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OhioBWC - Basics: How is the premium figured for my Business?
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How is the premium figured for my business?
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Private employers are required to pay workers’ compensation premiums
into the State Insurance Fund. Employers calculate their own premium on
a payroll report that BWC sends out twice yearly. The employer is instructed
to report the payroll for the previous six-month period separating the
payroll according to the different manual classifications. (Manual classifications
are assigned to each employer based on the job duties reported on the
initial coverage application) The payroll report comes to the employer
with the manual classifications and the rates already entered. The employer
enters the actual payroll for each manual classification, multiplies by
the rate assigned to that manual classification, then adds the totals
for each and this figure is the premium amount due to BWC.
Reporting payroll
To maintain workers compensation coverage, state-fund employers are required to
submit a payroll report along with their premium payment to BWC twice yearly. In
defining payroll, BWC generally follows the guidelines of the Ohio Department of
Job and Family Services and Federal Unemployment Tax Authority (FUTA).
The following items are considered payroll and should be included on the payroll
report:
- Gross hourly wages and gross salaries less qualifying deductions for section
125 cafeteria plan benefits;
- Sick pay (including third party, excluding workers’ compensation);
- Bonus payments including stock given as a bonus;
- All sales commissions;
- All tips;
- Severance pay;
- Overtime pay;
- All stock gifts;
- Profit sharing going directly to employees as payroll;
- Any voluntary employee contributions to retirement plans, including
401K;
- Any portion of cafeteria plans as reportable to FUTA, such as cash
options and unqualified benefits;
- Reasonable value of board, lodging, house or room rent unless provided
for the convenience of the employer;
- Per diems and traveling expense is reportable if this amount exceeds
one-third of the employee’s total remuneration. Total remuneration
includes both the regular wages and per diems and traveling expense.
The amount of per diem and/or traveling expense that exceeds one-third
of the total remuneration is reportable;
- Contributions to deferred compensation by employees (except for
government employees);
- Expenses exceeding one-third of an employee’s normal pay;
- Personal use of a company car.
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