On June 27, 2008, the Ohio Bureau of Workers’ Compensation (BWC) Board of Directors unanimously approved the first phase of a long-term plan that will transition to a new split experience rating method for calculating premium rates that is designed to cushion the premium blow that state-funded employers frequently receive as the result of a single costly workers’ compensation claim. In addition, the plan will:

— Gradually reduce the maximum group rating discount from 85 to 77%beginning July 1, 2009, with a 20% annual cap on premium rate increases caused by these discount reductions;

— Cap premium increases at 100% for all employers, including those that have been removed from a group; and

— Develop additional inducements for employers to manage costs and improve workplace safety.

According to the BWC’s press release, the long-term plan proposes a gradual transition to the new experience rating method over three years. The first phase of the plan was approved with further study on the group rating rules and governance to be complete by 2009. Other aspects of the long-term plan, such as an additional discount reduction in 2010 and the rating transition in 2011 will be addressed after further testing and impact analysis are complete.

The plan looks to be a step in the right direction for Ohio’s state-funded employers. At a minimum, the BWC expects that the changes ultimately will reduce base rates by 23 to 27%. Though it continues the recent reductions in the discounts associated with the group rating program, the plan should make it more difficult for employers to be removed from a group and, for those that are removed, less costly.