Few responsibilities are as critical—or as complex—for Ohio manufacturers as workers’ compensation when it comes to protecting your workforce and managing risk. This mandatory coverage ensures that employees who are injured or become ill on the job receive the medical care and wage replacement that they need. It also protects employers from costly litigation.
Ohio operates a unique workers’ compensation system that gives manufacturers two main options: getting coverage through the Ohio Bureau of Workers’ Compensation (BWC), which is state funded, or being self insured. The latter is when a company assumes direct financial responsibility for its own claims. Both offer distinct benefits and challenges. Choosing the right model depends on your organization’s size, financial health, administrative capacity, and risk management strategy.
In this article, we break down the key differences between state-funded and self-insured workers’ compensation models to help you determine the best approach for your manufacturing business.
For most Ohio employers, the state-funded workers’ compensation system is the default option. It’s administered by the Ohio BWC, which manages claims, collects premiums, and oversees workplace injuries and illnesses across the state.
Definition and Overview
In the state-funded model, employers pay premiums into a pooled insurance fund managed by the BWC. These premiums cover the cost of benefits for injured workers, including medical treatment, wage replacement, rehabilitation services, and death benefits when applicable.
The BWC assumes the role of insurer, handling all claim investigations, benefit payments, and dispute resolutions. This centralized structure provides standardized processes across industries and employer types.
Premiums and Cost Structure
Premiums in the state fund are based on several factors, including:
State-funded employers may also qualify for programs that reduce premium costs, such as group-experience rating, group-retrospective rating, and safety incentive programs.
Claims Management and Coverage
A significant feature of the state-funded model is that the BWC manages all claims administration. This includes:
Employers have less control over how claims are handled but benefit from the structure and consistency provided by the BWC.
Advantages of the State-Funded Model
Challenges of the State-Funded Model
For certain manufacturing companies—especially those with robust finances and well-established safety protocols—self-insurance may offer a more strategic and cost-effective alternative to the state-funded model.
Definition and Requirements
Under Ohio law, qualified employers may apply to become self insured. This means they take on the direct financial responsibility of paying workers’ compensation claims. To be approved, companies must:
To be sure, the self-insured route is not for every manufacturer. It is a highly regulated path designed for businesses with the resources and commitment to independently manage the entire workers’ compensation process.
Cost-Savings Potential
A top incentive for self-insuring is the potential for significant cost savings. Instead of paying into the state fund annually, self-insured employers:
When managed effectively, self-insurance can lead to lower overall costs, especially for manufacturers with a strong safety culture and low claims frequency.
Risk and Liability Management
With greater financial control comes increased responsibility. Self-insured employers must be prepared to:
This model exposes the employer to greater financial risk, particularly in cases involving severe or complex injuries. To minimize liability, a proactive approach to risk mitigation and workplace safety is also required.
Administrative Responsibilities
Self-insuring requires significant operational infrastructure, including:
While demanding, these responsibilities offer an opportunity for manufacturers to take full control of how claims are handled, often leading to faster resolutions, better employee outcomes, and cost containment.
Pros and Cons of Self-Insurance
Pros:
Cons:
Choosing between state-funded and self-insured workers’ compensation isn’t just a financial decision—it’s a strategic one. Manufacturing companies must consider their financial stability, risk tolerance, claims history, and internal capacity to manage complex processes in order to make the most informed and optimal choice determination.
The good news is that when it comes to workers’ compensation in Ohio, manufacturers are not limited to a one-size-fits-all solution. The state-funded model offers a predictable, lower-risk approach with the support of the Ohio BWC, making it ideal for small companies or those with limited administrative resources. Self-insurance presents a compelling opportunity for financially secure manufacturers to reduce long-term costs and take full control of their claims process; it just comes with added responsibility and risk.
Making the right choice may seem daunting, but as a manufacturer, you don’t have to do it alone. Whether you're exploring self-insurance, looking to optimize your current claims management, or simply seeking clarity on your best options, you can access various resources.
Managing workers' compensation claims in Ohio shouldn’t be a headache. Partner with CSI to take the hassle out of claims, lower costs, and stay compliant with Ohio BWC regulations. Focus on your business and employees, and let our seasoned experts guide you through the complexities of workers' comp. Contact us today to streamline the process and experience stress-free claims management!