Ohio BWC eliminates seamless coverage

Written on Sep 01, 2017

The Ohio Bureau of Workers’ Compensation (BWC) has announced a change in processing new business applications associated with a purchase, acquisitions, or mergers (successorship/combines). Effective, Sept. 1, 2017, the BWC-Underwriting Department will no longer utilize the "Seamless Coverage" process.

Seamless Coverage is not included in rule or statute. It is a process created by the BWC Underwriting Department that involves changing the original effective date of the successor policy to match the date of the purchase/sale or merger acquisition. By creating a "seamless" transition from predecessor to successor, this allowed for the succeeding employer to benefit from the predecessors Group Rated participation on the outset of coverage, thus eliminating the successor to have to wait for the next policy years group eligibility period.

An example of a Seamless Coverage scenario: Company B purchases the entire business of Company A, with an effective date of purchase of Jan. 1, 2017. Company B, being a new company, establishes a new policy, however the application is submitted after the purchase date, on Feb. 1. The Underwriting Department may grant seamless coverage by changing the effective date of the new application to Jan. 1, 2017 to allow the successor employer (Company B) immediate eligibility in group rating based on the predecessor’s participation in group. By changing the effective date of the new policy, the Underwriting Department must cancel the newly established policy and issue another policy with a revised effective date of Jan. 1, 2017, referred to as a Cancel-Rewrite.

Effective Nov. 14, 2016, BWC converted to new Claim and Employer operating system called Power Suite. This new system has resulted in a need to review many of the BWC’s current work processes. Historically, when the original effective date of coverage was modified under the previous system (WCIS), those changes were relatively transparent to the customer. Employers maintained their existing policy and were able to continue reporting payroll and paying premiums using the originally issued policy. However under the new system, when the policy original effective date requires a change, the policy undergoes a rewrite function where the employer is then issued a new policy. This new Cancel-Rewrite process is not only labor intensive for BWC staff, but it also causes confusion for the employer with the issuance of multiple policies numbers.

In review of the successorship process, it was determined that that seamless coverage was not needed since its primary purpose was to address the group rating participation for the successor policy. It was determined that the BWC can achieve the same goal to address this group eligibility without the Cancel-Rewrite function, which caused confusion on the part of the employer. Starting Sept. 1, 2017, the decision to allow the successor policy group rating will be handled in the Employer Programs-Group Rating Unit. The Unit will receive a report that reflects all combinations processed and will use that report to determine group eligibility for the successor employer. The succeeding employer must have submitted their application for coverage within 90 days of the purchase/sale or merger acquisition and the Predecessor's coverage status must have been active/reinstated at the time of the transfer/purchase. The BWC stresses that employers will not be negatively impacted regarding the group rating eligibility issue. The same criteria will be used; the process simply eliminates the canceling of the previous successor policy and issuing a new policy with a revised effective date. The BWC Underwriting Department has partnered with the Employer Programs Unit to ensure a smooth transition.

In addition, the process involving appeals for an Earlier Original Effective Date will be unchanged. If for some reason the employer wishes an earlier effective date for their policy, even if it does not involve a successorship transaction, the protest will be handled in the same manner as in the past through the appeals process. If the earlier effective date is granted, the Underwriting Department will use the Cancel-Rewrite function to cancel the existing policy and issue a new policy (and new policy number) with the revised original effective date.

Questions regarding the process change should be directed to Rex Blateri, Director of Underwriting & Premium Audit, at Rex.B.1@Ohio.gov.

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