How to Obtain Workers’ Compensation Insurance in Monopolistic States

If your business is headquartered or has employees in Ohio, Washington, North Dakota, or Wyoming, you cannot buy workers’ compensation (WC) from a private insurance carrier.
Instead, you must purchase coverage from the state-run “monopolistic” fund. Failing to do so can result in six-figure penalties, stop-work orders, and personal liability for medical bills.

This ultimate guide (≈ 2,900 words) explains step-by-step how to secure “state-fund” coverage, compares 2026 premium rates, and shares expert tactics to keep costs low.

Table of Contents

1. What Is a Monopolistic State?
2. 2026 Premium Snapshot & State-Fund Contact List
3. How to Get Coverage in Each State
   • Ohio
   • Washington
   • North Dakota
   • Wyoming
4. Cost Examples by Industry & Payroll Size
5. Frequently Asked Questions
6. Next Steps & Resources

What Is a Monopolistic State?

A monopolistic state prohibits private insurers from writing statutory workers’ compensation. Employers must buy coverage directly from the state fund:

• Ohio – Bureau of Workers’ Compensation (BWC)
• Washington – Department of Labor & Industries (L&I)
• North Dakota – Workforce Safety & Insurance (WSI)
• Wyoming – Department of Workforce Services (DWS)

(Sole proprietors may elect coverage, but corporate officers and employees must be insured.)

Because the state is the only insurer, rates, class codes, audits, and claims handling are all dictated by the fund—no shopping around for cheaper carriers.

2026 Premium Snapshot & State-Fund Contact List

*Average rates across all class codes; your individual premium depends on classification, experience modification, and participatory discounts.

How to Get Coverage in Each State

1. Ohio – Bureau of Workers’ Compensation (BWC)

Online enrollment: bwc.ohio.gov ➜ Employer ➜ Create an Account

1. Apply for a Policy Number
   • File “U-3 – Application for Ohio Workers’ Compensation Coverage.”
   • Pay the first semi-annual installment (generated automatically).
   • Receive your BWC “Certificate of Coverage” within 1–2 business days.

2. Choose a Managed Care Organization (MCO)
   • Required within 30 days of policy issue.
   • Leading options (no extra cost): Concentra, Optum, CareWorks.

3. Decide on Rating Programs
   • Group-Experience Rating can lower premiums up to 53 % (bwc.ohio.gov).
   • Other savings: Drug-Free Safety, Industry-Specific Safety, Deductible plans.

4. File Payroll Reports Twice a Year (Jan 31 & July 31).

Example cost: A Cleveland auto-repair shop with $500,000 payroll in class code 8393 (rate $1.11) and a 0.88 experience mod would pay:
$500,000 ÷ 100 × $1.11 × 0.88 ≈ $4,884 annually.

Deep-dive on the Buckeye State: Understanding Ohio's State-Funded Workers' Compensation Insurance System

2. Washington – Department of Labor & Industries (L&I)

Washington is the only state that bills WC by hours worked, not payroll.

Steps:

1. Create a “My L&I” account and file the “Business License Application.”
2. Classify workers by “Risk Class.” (E.g., 0513—Restaurant, 6704—Carpentry.)
3. Report hours & premiums each quarter on the “Quarterly Report of Hours.”
4. Split premium with employees (≈25 % worker share). Deduct the employee portion from each paycheck and remit the total.

2026 average increase is 4.9 %, translating to $1.37 more per week per full-time employee (content.govdelivery.com).

Example: A Seattle software firm (class 7101) with 10 full-time staff logging 20,800 hours/year at $0.15 per hour would owe $3,120.

3. North Dakota – Workforce Safety & Insurance (WSI)

Application: “WSI Application for Insurance” (fillable PDF or online).

Key points:

• Mandatory coverage for any employer with even one employee.
• Minimum premium: $250 per policy year, even with no payroll (workforcesafety.com).
• Payroll must be reported annually by Feb 28 (calendar-year basis).
• Discounts: 10 % credit if no claims > $250, Military Premium Credit ($250) for veteran-owned startups (workforcesafety.com).

Example: A Fargo retail store, class code 8039 at $0.85 per $100, with $750,000 payroll and zero claims would pay:
$750,000 ÷ 100 × $0.85 = $6,375 – 10 % = $5,738 (but never below $250).

4. Wyoming – Department of Workforce Services (DWS)

Where to start: “Wyoming Internet Filing System for Employers (WYIFS).”

Checklist:

1. Register for Unemployment Insurance – generates a UI number used by WC.
2. File Workers’ Compensation Employer Registration (Form WCSR-1).
3. Report wages quarterly (same portal as UI).
4. Pay premiums by the last day of the month following each quarter.

Base rates drop 15 % on Jan 1 2026—the third straight cut, saving employers ≈$66 M over three years (workcompwire.com).

Example: A Cheyenne trucking company, class 7219, 12 drivers, $1 M payroll at a 2026 base rate of $5.25 (post-cut), experience mod 0.92:
$1,000,000 ÷ 100 × $5.25 × 0.92 ≈ $48,300.

Cost Examples by Industry & Payroll Size

Rates sourced from 2024–2026 state schedules and Kickstand Insurance state index (kickstandinsurance.com).

Frequently Asked Questions

Q1. Can I use Pay-As-You-Go payroll vendors (e.g., Gusto, ADP) in monopolistic states?
Yes. Most payroll platforms can file wage reports and remit premiums for a service fee of $4–$8 per employee per month. They do not replace the state fund—they simply automate reporting.

Q2. Do I still need an experience modification (E-Mod)?
Absolutely. All four funds calculate an E-Mod once you have three full policy years. Good loss experience can cut premiums up to 45 %; poor experience can add 100 %+.

Q3. I have employees in both Ohio and Texas. Do I need two policies?
Yes. Buy Ohio coverage from BWC and a standard NCCI-filed policy for Texas. For multi-jurisdiction strategy read: Multi-State Employers: How to Navigate Conflicting Workers' Compensation Insurance Laws.

Q4. What if I refuse to buy state-fund insurance?
Penalties vary but include:

• Stop-work orders and penalties up to $10,000/day in Washington.
• 100 % premium back-charges plus 15 % penalty in Ohio.
• Potential felony charges for intentional non-compliance in North Dakota.
  See also: Penalties for Non-Compliance with Workers' Compensation Insurance in Illinois for a cautionary comparison.

Next Steps & Resources

1. Identify every state where your employees physically work.
2. Register with the appropriate state fund before the first pay date.
3. Calendar all premium and payroll-report deadlines (add 30-day reminders).
4. Leverage discounts (group-rating, safety, deductible) each renewal.
5. Benchmark your E-Mod annually; aim for < 1.00.

Key Takeaway

Monopolistic states may feel restrictive, but understanding each fund’s rules—then optimizing class codes, experience modifications, and discount programs—can slash premiums by 30–50 %.

Bookmark this guide and revisit it before every policy renewal to keep your WC costs competitive and compliant.