Wednesday, May 11, 2011

       Senate Working to Protect Small Businesses From Increases to Their BWC Premiums So They Can Keep and Create Jobs

As someone who comes from a family of small business owners, I understand the importance of making sure Ohio creates an atmosphere that is conducive to business development. Small businesses are the backbone of our economy, but issues such as increased taxes and government regulation are making it more and more difficult for them to support a robust workforce.

The decision to “freeze” the income tax cut all Ohioans were promised in 2005 means that come tax time, refunds will be smaller or in some cases, people will have to write bigger checks than they anticipated. With many small business owners paying their taxes via the income tax, this move could not come at a worse time. Additionally, the recently-passed health care legislation places new mandates and costs on businesses. Now many of these companies are about to be hit again with increased premiums from the Bureau of Workers’ Compensation – a move that will further drive up the cost of doing business here in Ohio.
Map of USA with Ohio highlighted 
Currently, the BWC is working to ensure long-term financial stability of the state’s injured workers’ fund, in part by addressing the disparity in premium rates paid by different Ohio businesses. For many years, certain group-rated companies have enjoyed substantial discounts on their premiums. The BWC is planning to reduce these discounts beginning July 1 – in addition to previously-approved discount reductions and added surcharges since 2005 – meaning many employers will see their premiums increase. Given the current economic challenges facing businesses throughout Ohio, increasing workers’ compensation premiums now would only place an additional burden on already-struggling employers.

To help reduce the financial strain this move would place on Ohio’s small businesses, the Senate passed Senate Bill 213 earlier this year. The bill would freeze maximum premium discounts at the level they will be on July 1 for two years and require the BWC to conduct a thorough study of the premium rating system. This would give the BWC time to develop a plan for determining workers’ compensation rates that are fair to all Ohio companies, regardless of size. 

It is estimated that the BWC currently has surplus of roughly $4 billion. SB 213 could save small businesses approximately $130 million over two years – money these companies could use during these difficult times to reinvest in their business and create new jobs. Senate Bill 213 is currently in the House Insurance Committee, and I am hopeful that members of the House will join us in addressing rising workers’ compensation premiums and their effects on small businesses.

In addition, the Senate is also examining possible changes to how Ohio’s workers’ compensation system is administered. Ohio is one of only a few states to have an entirely state-run workers’ compensation system, and now is the time to see if there are alternatives to our current approach that would benefit employers and businesses while still protecting injured workers. That is why we passed Senate Resolution 118, which established the Competitive Workers’ Compensation Task Force. The group is tasked with studying alternatives, including market place competition, with respect to the worker’s compensation system in Ohio.

Members of the task force represent employees, employers, insurance companies, managed care organizations, third-party administrators, local governments, business owners, lawyers and legislators. The group will evaluate the workers’ compensation insurance options currently offered by the BWC to determine if they are competitive with those available in other states. They will also look at the efforts made by other states to open their workers’ compensation markets to private competition. The group must submit a report detailing their findings to the Governor and legislative leaders by December 15.

One of the top complaints legislators hear from business owners is how rising BWC rates are impacting their ability to compete and create new jobs. A rise in premium rates also makes it more difficult to attract new businesses and jobs to our state, as the workers’ compensation system is one of many factors companies use in deciding where to locate and expand. By studying options to our current workers’ compensation system, we can determine if any changes are needed in order to ensure businesses continue to see Ohio as an excellent place for relocation and expansion.

The BWC has taken numerous steps in recent years to change its operations and the way it determines premiums; however, there remains much work to do to ensure the system is working with small businesses and not against them. SB 213 and SR 118 will help determine the best course of action to keep employers’ premiums affordable while continuing to protect injured workers.

Please do not hesitate to contact my office if you have questions or concerns about any state-related matter. You can reach my office by phone at (614) 466-9737, by e-mail at or by writing State Senator Shannon Jones, Ohio Statehouse, 1 Capitol Square, Columbus, OH 43215. I look forward to hearing from you.

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