Ever found yourself scratching your head over the intricacies of workers’ compensation? You’re not alone.
Navigating the complexities of workers’ compensation can be challenging for many Ohio business owners, so we’ve created a guide to provide clarity on the topic of elective coverage, using a few real-world examples to illustrate.
What on earth is elective coverage?
First things first, if an employer has employees, workers’ compensation coverage is required. However, in Ohio, workers’ compensation coverage is optional (elective) if you are an owner in one of the following types of businesses: sole proprietor, partnership, LLC, family farm corporate officer, or sole-owner corporation. Elective coverage also applies if you are a minister in a religious organization.
So, how do you know if you need elective coverage as an owner of a company in Ohio? Let’s look at a few examples.
Example Scenario: The Hauling Company Owner
Consider this scenario: You own a hauling company in Ohio with a team of five employees. In addition to your managerial role, you’re also registered as an operator on the initial form you submit through the Bureau of Workers Compensation. As the policy year concludes, you receive a bill for workers’ compensation coverage, which includes charges for your own coverage.
The crux of the matter is understanding the implications of your choices. If you had been solely in a supervisory role, would the coverage have been necessary? Being proactive in understanding these nuances can save potential headaches down the line.
The Scenario of the Café Proprietor
Take another example: You are the sole proprietor of a cafe, and you manage a team of baristas and occasionally interact with customers. When completing your workers’ compensation form, you include yourself. A year later, you’re invoiced for your coverage. Upon reflection, you recognize that, given your primary managerial role, you might have opted out of personal coverage.
Strategic Considerations for Business Owners
As an owner, if you do elect to cover yourself, you can apply in the initial application. Or, you can also add coverage or opt out at a later date by using this form. If you have owners of the business you wish to add coverage for at a later date, you would use this same application.
It’s also important to know that once coverage is activated, any subsequent billing for the policy year is binding. While future adjustments can be made, retroactive changes are not permissible. To opt out, you need to notify the Bureau of Workers’ Compensation (BWC) by completing this form.
The Role of Your CPA in Decision-Making
Prior to finalizing any decisions regarding workers’ compensation, we advise consulting with your CPA. Their expertise can provide invaluable insights, ensuring that business owners make informed decisions tailored to their specific circumstances. For those contemplating the necessity of workers’ compensation coverage as an owner, a CPA can offer guidance based on a thorough understanding of the regulations.
The moral of the story? Knowledge is power. Being informed about filling out the initial paperwork with the BWC can prevent surprises down the road. And, knowing when and how to opt out of elective coverage ensures both compliance and optimal financial planning.
