Each state runs its workers’ compensation board differently. Ohio uses a premium payment estimate system to help employers track their workers’ compensation contributions. In cases where estimates are higher or lower than the total amount due, a true-up report reconciles the difference.
Here’s what Ohio employers need to know about true-up reporting and how Mosey can help you stay on track with corporate compliance.
What Does True-Up Mean in Payroll?
Ohio workers’ compensation calculates employer premiums based on payroll estimates. Employers make the required payment based on the previous year’s payroll estimates.
However, things don’t always stay the same. You may spend more or less on payroll than you did the year prior. Your true-up report is the reconciliation between your estimate and your actual annual payroll.
It isn’t uncommon to make underpayments or overpayments based on your estimate. Your true-up report shows how much you still owe or how much you’re overpaid.
The workers’ compensation board uses true-up reports to adjust their estimates. The data they collect and review over time allows them to predict industry trends and estimate premiums more accurately. Consequently, your estimates for next year may differ from those of previous years, even if your payroll situation doesn’t change.
When Is the True-Up Reporting Period?
There are two true-up reporting periods — one for public employers and one for private employers:
- Public Employers: True-up reporting begins Jan. 1. The filing deadline is Feb. 15.
- Private Employers: True-up reporting begins July 1. The filing deadline is Aug. 15.
Public employers refer to government-affiliated organizations or government employees. Private employers refer to any business run by an individual or group without a government or federal association.
If your estimated payments were lower than your actual premium, you must remit the remainder by the deadline. If you’ve overpaid, you will not be issued a refund. Instead, your excess payments are carried into the next year as a form of premium credit. You’ll simply pay less next time if your payroll stays the same.
Does Every Employer Need To File a True-Up Report?
Beginning in July of 2023, Ohio workers’ compensation will selectively waive true-up reporting for employers with no employees and zero payrolls. The workers’ compensation board will complete and submit a true-up report on your behalf showing zero liability for premium payments. You will not owe any payments, and your true-up obligation will be fulfilled.
The workers’ compensation board will review and adjust waiver criteria each year. It’s best not to assume you’re eligible for a waiver or that you’ll receive another waiver if selected in a previous year.
The workers’ compensation board will formally notify every eligible employer that they do not need to complete a report. Unless and until you receive a notification from the board, it’s best to assume you will need to file.
If you receive a notice that you were granted a waiver but hire an employee and have payroll to report after receiving it, consider the waiver rescinded. You’ll still need to report your new hire and make workers’ compensation contributions for that employee.
How Do You Complete a True-Up Report?
True-up reports must be completed online through your employer OHID account. The workers’ compensation board is in the process of phasing out other filing methods. They currently do not accept paper forms and do not intend to do so in the future.
The workers’ compensation board may also be able to assist you with reporting over the phone, but due to long wait times and limited manpower, they ask that you do not utilize this method unless it’s absolutely necessary.
The board will also generate estimated annual premiums (EAPs) for new employers based on their own annual payroll estimates. The board uses data from previous years to generate estimates for existing employers. Estimates should become more accurate each year.
The reporting process is simple. Upload your payroll information to compare it against your premium payments. Then, make a new payment if you owe a balance. If you overpaid, you don’t need to do anything. The board will retain your overpayment to apply to your balance the following year, and no action is required on your part.
What Are The Penalties for True-Up Noncompliance?
If your business doesn’t comply with true-up reporting requirements, you may lose rebates or incentives from previous years. You’ll be removed from the current year’s programs and may be ineligible to participate in programs for future years until you’ve satisfied your prior true-up reporting and payment obligations.
By extension, true-up noncompliance can also lead to workers’ compensation noncompliance. Part of your true-up obligation is to make premium payments for your workers’ compensation. If you don’t make your premium payments, the consequences for your business may be severe.
You’ll be responsible for every eligible employee’s medical expenses at a dollar-for-dollar rate. These hefty medical bills also include fines and penalty percentages for unpaid premiums. Failing to pay workers’ compensation can rapidly bankrupt a business. In some cases, non-compliant employers can be criminally charged with theft or fraud.
How To Stay Compliant With True-Up Reporting
True-up compliance doesn’t need to involve a wealth of steps. If you’re remaining compliant with payroll laws and paying workers’ compensation premiums, complying with the true-up system should be fairly simple.
Keep Accurate Records
Financial record-keeping is essential for businesses of all sizes. You’ll need accurate payroll information to report to the workers’ compensation board, as your total payroll is used to calculate your premiums.
You’ll also need accurate records of your workers’ compensation contributions. The board will keep its own records, but it’s wise to keep some for yourself in case of discrepancies or errors.
Pay Your Premiums on Time
Reliably making workers’ compensation contributions in full can prevent you from encountering penalties for failing to comply with the law. Estimated premiums exist to keep you compliant with the program. Even if your true-up report determines that you’ve been underpaid, you aren’t in trouble if you’ve reliably made your estimated payments on time.
File in a Timely Manner
The most important part of true-up compliance is abiding by the filing deadline and paying any remaining balance when it’s due. Filing late or leaving your remaining balance unpaid can lead to penalties from workers’ compensation, which may affect your ability to operate your business legally.
Stay Compliant With Mosey
Every state has its own unique business compliance requirements. If you run a business in the state of Ohio, Mosey can make state compliance as easy as possible.
Our compliance management platform helps you keep track of important state-specific requirements and deadlines so you never miss a beat. Schedule a demo with Mosey to learn how we make staying compliant simple.
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