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Self-Insurance in Ohio

sheakley
Self-Insurance in Ohio
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Published on Jul 2
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Providing more stability and control over Workers’ Comp rates, a PEO helps stabilize cash flow for businesses, compared to the volatile state fund programs.

For Ohio employers, there are 3 primary ways to obtain Workers’ Compensation insurance: through the Ohio Bureau of Workers’ Compensation state fund, through standalone self-insurance, or by obtaining self-insurance through a Professional Employer Organization (PEO) such as Sheakley.

For most small business, the best and only option is the Ohio BWC’s state fund. For the state’s largest employers, standalone self-insurance is permitted and is the most cost-effective option. For the majority of the mid-sized businesses, self-insurance through a PEO is the best option.

When you participate in a self-insured plan through a PEO, the PEO underwrites your Workers’ Comp insurance coverage, manages your claims, and provides additional related services. This option provides the employer with more direct involvement and cost management control, guaranteeing that injured employees are receiving appropriate and timely medical care.

How Do the Workers’ Compensation Insurance Programs Work?

Workers’ Comp State Fund — Workers’ compensation state funds provide workers’ comp insurance to employers in a specific state. Most states have competitive funds, where companies are allowed the option of purchasing a policy from the state or from a private insurance carrier. A few states are monopolistic, meaning that companies are only allowed to purchase a policy through the state fund. Ohio is a monopolistic state, but has allowed businesses to self-insure in certain cases.

Standalone Worker’s Comp Self-Insurance — Instead of paying in advance through Workers’ Comp insurance premiums, Ohio employers who self-insure pay claims as they are received. In order to qualify for self-insurance, the Ohio BWC requires that you have 500 or more employees, pay premiums into the state fund for at least two years, show the ability to administer a program, and demonstrate strong financial stability. Typically, only the largest public school systems and corporations meet Ohio’s strict requirements. Those who do maintain their own insurance fund and hire a Third Party Administrator to manage their claims.”

PEO Workers’ Comp Self-Insurance — Many small to medium-sized employers in Ohio use the PEO alternative, which allows them to participate in a self-insurance program and provides additional important risk management services. By bringing participant companies’ employee bases into the PEO, the organization is able to satisfy the state’s high requirements for maintaining self-insured Workers’ Compensation for participants’ employees.

This form of self-insurance works differently than the standalone option that large businesses utilize. Since a PEO shares a co-employment relationship with its client businesses, they are able to satisfy the state’s requirements for self-insurance.

As a participant employer, you are afforded greater underwriting flexibility, comprehensive risk management services, and important health and safety benefits.

Advantages of PEO Workers’ Compensation Self-Insurance

Unlike the formulas and scheduled rates used by the BWC to determine state fund premiums, a PEO has the flexibility to assign whatever premium rate they determine is fair for each participating employer. When determining an appropriate rating, the PEO considers factors such as claims history, claim frequency, and safety improvements and enforcement. This typically allows the employer to obtain Workers’ Comp coverage at a fraction of the rate of state fund policies.

Sheakley’s PEO can also provide a three-year rate lock, which helps employers with business planning, cash flow, and budgeting. For clients whose business perform well in the program, the PEO also offers additional deductible and refund options.

In addition to the premium savings afforded to you as a PEO participant, you will also have access to a spectrum of other risk management services, including:

Co-Employment Relationship — As a co-employer, the PEO reports each client’s payroll under Sheakley’s federal ID. By doing this, we are able to manage their payroll and tax reporting, provide health insurance, Workers’ Compensation administration, HR support, retirement plans, and more. By handling these complex and time-consuming tasks, we are able to free our clients to focus on growing their businesses with the confidence of knowing everything is being management in one streamlined, efficient support system.

Ongoing Resources — Depending on client needs and preferences, we provide different levels of involvement and ongoing resources. In addition to our regular annual visit and follow-ups, some clients opt to fund more frequent on-site visits. When requested, we assist in writing and updating client policies. We also keep clients up-to-date on changing OSHA rules and regulations applicable to their industries.

On-site and Online Training — As a PEO participant, you will have access to our safety experts and an extensive online library of safety training videos. If you have a new safety policy or procedure and prefer on-site training for your staff, our safety experts can be available to meet your needs. If you have one or two employees that need a refresher on a certain topic, our online library offers a convenient solution.

Dedicated Risk Management Consultant — Clients are assigned a specialist who provides safety consultation, manages implementation of safety plans, and facilitates access to all of our safety resources. The consultant helps the client stay up-to-date on OSHA compliance, significant safety issues, and other hot topics in their industry. The consultant will also review the client’s number and types of Workers’ Comp claims and compare them to other businesses in the industry to gauge the effectiveness of current safety programs.

Sheakley works hand-in-hand with our clients to positively impact compliance and employee safety to ensure a reduction in Workers’ Comp claims. The client has the benefit of an entire safety support system, with professionals acting proactively to help minimize safety risks.

A Closer Look at Risk Evaluation – BWC vs. PEO

Ohio doesn’t impose a cap on insurance claim limits. To align its risk mitigation with this policy, the BWC groups employers into two plans: group rating and group retrospective rating.

With group rating, employers with above average claims histories are pooled together when rates and claim expenses are calculated, allowing for up-front premium savings. To remain in this plan, employers must have little or no claim activity throughout the rating period.

With group retrospective rating, employers with average or below average claims histories are pooled together to achieve lower premiums than they could as individuals. Employers continue to pay their own individual premiums, but have the chance to receive retrospective premium adjustments at the end of three evaluation periods performed by the Ohio BWC. This plan incentivizes employers to implement effective workplace safety programs and claim reduction strategies.

Regardless of the plan you are placed into, the BWC will reevaluate your company’s rating each year. This may be a positive, especially if you’ve implemented safety programs to reduce your claims and can move from group retro to group rating. However, for companies struggling to reduce injuries and normalize claims, yearly rating changes can lead to a roller coaster of financial uncertainty.

The PEO alternative offers a much simpler, more manageable, and financially predictable Workers’ Compensation program. With no state claims cap policy for self-insured plans, PEO participants simply pay their fairly calculated premiums. Sheakley then pays 100% of Workers’ Comp claim costs within the policy period, less any deductible chosen by the client. Furthermore, we can offer to lock in your company’s best possible rate, eliminating the worry of risk and stabilizing your bottom line.

How Do You Obtain Workers’ Comp Insurance Through a PEO?

Obtaining workers’ compensation insurance through a PEO is straightforward and simple. By submitting a single form to the Ohio BWC, you allow Sheakley to access your claims history and the other hard data we need to generate a contingent quote and build program options for your company.

During the underwriting process, we review your claims history, payroll, safety records, credit standing, and any other relevant information to determine if your business is a sound risk. In the final part of the underwriting process, we speak with you directly to learn about your business and understand your specific needs. We also review your current claim reporting and management process, along with your safety program, to identify areas where we can have the greatest positive impact. In some cases, we will perform an on-site inspection to gain a deeper understanding of your workplace culture and practices.

When all of this is complete, we determine if your company is a risk we are comfortable taking. If both you and Sheakley wish to move forward, we agree upon the service plan, decide on a rating program, and begin to transition your company into our workers’ compensation program.

When It’s Time to Move to Your PEO Workers’ Comp Solution

The daunting proposition of keeping up with myriad Workers’ Compensation regulatory requirements, much less mastering the far broader field of comprehensive HR legal and operational knowledge is not worth the struggle for most growing businesses these days. First, HR and Workers’ Compensation are fraught with legal and financial hazards around every turn. Second, the scope of the business mission for most employers and their teams is driven by the core competencies that inspired the business owner to start up the enterprise in the first place, and those skills typically do not include managing full-scale HR and Workers’ Comp.

As a business grows, there are increasing advantages in recognizing when it’s time to stop trying to manage the more and more unwieldy realities of full-scope HR in-house and reaching out for professional guidance to navigate the vast legal labyrinth of HR, including Workers’ Comp.

If you’re operating a small to medium-sized business in Ohio, the most practical solution is probably going to prove to be using a PEO, and your research is most likely to lead you to discover ultimately that Sheakley can provide you with the most competitive and professional array of services.

Many More Benefits for Sheakley PEO Clients

In addition to the Workers’ Comp self-insurance plan and risk management solutions, Sheakley’s PEO provides employers with a broad range of client-focused HR services including individualized HR support, employee benefits administration, health & wellness programs, and more.

For Ohio Workers’ Compensation Self-Insurance — Sheakley HR and Risk Management Services


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