Workers' Comp Insurance in Ohio: Employers Have Choices

As an Ohio employer, you must know the state's unique approach to workers' compensation coverage. All employers must carry workers' comp, even if they have one employee. However, traditional commercial insurance markets are not permitted in Ohio. Instead, Employers must buy coverage directly from the Bureau of Workers’ Compensation (BWC). In turn, the BWC pays medical benefits and lost wages to injured employees. This coverage is mandatory.

While workers' comp is vital to every employer's risk management strategy regardless of location, Ohio, as a monopolistic state, is different. That's why Employers must understand all their options to obtain this coverage and to help navigate the state's insurance regulations and make better-informed decisions.

Ohio's State-Run Workers' Compensation Fund

The Ohio Bureau of Workers' Compensation (BWC) operates a state-run workers' compensation fund that provides coverage to all Ohio employers. As a self-supporting, exclusive state-fund insurance fund, it issues workers' comp policies directly to Ohio employers.

Your BWC Coverage will Provide

Comprehensive coverage to all Ohio employees, regardless of their employer’s size or industry. This includes medical benefits and lost wages for workers who are injured or contract an occupational disease.
Support through various resources, safety programs, and training to help employers mitigate workplace risks and promote a safe working environment.
Stable and predictable workers' comp premium rates and claims management.

Workers' Compensation Self-Insurance

Self-insurance allows qualifying employers to manage and pay their workers' compensation claims instead of purchasing coverage from the state fund.

This alternative is ideal if your business has a high financial capacity and is willing to assume the risk of workers' compensation claims.

While this approach has potential cost savings, you must invest significantly upfront, be compliant with numerous regulations, including reporting and reserve requirements, and commit to maintaining a strong safety program.

Advantages of Self-Insurance For Ohio Businesses

Flexibility and control over claims management by choosing your provider and implementing safety programs tailored to your organization's unique needs.
More feasible for larger employers with sufficient financial resources, more employees, and a solid commitment to safety.
Efficient cost management with a high potential to save you various costs, such as administrative and assessment costs.
Customized risk management programs to address your workforce's specific hazards and challenges.
Potential for long-term cost stability.

Factors to Consider in Ohio With Workers' Comp Self-insurance

Financial risk if your business has a high risk of claims.
Understanding and complying with all state and federal workers' comp laws can be complex and time-consuming. It also requires specialized expertise.
Setting up administration for your Workers' Comp program can be burdensome.
Regulatory requirements and reporting obligations must be accounted for, such as demonstrating financial stability, maintaining appropriate reserves, and submitting regular financial statements to the BWC.

Professional Employer Organizations (PEOs)

PEOs provide Ohio employers with human resources and employee management services, including workers' compensation insurance coverage.

PEOs can be a good option for your organization if you lack the time or resources to manage your workers' comp program. It's also an ideal option if your business spans multiple locations within or outside its domiciled state.

PEOs typically handle all workers' compensation claims process aspects, including claims management, safety training, and rehabilitation services.

Advantages of Professional Employer Organizations

Versatility by handling various HR functions, including workers' compensation administration, payroll, benefits, and compliance.
Risk sharing and economies of scale, reducing workers' compensation costs.
Suitable option for small and medium-sized businesses needing more resources or expertise to handle workers' compensation administration independently.
Comprehensive HR services at reduced costs.
Improved HR efficiency and compliance with Ohio's applicable laws and regulations.
Access to better benefits than what SMBs could offer on their own.

Factors to consider when working with PEOs in Ohio

Co-employment is required. This must be carefully considered and implemented as it impacts payroll and tax reporting.
Payroll systems may not meet the needs of your organization.
Transitions from a PEO can have tax implications and must be timed properly.
Increased costs, especially if you have a large number of employees subject to new admin fees.
Varying quality of services, expertise, and customer support from one PEO to another.

Alternative Employer Organization (AEO) Programs

An AEO is a unique alternative to the state fund and PEO options. It offers potential savings for qualifying employers and does not require co-employment.

Working with an AEO ensures that you satisfy state requirements for workers’ compensation and associated payroll requirements as well, either from the AEO or an approved payroll service vendor.

AEO programs can provide you with the benefits of self-insurance, such as lower costs and greater flexibility while avoiding the need for a significant upfront investment.

These programs are ideal if your business isn't ready or willing to assume the entire risk and responsibility of self-insurance but wants to save money on workers' comp insurance premiums. They are also a cost-effective option for businesses with few employees.

What Are The Advantages of AEO programs For Ohio Employers?

Significant cost savings through risk management strategies, lower premiums, and improved claims management.
Specialized workers' comp claims management and personalized support to employers.
Suited for employers who meet specific criteria set by the program provider.
Streamlined and efficient claims management.
Allows the company to remain the employer of record, simplifying things from a legal and administrative perspective

Factors to consider when working with an AEO program in Ohio

The AEO program is fairly new and has been in place for just over two years. Nonetheless, it is a popular and fast-growing program.
You must engage the AEO for a qualified payroll service, either directly through the AEO or a qualified payroll service provider that works with that particular AEO. (The good news is you may already be working with one). Client-based in-house payroll is not permitted within the AEO program.
You may wish to replace certain state fund-related programs and resources if you switch, although excellent alternatives are available.

Which Workers' Comp Option Is Best For Ohio Employers?

The best option for obtaining workers' comp insurance in Ohio will vary depending on your business's specific needs and preferences. However, consider your business's financial capacity, risk tolerance, and safety record when choosing an ideal workers' compensation insurance option. If you need expert guidance and analytics on your organization's insurance, turn to Alloy Employer Services, an expert in Ohio Workers’ Compensation risk management.

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