Elizabeth Witmer, who has held the position of WSIB chair for over a year now, recently reported that the WSIB has made significant progress in the quality of service it provides to Ontario workers and employers. Looking back four years earlier, the future and sustainability of the WSIB system seemed bleak as finances continued to worsen and the unfunded liability reached unbelievable levels—2012 the number was reported to be upwards of 13 billion. Something needed to change. Witmer exclaims that the WSIB has now begun to pull away from that “tipping point” and focusing on the “longer-term viability of workers’ compensation in Ontario.” (Source: WSIB: Toward North America’s best workers’ compensation system)
So what progress has been made exactly? According to Witmer:
- Premiums are now covering costs, eliminating the need to borrow from Investment Fund to maintain benefits
- Unfunded liability has fallen by one billion dollars since last year
- On track to achieve the legislated target of 60 percent funding by 2017
- Able to freeze employer premium rates for 2014
The hard reality for employers
Witmer paints quite the happy picture in her message—but the bigger picture, especially where employers are concerned, leaves much to be desired. How has the WSIB been able to improve their financial situation? What has taken place in order for other costs to be reduced? The truth is, employers have been hit quite hard as a result of this “progress”.
Here are some of the most prominent changes that have occurred as a result:
- Reserve factor table
- Reduced expected costs
- Addition of a fourth year for the NEER window
- Difficulty in obtaining SIEF cost relief for claim costs
1. Reserve factor table changes
As some of you may already be aware, the WSIB announced changes to the NEER reserve factor tables in August 2013, resulting in increases in projected future costs and overall limited claim costs. Because of these increases, many employers received quite the unpleasant surprise when they saw their September 2013 NEER statement results.
This change had a significant impact on surcharge and rebate numbers on the September statement. For employers that reviewed their 2013 NEER statements in June and forecasted for September 2013, some have seen their estimated rebate cut in half or have even moved from a rebate to a surcharge position. Depending on the size of the company and the number of claims they have, the cost for the employer can range from $5000—$400,000 or more.
Interestingly enough, for the first time ever, the WSIB noted on page 2 of the September 2013 NEER statement that the reserve factors are preliminary and subject to change again. This, in essence, is giving the WSIB room to change the reserve factors at any given time. In the past, the reserve factor tables were never changed past March in the current review year. With this significant change to continue to update reserve factors as late as August, employers must closely monitor the WSIB website as these changes are likely to result in increased costs for the employer.
2. Reduced expected costs
In addition to changing the reserve factors in August, the WSIB also reduced expected costs (See NEER user guide p.5). An employer’s refund or surcharge is determine based on a proportion of the difference between their NEER costs and expected costs. Because expected costs have been reduced, more and more employers are finding themselves in a surcharge position or are receiving less of a rebate than they would have otherwise.
3. NEER window
The WSIB has also extended the NEER review window to four years, starting with the 2008 accident year. Instead of a claim’s cost impacting employers for three years, it now impacts them for four—resulting in increased costs.
4. Difficulty obtaining SIEF cost relief
Under WSIB Policy 14-05-03, if a prior disability caused or contributed to the worker’s injury, or if the recovery period becomes prolonged or enhanced due to a pre-existing condition, all or part of the compensation and health care costs may be transferred from the employer’s experience rating or NEER statement to the Second Injury and Enhancement Fund (SIEF).
In the past, the WSIB case manager was more likely to grant cost relief in situations where it was requested. Now however, the WSIB has a specialized SIEF team in place who scrutinize each request and are much more reluctant to allow SIEF on claims. In order to obtain cost relief, we see the WSIB more and more relying on the employer to provide the WSIB with objective medical documentation to support that the pre-existing condition is directly linked to the prolonged recovery. In the past, the pre-existing condition in itself combined with an obviously prolonged recovery would have been enough to warrant cost relief.
Behind the progress
The truth is, as positive as Witmer’s comments about the WSIB’s financial progress reads on paper, many employers have been suffering financial consequences as a result. It is now significantly more difficult for employers to be successful in reducing their WSIB costs through NEER forecasting and acquiring SIEF cost relief—even when they appear to be doing everything right.
Clear Path Employer Services
HR Consultants and Disability Management Experts
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