At its January 2009 Board of Directors meeting, the Bureau of Workers’ Compensation announced that it was in the process of modifying the criteria for its group rating programs. In previous years, group rating plans had to be submitted to the Bureau on or before the close of business on February 28. Because of the proposed modifications, the Bureau of Workers’ Compensation announced an extension of the deadline for sponsors to file group rating plans until April 24, 2009. The Bureau also announced it was addressing the Drug-Free Workplace Program, which creates discounts for participants.

Group Rating Changes

On March 20, 2009, the Board of Directors announced its changes to the criteria for group rating. The complex changes include a reduction in the cost savings for group rating plans and a reduction in the base rate for non-group rating plans. According to the Bureau, these changes were made to level the playing field between group and non-group rating plans in terms of premiums charged.

The Bureau’s changes have caused third party administrators and group rating plan sponsors to modify their review of employers for group rating purposes. Under the new criteria, in many cases employers who previously benefited from being in group would lose money if they remained in group rating. As a result, the total enrollment of employers in the group rating program has decreased by approximately 16,000 members compared to the number of employers in the program for the rating year beginning July 1, 2008.

Eligibility Changes for Drug-Free Workplace Program

The Bureau’s Board of Directors also eliminated the ability of employers who participate in group rating to receive any drug-free workplace discount. Employers who are non-group rated can qualify for up to a 20 percent premium discount depending on which level of the Drug-Free Workplace Program (DFWP) they choose to implement. The DFWP discount is available for a maximum of five years, and if for any reason an employer withdraws from the program, no future discounts are available upon reapplication. With the Bureau’s recent change, group rated employers are no longer able to take advantage of the premium discount associated with this program.

With the discount taken away, group rated employers may be tempted to discontinue their DFWPs. However, if they are involved with state construction contracts, these employers need to think twice. Pursuant to an Executive Order handed down by Governor Taft several years ago, all employers who do state contract work must maintain a DFWP. Thus, state construction contractors with group rating plans must have a DFWP, even though they are no longer entitled to the discount for doing so. In addition to group rated employers being ineligible for DFWP discounts, the Bureau announced the ineligibility of such employers for safety council participation discounts.

The Bureau of Workers’ Compensation continues to consider further modifications to the group rating program and most likely will continue to cut discount programs such as the Drug-Free Workplace Program. We will continue to monitor the Bureau’s actions in these areas.