Group Rating FAQ's

What is group rating?
Group rating is a means of lowering workers' compensation premium rates by pooling together companies that have minimal claims costs and good premium payment histories.
The sponsoring organization, such as a chamber of commerce or trade association, will invite employers with an EM% less than 100 to join its group. The sponsor hires a TPA (Third Party Administrator) to manage the claims of its members.

What are the benefits of group rating?
Premiums can be reduced to as little as 15% of your company’s non-group premiums. Plus, if your company has never had a serious or questionable claim, it can be helpful to have a TPA already available to guide you if such a claim does occur.

What are the drawbacks to group rating?
Rarely, being in the group may result in higher premium rates, if the TPA has not properly calculated or estimated the claims costs of the companies in the group.

Less rare is when the group's TPA does not do a good job of managing the claims costs. If the claims costs for your company become too high, your company will not be welcome to join group rating in a subsequent year.

Who is eligible for group rating?
Companies whose EM is 100 or less are solicited by sponsors to apply for group rating. Some groups will accept companies with an EM slightly more than 100, so it's important to apply to more than one group. You can find the EM in the premium rate notification letter sent to your company in July, or you can call the BWC; the phone number is 1-800-OHIOBWC (1-800-644-6292). Or you can go online to www.ohiobwc.com and click on Ohio Employers.

What are the BWC criteria for group rating?
The company must be in good standing with the BWC. Partial payment plans (if any) must be paid in full by the February 28 deadline. Your company may not have been late paying premiums for more than 59 days during the eighteen-month period prior to the deadline.

Can my company join any group it wants?
Your company may apply to any sponsor. Acceptance into the group is determined by the sponsor and its TPA, subject to final approval by the BWC.

What is a TPA?
TPA stands for Third Party Administrator. The TPA manages the claims costs of the company it represents. The TPA for a group may or may not represent the employer at hearings on contested issues before the Industrial Commission of Ohio. The contract that accompanies the invitation to join the group will indicate what services the group TPA will provide.

Do all sponsors have the same criteria for members of the groups it represents?
No. Some sponsors want only the best companies in the groups they manage. Other sponsors will accept companies whose EM is slightly greater than 100. That's why it's important to apply to several groups, especially if your EM is close to 100. Other sponsors will only accept companies in a particular industry, such as transportation or manufacturing or retail.

What are the duties of the TPA?
The TPA is hired to represent the employer before the Bureau of Workers' Compensation (BWC). Some TPAs take a very aggressive stance in managing claims costs; others merely record the claims costs and then warn the company when the claims costs are getting too high to keep the company in group rating.

Do I have to use the group TPA?
All members of the group must pay the TPA fee. However, your company may use another TPA or attorney to administer its claims and represent it before the BWC and ICO. For example, if your current TPA has been so effective in reducing your company's EM that now your company is eligible for group rating, you may want to continue to use that TPA.

What does it cost to join a group?
Many sponsors charge a membership fee. Some trade associations charge a larger membership fee if your company is a member of the trade and would benefit from the research or lobbying it performs for its members; but charge a smaller fee if your company joins only for group rating.
Or a chamber of commerce may charge a large fee to join, but makes available other programs such as rental car discounts, group health insurance, etc. If your company wants to take advantage of numerous other benefits, joining could be a good investment. But if your company does not need all those other benefits, it may make more sense to join a group that saves the most but costs the least.
The group TPA also charges a fee. Often, the fee is based on a percentage of the projected savings.

What happens after my company applies for group rating?
The TPA will send a packet that includes an estimated TM, estimated premium rates, estimated savings, TPA fee, contract, and forms to complete. You will also receive numerous phone calls from the TPA to answer any questions and encourage you to make a decision as soon as possible.

Why is everything estimated?
The TPA does not know until February 28 which companies will join the group, plus there may be excessive claims costs unknown to the TPA at the time of the deadline. Therefore all information is presented as estimated, or projected.

What is the deadline for group rating?
The BWC deadline is February 28 for the fiscal year that starts next July 1. Most groups will accept your application up through the last week in February. Do not apply to more than one group because the BWC can reject all your applications, and then your company won’t be in any group.

How do I decide which group is best for my company to join?
This is the tricky part. First, ignore the estimated savings and the estimated premium rates provided by the group TPA. Use the TM (this may be called the group mod or group discount, and should look like a negative number, such as –95, -43, -27, etc.) provided by each TPA to calculate your company's projected premium for the upcoming year. Add in all the dues and fees to get an estimate of workers' compensation costs for coming year.
You may also wish to consider other factors, such as the location of the TPA, or any other benefits the sponsor can provide to your company.

What’s the difference between the EM and the TM?
EM stands for experience modifier and is the term usually used in the insurance industry. TM stands for total modified and was the term used by the Ohio BWC before it began to more closely mimic the insurance industry. The EM is a whole number, and employers with a good claims experience have an EM of 100 or less. The TM is a percentage where a negative number means that your company has a good claims experience. An EM of 75 is the same as a TM of –25. Group rating quotes use the TM because it’s easier to understand that projected savings of -75 are better than projected savings of -57. You might not recognize that an EM of 34 is better than an EM of 65.

When do I see the savings?
The group rating premium rates are in effect from July 1 through June 30 of the following year. This is called the policy year. For example, the policy year starts July 1, 2008. In February 2009, you pay premiums based on your payroll from July 1 through December 31, 2008. In August 2009, you pay premiums based on your six months of payroll from January 1 through June 30, 2008. By then, the July 1, 2009 to June 30, 2010 policy year has started, with new premium rates.