What’s the difference between a state-funded employer and a self-insured employer?
by Jacob Brandt | Oct 19, 2020 | General Information
The legislature for the state of Ohio has determined that in order to conduct business in this state, employers must provide benefits to their injured employees. Essentially, employers must provide insurance to their employees for injuries suffered as a result of a workplace accident or occupational disease injury. The Ohio Legislature has allowed employers to choose between two insurance options to cover workers’ compensation claims. Employers can choose to either be state-funded or self-insured for workers’ compensation purposes.
State-funded employers are employers that pay premiums to a fund or pool administered by the Ohio Bureau of Workers’ Compensation out of which injured workers are compensated when they suffer a compensable injury as a result of a workplace accident or occupational disease. Treatment coverage, as with compensation, also comes from that fund or pool to which state-funded employers pay premiums. The greater number of claims that are attributable to a specific employer the higher they must pay in premiums. Therefore state-funded employers are incentivized to lower the number of employees injured at their place of employment by the prospect of keeping their premiums as low as possible.
Self-insured employers are obligated to directly bear the risk of loss associated with workers’ compensation claims. Self-insured employers are obligated to pay compensation and medical coverage directly out of their own pockets when one of their employees suffers a compensable workplace accident. Self-insured employers therefore are not obligated to pay premiums or contribute to the State of Ohio’s workers’ compensation fund but are rather personally liable for the costs associated with one of their employee’s injuries. Obviously, self-insured employers are incentivized to prevent workplace accidents as a means to limit their out-of-pocket expenses.
This may be of concern if you are working for a small employer. Keep in mind the Ohio Revised Code, Section 4123.35(B), prescribes standards for eligibility for employers that wish to operate under a self-insured plan. The Administrator of the Ohio Bureau of Workers’ Compensation has the ability to grant and revoke self-insurance status for employers. This means the Administrator may grant or revoke the employer’s ability to be considered “self-insured,” based on whether the employer “will abide by the rules” and based on “who may be of sufficient financial ability to render certain types of payments” to injured workers or the dependents of deceased employees, all of which are provided for in the Revised Code.
Should the self-insured employer fail to pay into the insurance fund the employer is tasked with maintaining, the injured worker is never left high and dry. Should your self-insured employer fail to have the funds for payments, or if the employer goes out of business or declares bankruptcy, for example, the injured worker will continue to seek any benefits he or she may be entitled to. The difference is the funds and medical coverage will then be covered by the State Surplus Fund. The surplus fund provides a safety reserve in which benefits are payable from.
Remember, both state-funded and self-insured employers are obligated to ensure that their employees are covered following a compensable workplace accident or occupational disease. Regardless of whether your employer is state-funded or self-insured, if you suffer an injury as a result of a workplace accident, or develop an occupational disease, you should seek coverage through the Ohio Workers’ Compensation system. If you are contemplating filing a workers’ compensation claim do not hesitate to contact the workers’ compensation attorneys in Columbus and six local location at The Bainbridge Firm for assistance seeking those benefits. We can provide you all the assistance you need in order to prove your claim.