Workers' Compensation

Benefits of Workers’ Compensation Self-Insurance

Chelsea Bikner
Self-Insurance
Reading time 5 Mins
Published on Jun 24
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While the state of Ohio requires all employers with one or more employees to carry workers’ compensation coverage, the Bureau of Workers’ Compensation (BWC) offers two options for employers seeking coverage: state-fund participation and self-insurance (SI). With oversight by the BWC, self-insured employers have the freedom to administer their own workers’ comp program and make direct payments to providers and workers for all claims. While workers’ comp laws apply equally to both state-fund and SI employers, there are significant benefits to self-insurance in Ohio.

Self-insurance basics

Employers must seek authorization from the Ohio BWC to become self-insured employers. The BWC’s requirements for SI employers include:

  • Must have held state-fund coverage for at least 2 years preceding SI application
  • Demonstrate sound financial stability
  • Demonstrate the ability to administer the self-insured program
  • Demonstrate the existence of a strong safety program
  • Demonstrate the ability to administer the medical management program

SI employers are responsible for paying the medical bills and wage replacement costs for their injured workers directly, instead of through premiums paid to the BWC. Injured employees must file a First Report of Injury claim directly with their employer (who then forwards it to the BWC). The BWC provides oversight to ensure that all claims and payments are processed appropriately. For more information, check out Common Questions about Self Insurance in Ohio.

Benefit 1: TPA expertise

For employers thinking about becoming self-insured, working with a third-party administrator (TPA) to understand the risks and benefits is invaluable. As part of the employer’s AC-3 analysis, TPAs help employers understand all of their workers’ comp options, including cost-containment strategies and whether becoming an SI employer is the right choice for the company. Think of the AC-3 as a feasibility study that helps employers make sound financial determinations about their workers’ comp options.

TPAs also help employers understand all of the responsibilities required by the BWC for a self-insured program, as well as the liability the employer assumes by paying benefits directly. To learn more about how businesses can benefit from working with a TPA, read our article What an Ohio TPA Can Do for Your Business.

Benefit 2: Monetary control

Becoming an SI employer is not an immediate fix to reduce annual premiums, but can offer employers a long-term route towards reducing overall workers’ compensation costs. This ability to exercise greater monetary control is one of the primary draws of becoming an SI employer.

Self-insured employers pay claims as they occur rather than paying regular premiums to the BWC based on payroll and claims experience. This can free up cash flow for other projects and priorities within a business, but SI employers must be careful to budget and set aside funds for future claims to ensure long-term financial stability. As the company becomes more experienced with self-insurance, they can work together with their TPA to determine how much should be budgeted for workers’ compensation claims based on actual claim experience. Check out Decoding the Language of Workers’ Compensation to learn more about premium rates and other commonly used workers’ compensation terms.

Benefit 3: Claims and case management

One of the top benefits of becoming a self-insured employer is the ability to exercise greater control over claims and case management. In conjunction with a TPA, SI employers can develop appropriate claims and case management procedures within the scope set forth by the BWC to help ensure that injured workers get the appropriate care while reducing costs for the employer.

Working with a TPA allows SI employers to ensure that their employees receive access to the same quality of care as they would with state-fund employers. TPA’s provide claim investigations to help identify and prevent workers’ compensation fraud, make claim allowance determinations, make compensation payments to employees, pay medical benefits to providers on the employer’s behalf, and help identify return to work opportunities that can decrease the overall length and cost of an injured worker’s claim.

SI employers can also benefit from access to a TPA’s network of preferred providers, who have experience working within the BWC system to control treatment costs. TPA’s work directly with the provider to communicate all treatment requests and plans and develop timely expectations on return to work.

Benefit 4: Limit risks

When employers are paying directly for the treatment and lost wage costs of an injured worker, they are more motivated to create a culture of safety that reduces the risk of future injuries. By implementing additional safety measures and expanding training opportunities, SI employers are able to limit their potential workers’ compensation risks.

Many self-insurers offer access to additional safety training opportunities beyond those offered by state-fund employers and conduct more frequent safety audits with an eye toward reducing accidents and out-of-pocket expenses. TPA account managers understand the importance of injury prevention for SI employers. By recommending industry-specific safety programs, in addition to those designed by the BWC, and providing access to additional training opportunities, TPA’s enable companies to reduce the likelihood of injury and exercise greater control over their liability and risk. Learn more about how TPA’s can help your company by reading 5 Reasons You Need a TPA in Your Corner.

Never work alone

Self-insurance doesn’t mean that your company has to go it alone. Your TPA partner will work with you to develop a tailored Plan of Action to meet your workers’ compensation needs, ensuring that you are able to make the best decisions for your company. Your TPA is your business’s advocate in workers’ compensation, helping to identify cost-containment opportunities and providing assistance with claims.

Contact a Sheakley Workers’ Compensation professional today to learn more. Stay up-to-date on all things Sheakley by subscribing to our blog and following us on social media. Join in the discussion by commenting below.


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