Ohio Chamber Testifies on Two Problematic Workers’ Compensation Bills

Last week, the Ohio Chamber testified in opposition to a pair of bills dealing with workers’ compensation that would be problematic for Ohio’s employers and potentially increase costs. House Bill 268 undermines a key tenant of Ohio workers’ compensation self-insurance (SI) by allowing employers that the Bureau of Workers’ Compensation (BWC) has determined not to have the financial wherewithal to self-insure to self-insure. Without going through every aspect of the bill, it would generally require the BWC Administrator to waive the financial requirement that an applicant for SI status have sufficient assets in the state to cover its SI responsibilities if the company has a Moody’s credit rating of Ba2, which is less than investment grade. It would then pool these companies together into a Guaranty B Fund and require that all employers in that B Fund grouping to cover each other’s liabilities in the event of a default.

However, simply requiring that the Administrator waive the financial requirement based on a credit rating does not provide the level of certainty necessary for such a change. Too many questions exist as to what this would do to self-insurance in Ohio, to the State Fund, and to our workers’ compensation system. What happens if the Guaranty B Fund collapses? Are all other employers and State Fund on the hook? Any change to Ohio’s workers’ compensation system of this magnitude cannot be done in a silo and must be examined for its overall impact on employers and the system.

The second bill, House Bill 269, would arbitrarily create new death benefits, in addition to current death benefits, that have absolutely no ties to the employee’s earning capacity or work. This would be a fundamental departure from current law and would increase costs for employers. No testimony has been provided showing why the additional $35,000 death benefit is necessary or why this number was chosen.

The bill also increases costs for employers by instituting a scholarship in death claims of $5,000 per year for up to four years per dependent. This could increase costs by $20,000 per dependent. Once again, this provision has no tie to an employee’s earning capacity and significantly increases costs without a justification as to why this is needed. The BWC did an actuarial study on pieces of this bill and found that these two changes would result in a $3.9 million increase in premiums to employers annually.

Leave a Reply

Your email address will not be published. Required fields are marked *