Why is transaction sequencing important?
Transaction sequencing refers to the order that the transactions must be submitted. The Electronic Data Interchange (EDI) reporting process requires that all proof of coverage events be reported and processed in the order they occur. Failure to report events in the correct order creates sequencing errors, which may lead to rejected transactions. If the rejected transactions are not corrected and resubmitted in a timely manner, more rejected transactions may occur and untimely reporting may be subject to penalties.
An insurer did not report all covered employer locations for a policy, either at the inception of the policy or as locations were subsequently added to it. The insurer reports a change of information such as correction of the address for one of the employer locations that was not reported. With no record of that location to match against, the transaction will be rejected.
What is the difference between the filing date and the transaction effective date?
The filing date is when an electronic record is filed or delivered to the division and the division issues a Transaction Accepted acknowledgment. Rejected transactions are not considered filed. The division uses filing dates to regulate insurer timeliness of reporting. When a rejected transaction is corrected, resubmitted, and accepted by the division, the filing date is the date the corrected transaction is accepted, not the submission date of the original rejected transaction. Transactions acknowledged after the division has mistakenly rejected an original transaction retain the filing date of the original transaction.
Example of filing date:
An insurer must file an employer’s proof of coverage within 30 days from the effective date of the coverage to be timely. The EDI proof-of-coverage transaction is delivered on the 28th day. The transaction is rejected because of a missing Insured FEIN. The insurer corrects the error and the transaction is sent to the division on the 35th day and is accepted. The recognized filing date is the 35th day, and is considered late.
A transaction effective date establishes when the activity reported is effective, regardless of when it is actually reported. The effective date for binders and policy-establishing documents is the Policy Effective Date (DN0029) identified in the transaction. For all other transactions, the effective date is the Transaction Set Type Effective Date (DN0304).
Example of transaction effective date:
An insurer must file an employer’s proof of coverage within 30 days from the effective date of the coverage to be timely. The policy effective date is March 1. The EDI transaction is delivered and accepted on April 15, not within 30 days of the policy effective date and is considered late. Coverage would have to be filed and accepted by March 31 to be considered timely.
What is the division’s file processing schedule?
The division processes EDI files and provides transaction acknowledgements each business day. Accepted transactions are credited with the date delivered to the division as the filing date to determine timeliness. However, transactions submitted Saturday, Sunday, and legal holidays are not processed until the next business day. Files delivered before 5 p.m. (Pacific time) Monday through Friday will be processed the same day. Files delivered after 5 p.m. (Pacific time) will not be processed until the following business day.
After a transaction is processed, an acknowledgement will be downloaded by the division to the sender’s directory on the division’s FTP site, typically by the end of the next business day.
Insurers are responsible for obtaining and reviewing acknowledgements, making corrections to rejected transactions, and resubmitting them. Insurers that use an EDI vendor will receive acknowledgements directly from the vendor. Transactions rejected as a duplicate do not need to be resubmitted. Only accepted transactions satisfy the insurer’s proof-of-coverage requirement, so rejected transactions must be corrected, resubmitted, and accepted within the designated time frames in order to meet timeliness requirements.
The division recommends insurers review and correct their rejected transactions as soon as possible, leaving enough time to resolve issues and resubmit the transaction within the appropriate filing time frames.
What is the appropriate file naming convention for EDI proof-of-coverage files?
All EDI proof-of-coverage files submitted to the division should be named using the following format: “Xymmddss.xxx”
- Where ‘X’ indicates the sender’s initial (e.g., I for ISO or N for NCCI)
- ‘y’ is the last digit of the year (‘5’ for 2015, ‘6’ for 2016, etc.)
- ‘mm’ is the current month (‘01’ for January, ‘02’ for February)
- ‘dd’ is the current day; and
- ‘ss’ is a sequence number: (e.g., first file = 01, second file = 02)
- The .xxx extension must be POC for proof-of-coverage information and AKP for acknowledgements returned by the division to the sender.
Will senders receive confirmation of their electronic submissions from the division?
Yes. All vendors and self-reporting insurers receive electronic acknowledgement of every EDI submission received by the division. Each transaction will receive a Transaction Accepted (TA) or Transaction Rejected (TR) code. Insurers using vendors should contact their vendors to determine how to access the division’s acknowledgements.
What acknowledgements does Oregon send?
Once all the transactions within a transmission have been validated per division requirements, the division will provide an acknowledgement file to the sender. It is the insurer’s responsibility to monitor the acknowledgements and take necessary corrective action in a timely manner. If an insurer using a vendor does not know how to access its acknowledgements, it should contact its vendor for help.
Each transaction will be acknowledged with either a Transaction Accepted (TA) or Transaction Rejected (TR) indicator. Transaction acknowledgements contain key data elements to identify the transaction and technical or business issues discovered.
Transaction Accepted with Errors (TE) acknowledgements are not applicable in Oregon.
If insurers or vendors need help researching a rejection, contact the EDI coordinator at email@example.com.
Federal Employer Identification Numbers (FEINs)
What if the employer or insured does not have a FEIN?
The FEIN is a nine-digit number assigned by the Internal Revenue Service to identify a specific employer. In the case of a sole proprietor who does not have a FEIN, the sole proprietor’s Social Security number may be provided in place of the FEIN if the employer does not want to obtain a FEIN for reporting purposes. Any employer, including sole proprietors, may obtain a FEIN quickly online from the IRS.
Do insurers have to report a changed or corrected FEIN for insureds or employers?
Yes. The FEIN is a required identification number that maintains a consistent proof-of-coverage record for the employer through the lifetime of their business. It is important to report all Insured FEIN (DN0314) and Employer FEIN (DN0016) changes. Failure to do so may result in rejected subsequent transactions due to no match found on the division’s database. The correct paired transaction change (04-32-77/05-32-77 or 04-32-76/05-31-76) must be used to submit these changes. It is also important to report corrected FEINs for prior policy terms when the insurer learns that the prior FEIN was incorrect.
Do I need to send in a proof-of-coverage transaction if a sole proprietor changes his or her legal status (incorporates, becomes a partnership or LLC, etc.)?
Yes. It is important that insurers notify the division when the employer that the insurer provides coverage for changes legal status. If the employer changes its legal status or ownership but the insurer continues coverage on the same policy, report FEIN and demographic change transactions for the employer’s new FEIN, legal name, and legal status. If the insurer reports the new employer with a new policy, the old employer’s policy must be canceled with the appropriate cancellation reason: out of business, change of ownership, or business sold.
In all cases, IRS guidelines should be followed to determine if the old and new businesses are considered separate legal entities requiring unique FEINs.
Worker leasing (or employee leasing)
Do you accept wrap-up project policies through EDI?
Yes. Wrap-up policies will be accepted by EDI, subject to the same data and transaction editing standards as other policies. Report the project’s location address as one of the addresses on the wrap-up policy. Wrap-up projects and any change of insurer mid-project must be approved by the Division of Financial Regulation.
Insurer monitoring and civil penalties
How does the division monitor proof of coverage?
The division monitors the timeliness and accuracy of both vendor and insurer performance on data reporting requirements. The responsibility of accurate reporting ultimately resides with the insurer, even when it uses a vendor. The division will make information available to the vendor or insurer to help clarify or resolve potential issues.
The director may monitor and conduct periodic audits of reported proof-of-coverage data to ensure compliance with ORS Chapter 656 and OAR Chapter 436, Division 162 rules. If the director finds violations of the reporting requirements, civil penalties may be issued under OAR 436-162-0440 and ORS 656.745.
Proof of coverage must be reported timely. “Timely” means that an insurer reports data within the time allowed by OAR Chapter 436, Division 162 rules, as shown on the Event Table (Appendix C).
Proof of coverage also must be reported accurately. “Accurately” means that the reported coverage data accepted by the division conforms to the reporting requirements of these rules, including Appendices A, B, and C.
What civil penalties are assessed against insurers for proof of coverage?
Under ORS 656.745, the director may assess a civil penalty against an insurer that fails to comply with ORS Chapter 656 or the director’s rules and orders. (OAR 436-162-0440)
The insurer is responsible for its own actions, as well as the actions of others acting on the insurer’s behalf, including agents, brokers, and EDI vendors. Brokers and agents work as a representative of the insurer in the sale or servicing of the policy. EDI vendors work on behalf of the insurer to report the proof of coverage to Oregon. If an insurer or someone acting on the insurer’s behalf violates any provisions of these rules, the director may impose a civil penalty against the insurer.
Has the division instituted penalties against insurers for not making timely filings?
Yes. There are two types of proof-of-coverage penalties: quarterly and Orders of the Director.
For quarterly penalties, the division reviews how well insurers meet Oregon’s filing requirements for proof of coverage and termination of coverage each quarter. Filings that establish or terminate proof of coverage are reviewed for timeliness. If an insurer reports less than 90 percent timely proof-of-coverage or termination filings during the quarter, the division will assess penalties on those late filings below the 90 percent allowance. The detail report enclosed with the penalty lists all filings that were late during the quarter, not just the filings that were penalized.
To determine required filing timelines, refer to the Proof of Coverage Event Table, which includes a column of when certain transactions are due.
Proof-of-coverage and termination filings are by entity (each unique FEIN), not by policy. If the insurer files one policy that establishes proof of coverage for 10 entities with 10 different FEINs, all 10 are included in the quarterly calculations (not just the Primary Insured FEIN).
Orders of the Director occur when the division obtains possible coverage information during a noncomplying employer investigation and orders proof of coverage to be filed by the insurer. The order requires the insurer to comply within 30 days of the order’s mailing date to avoid penalties. An insurer may comply with the proof-of-coverage order by doing either of the following:
- Filing the proof of coverage
- Responding in writing to the Employer Compliance Unit and:
- Explaining that coverage is not provided and will not be filed; or
- Providing information that proves to the director that proof of coverage has been filed.
When the insurer does not file proof of coverage or respond to the order, the employer’s coverage investigation is unresolved and continues. The division needs to know whether or not the insurer covers the entity and FEIN listed on the order. If the insurer covers a related entity but not the entity listed on the order, the division needs to know that so please respond with that information. When the insurer reviews and responds promptly, the division may end or redirect the investigation.
Is there a hearing or appeals process for penalties?
Yes. Per ORS 656.740(1), the insurer has 60 calendar days from the order’s mailing date to pay the penalty or request a hearing to contest the order. Hearing requests must be in writing and mailed to the Department of Consumer and Business Services, Workers’ Compensation Division, P.O. Box 14480, Salem, OR 97309-0405, within 60 calendar days from the order date. The request must include the reason why the order is being contested. If a hearing request is not filed within the time allowed, the order will become final and not subject to review by any agency or court. If hearing rights expire and the penalty has not been paid, the penalty amount will be considered past due. Past due amounts may subject the insurer to collection activity and interest.
Does Oregon require the reporting of all employer locations?
No. Oregon does not require reporting for locations, only for each unique employer (or each unique FEIN). An employer is defined as “any person, including receiver, administrator, executor or trustee, and the state, state agencies, counties, municipal corporations, school districts and other public corporations or political subdivisions, who contracts to pay a remuneration for and secures the right to direct and control the services of any person.” [ORS 656.005(13)(a)]
What should I do if I need to rewrite a policy for the same employer with the same insurer?
If possible, report changes using the appropriate triplicate codes to the policy that has already been filed. If an insurer decides to send a new policy and a cancellation for the old policy, the transactions will establish and end proof of coverage and potentially subject the insurer to a quarterly late filing penalty. Instead, report changes to the existing proof of coverage, if possible.