Even if you have one employee working for your small business, Ohio requires you to obtain workers compensation insurance. The only companies exempt from this rule are workers in your home (such as babysitters or housecleaners) who earn less than $160 per calendar quarter.
Ohio Bureau of Workers Compensation (BWC)
Ohio is one of four states where workers compensation insurance is provided through the state rather than through private insurance companies (the other ones are Wyoming, Washington, and North Dakota). These are called monopolistic states because they require businesses to purchase workers compensation insurance through them—there is no other option (other than self-insurance).
Some states offer state-funded workers compensation insurance, but you are free to seek out your own insurance if you prefer not to work with the state fund. The state fund is just one of many options. This is not the case in Ohio.
You can apply for workers compensation insurance in Ohio by completing the U-3 application and submitting your $120 application fee.
Large companies based in Ohio do have the option to self-insure. This means that employers would pay the workers medical costs and lost wages through their own coffers. It’s not recommended for small businesses, as a severe injury could easily bankrupt them.
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How small businesses can qualify for workers comp self-insurance in Ohio
To qualify for self-insurance, you’ll have to meet these requirements:
- Have two years’ experience with the Ohio State Insurance Fund
- Demonstrate strong financial ability (solvent enough to pay workers compensation claims out-of-pocket)
- Possess the ability to administer a self-insurance program
- Maintain an account with a financial institution in Ohio
- Have a BWC-certified Qualified Health Plan
Ohio wants to make sure that if you choose to self-insure, you can pay your workers’ medical bills and lost wages yourself.
Penalties for not having Workers Compensation Insurance in Ohio
Employees can make their own claim to the BWC if they feel they were injured or became sick at work. If one of your employees files a claim and you don’t have coverage, you will need to reimburse the BWC for all the money they pay the employee. In addition, the employee can sue you for damages and all expenses they incur due to the injury (rehab, retraining, etc).
If you fail to make payments to reimburse the BWC, they can charge you penalties of up to 15% more than the premium you would have paid. You can also incur penalies for failing to file payroll reports with the BWC.
How much does workers compensation insurance cost in Ohio?
The average rates for workers compensation in Ohio are $0.64 per $100 in payroll. There are some other factors that will affect how much Ohio will charge you for this insurance, such as:
- Location
- Number of employees
- Risk factor in your industry
- Coverage limits
- Claims history
- Payroll
The BWC will look at these factors and then charge you a rate for workers compensation insurance. Other than self-insurance, there is no other option to obtain workers compensation insurance in Ohio.
Each job is given a code according to the NCCI classification system. This is to account for the fact that some jobs are exposed to more risks than others. A locksmith is a very low risk occupation, whereas a roofer pays a much higher rate according to the code.
The rate for workers compensation insurance is always:
Payroll per $100 x classification code rate x experience modification rating.
The BWC does offer some discounts, such as for safe workplaces, drug-free workplaces and for employers willing to pay a deductible.
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What does workers compensation insurance cover in Ohio?
If you are injured on the job in Ohio, you are entitled to certain benefits:
- Medical benefits
- Temporary disability benefits
- Permanent disability benefits if the injury is permanent
- Change of occupation awards
- Death benefits
Workers compensation in Ohio is no-fault insurance, which means that it doesn’t matter how the injury happened—employees still get benefits.
Employer’s Liability Insurance in Ohio
Usually, when an employer purchases workers compensation insurance through a private insurance company, employer’s liability insurance is included. Employer’s liability insurance protects the employer when an employee sues if they believe you were responsible for their injury or illness. However, when you purchase workers compensation insurance through a state fund, employer’s liability insurance is not included.
Employers can seek out their own employer’s liability insurance through a private insurance company. You can often add it to a general liability insurance policy, which you should have anyway. Sometimes this is called stop-gap coverage.
Last Thoughts
If you own a business in Ohio, your options are to get workers compensation insurance through the state fund or to self-insure. Or you could just not have any employees or move out of Ohio. If you want to do business in Ohio, you will have to go through the state fund.
