News and Updates
Category: MIRA
Group Retro Updates: 2018, 2019 & 2020
We promised to keep you informed on the status of 2018 and 2019 policy year refunds from BWC’s Group Retro program. As it stands, no employers enrolled during those years will be receiving any refunds. Typically, in the fall of 2021 Group Retro participants should be receiving your first refund from the 2019 policy year and your second refund from the 2018 year. It’s important to understand that if these refunds are normally included in your budgeting process for the coming year, you should not factor that in. For more info on why BWC chose not to release these funds, and what Spooner is doing to help Ohio employers, check out our June blog entry on these missing Group Retro Refunds. If your company was enrolled in Group Retro for the 2020 year, your first refund will be paid out in the fall of 2022. Since the 2020 policy year recently ended, we also have an updated outlook on those returns. Out of the 45 total Private Employer Group Retro pools in Ohio, data from BWC shows that 31 of them will have an assessment for their first year (due in fall 2022). This means that companies in that pool will be billed by BWC for a portion of 2020 premiums instead of receiving a refund. This is largely due to BWC moving to a system called ACES to determine reserves on claims as of July 1, 2020. We believe BWC is open to discussing changes to some of the variables used to calculate refunds in response to the impact ACES is having on 2020 Group Retro
Changes in Reserve Calculations
Effective July 1, 2020, Ohio BWC implemented a new reserve system called ACES. Based on a large sampling of claims, we’ve found that this system can drastically increase reserves for future claims costs - which will then impact premiums and Group Retro performance. A reserve is a dollar amount placed on every claim, in which the insurer (BWC) “reserves” assumed future costs within the claim. The concept of a reserve is considered standard practice in workers’ compensation insurance, even for self-insured employers. Once a reserve is set, it will not leave the claim until the claimant has ceased medical treatment for at least six (6) months. The only other way to eliminate a reserve is through the process of a settlement. If a claim has a reserve when Ohio BWC’s September “snapshot” is taken - those reserves will be treated as dollars already spent on the claim, impacting premiums for the coming policy year. Lost time claims will see the largest impact, as medical reserves for 2019 were roughly four (4) times paid compensation and are now 19 times paid compensation. This does not necessarily mean your company should consider salary continuation to soften the blow, as all claims have reserves. That should be discussed with your TPA on a case-by-case basis and not used as a remedy to avoid a lost-time claim with BWC. We are expecting these changes to have an impact on Group Retro refunds for the 2020 policy year a
