The rate reduction brings employers’ three-year premium savings to an estimated $224 million
On May 30, the Ohio Bureau of Workers’ Compensation (BWC) set actions in motion for the distribution of $1 billion in cash rebates to Ohio employers, many of which can now also plan for additional savings through decreasing overall base-rates. The board unanimously approved a proposal set forward by Governor John Kasich to leverage BWC’s strong financial position by returning $1 billion to 210,000 Ohio employers. In a separate action, the board signed off on a 2.1 percent average reduction in base rates for private employers that brings their three-year premium savings to an estimated $224 million.
“The board’s actions in providing a rebate and reducing base rates makes it a banner day for business in Ohio,” said BWC Administrator/CEO Steve Buehrer. “We’re pleased prudent management and smart investing at the BWC are paying off, literally, for hundreds of thousands of Ohio’s private and public employers.”
The cash rebate to private employers and public employer taxing districts is made possible by larger-than-expected fund balances at the BWC generated by strong investment management. The entire proposal totals $1.9 billion and also calls for:
- Expanding the BWC’s successful Safety Grant Program from $5 million to $15 million to support increased statewide efforts that promote workplace safety and encourage further investment in protecting Ohio’s workers. Steps are already being taken to expand the program and increase overall safety efforts this summer.
- Modernizing how premiums are collected in Ohio by moving to a prospective-payment system and subsequently requesting the board issue an additional $900 million premium credit to mitigate transition costs. This switch would also result in rate reductions of 2 percent for private employers and 4 percent for public employers. This requires authorization by the legislature, which is currently considering the action.
The 2.1 percent base-rate reduction for private employers presented to the board last month and approved today is for the 2014 policy year, which runs Jul. 1, 2013 to Jun. 30, 2014. It represents an aggregate savings of $29 million over 2013 premium collections. The reduction follows a 4 percent rate decrease in 2012 and flat rates in 2013. Actual premium paid by individual private employers depends on a number of factors, including their industry, their recent claims history and expected future costs, and their participation in discount and savings programs. Rates for public employers, currently at a 30 year low, are decided in the fall.
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