BWC Update

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  1. Ohio BWC Update Paul Flowers – Director, Self-Insured Department Dave Sievert – Auditing Supervisor

  2. Ohio BWC Update • General Updates • Self-Insured Security Requirements • Assessment Rates • Current Status of Obtaining Security • Next Steps for Determining Security Requirements

  3. General Updates • Ohio Administrative Code 4123-19 • The biennial budget for the State of Ohio (H.B. 59) required two changes to the SI rules: • The Administrator must establish a rule with provisions for waiver of the requirement that SI applicants have 500 employees in Ohio • The Administrator must establish a rule with provisions for waiver of the requirement that SI applicants operate in Ohio for a minimum of two years

  4. General Updates • The proposed rule requires the Bureau to waive the 500 employee requirement if the applicant meets the following requirements: • The applicant meets all requirements established in ORC 4123.35 (B)(1)(c-h) • The employer provides audited financial statements for the current year and four previous years • The employer meets at least one of the following requirements: • The employer has a substantial employee count outside of Ohio, as determined by the Bureau, or • The employer has obtained excess insurance in an amount and with a retention level determined by the bureau to be appropriate.

  5. SIEGF & Mandatory Assessment Rate History

  6. Purpose of Assessments • Self-insuring employers pay semiannual assessments based on a percentage of the employers’ indemnity payments in claims. • Fund various administrative costs and the self-insured employers’ guaranty fund (SIEGF) and the mandatory surplus fund. • Should a self-insuring employer default on its future claim liabilities, the BWC will first pay these costs with any security on file for that employer. • Once the additional security is exhausted any remaining costs are paid for out of the SIEGF and/or mandatory surplus funds.

  7. SIEGF and Mandatory Assessment Rates • The combined assessment rate (SIEGF and Mandatory) for 7/1/2013 has increased approximately 14 percent due to several reasons: 1) Increased costs paid out of the SIEGF - Two large 2012 defaults (costs already exceeded security on hand and are being paid out of the SIEGF and mandatory surplus funds)

  8. Default Claim Disbursement History

  9. SIEGF and Mandatory Assessment Rates 2) Projected increase of costs and claims in future years - Approx 10% of all defaulted claims are the result of recent defaults

  10. Default History

  11. SIEGF and Mandatory Assessment Rates 3) Decline in reported paid compensation over the last several years - 35% reduction in paid compensation from 2003 to 2012

  12. Paid Compensation History

  13. SIEGF and Mandatory Assessment Rates 4) Restatement of 2012 claim disbursements among the SIEGF and Mandatory funds - Requirement to maintain 125% of prior years costs in the SIEGF

  14. Projected Fund Balances

  15. Security Background • In January 2011, a new methodology was implemented to determine the risk (claims liability) of a self-insuring employer • A concept was developed that evaluated a combination of an employer’s financial performance, using Moody’s analytics, and its claims liability, using self-reported case reserves • Based on this evaluation an employer may be required to supply additional security, at no more than 100% of the reserve total, as a condition of self-insured renewal

  16. Current Security Status

  17. Next Steps • The continued refinement in determining financial and claims risk will hopefully place less burden on the SIEGF • Accurately identifying the full exposure an employer presents to the fund will lead to appropriate security requirements • In an effort to achieve this objective, the current reserving methodology will be evaluated

  18. Next Steps 1) Request independent actuarial studies from employers identified as having the most potential risk to SIEGF • High financial risk (Moody’s rating Ba3 or lower for 2 consecutive years), and • Significant 2012 reported reserves ($1M or higher) - Identified 25 active employers in this group (2% of active SI’s) • Actuarial studies will be required as part of the next renewal period - If renewal March or after study will be required for 2014 (72%) - If renewal prior to March study will be required for 2015 (28%)

  19. Next Steps 2) Upon receipt of studies, BWC actuarial/finance will analyze to validate: • Validation of self-reported case reserves - If reserves are validated, future studies will only be requested every 3-5 years - If reserves are not validated, studies may be requested more frequently and/or security may be increased • The full claims liability (including IBNR)

  20. Next Steps 3) Based on the results identified in #2, the BWC and SI workgroup will collectively identify what appropriate adjustments, if any, should be made to current security model 4) Additional group of employers will be requested to provide actuarial studies in 2014 as a condition of 2015 renewal. • Moderate to high risk (Moody’s rating Ba2 or lower), and • Significant claim reserves

  21. Overturned Claims Reimbursement • What is the Claims Surplus Reimbursement Fund? • How does Sysco effect the Self-Insured Employer? • Sysco Application Process • Covered Compensation

  22. What is the Sysco Claims Reimbursement Fund? • Sysco Food Service v. Industrial Commission – Employer able to be reimbursed for costs due to overturned decisions • Kokosing Construction v. Ohio BWC- Clarified that a certified claim later found to be fraudulent is also reimbursable to participating employers • Extendicare v Ohio BWC- Employer right to be reimbursed if you were in the fund when the compensation was paid

  23. What is the Sysco Claims Reimbursement Fund? • Ohio Revised Code (O.R.C.) 4123.51 • A participating self-insuring employer must be able to document a final administrative or judicial determination. The employer must show documentation that compensation and benefit payments should not have been made payable to the injured worker.

  24. How does Sysco effect the Self-Insured Employer? • Assessments • Calculated by the established rate times the paid compensation. Reimbursements can be credited • Program Options- • Surplus Claims Reimbursement is not mandatory • Opt In • Continue to be assessed semi-annually • Opt out • No assessments • Irrevocable

  25. Application Process • Sysco application submitted • Copy of any and all relevant Hearing Orders. Including the hearing order authorizing payment and the order that was overturned (final determination). • Detailed information showing what benefits were paid. Including payment screens, fee bills and all copies cancelled checks. • Notification if employer took a credit on the SI-40. • Positive proof of medical benefits (fee bills) and indemnity payments (check copies) which are being requested.

  26. Application Process Cont. • Email to SIINQ@bwc.state.oh.us • Fax to 614-621-1246 Mail to Ohio Bureau of Workers’ Compensation Attn: Self Insured Claims Reimbursement administrator 30 W. Spring St Columbus, OH 43215

  27. What is Reimbursable • Covered Expenses • TT • PTD • PP • WL • Medical

  28. What is Reimbursable • Non-Covered Expenses • Lump Sum • DWRF • Attorney Fees(otherwise specified in the hearing order) • Deposition Fees(otherwise specified in the hearing order) • Investigation Fees

  29. Level 1 Audits • Scope • All active and Cancelled Self Insuring employers • Aggregate Reserves • Last Three SI 40 paid compensation reports

  30. Level 1 Audits – Information that may be requested • SI 40 Backup reports- Paid compensation sorted by Payment types, with individual claim payments documented. Require beginning with 2012 Si 40 submission • Claim Loss Run • Information to explain anomalies in PTD, Death, Recoveries and total amount of compensation reported each year

  31. Level 1 audits- Process • SI Department will send out instructions for SI 40 reporting at the end of the calendar year • Employer reports paid compensation on line and provides a copy of the backup information to the BWCSIAuditing@bwc.state.oh.us address • After February 28 deadline, SI department will identify employers who have not submitted SI 40 or backup report and request

  32. Level 1 audits process (cont.) • Aggregate Reserve Review • SI department will compare aggregate reserve to total paid for a high level determination if reserves are sufficient. • Reserves are evaluated to ensure that claims are not being suppressed • Properly evaluate required security • Provides insight into employer’s financial practices and stability.

  33. Level 1 audits process (cont.) • If there is a question about the aggregate reserve BWC will request a loss run to include paid to dates , total outstanding (reserve) and total incurred • Employer may provide other information which will help understand the aggregate reserve. • For Example: Several claims recently settled below reserve • Plant closure

  34. Level 1 audits process (cont.) • SI 40 review • Review total paid comp, PTD, Death and Recoveries • May look at TT paid • If there is a significant drop in these categories from the previous two years BWC will request explanation for the drop • Seeking explanation that may be as simple as location closing, fewer claims reported due to new safety initiative, PTD recipients passed away….

  35. SI Department Updates • Self Insured section of WWW.BWC.ohio.gov will be redesigned on 11/14/13. Intent is to be more efficient. Please provide feedback to SIINQ@bwc.state.oh.us • Renewals must be submitted electronically, no paper renewal applications will be accepted.

  36. General Updates • C-84 policy • If BWC receives a C-84 and the SI employer does not indicate what action is being taken, the BWC will send a letter requesting clarification • If the SI employer does not respond it will be referred to the Industrial Commission as a disputed matter • SI-7 submission

  37. Sensitive Data • Effective November 1, 2013 BWC Will use Zixmail to secure sensitive data • BWC will send out instructions and notification for the initial email to a recipient. • Recipient will need to set up login and password in ZixMail to access the email. • Once logged into ZixMail, the message can be addressed essentially as it is now.

  38. Ohio BWC Update Paul Flowers – Director, Self-Insured Department Dave Sievert – Auditing Supervisor

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