Use these five steps to help reduce the impact of your workers’ compensation audit.
Part of every workers’ compensation insurance policy is the carrier audit, and it’s important to be prepared. Audits can be performed annually, quarterly or sometimes even monthly.
#1: Understand insurance regulations
Workers’ compensation requirements vary by state. Familiarize yourself with the laws in your state and reach out to a knowledgeable insurance agent, like ADPIA, for help.
While California requires coverage for every employer, Florida only requires it when you have four or more employees.
#2: Uncover possible risks
A misclassification could mean you’ve been underpaying or overpaying your premium, which can wreak havoc with your cash flow. Regularly check the accuracy of all employee classifications and follow your state’s rules for owners and officers.
There are over 700 company classification codes and many more for employees. Premium rates differ based on these classifications.
#3: Keep accurate records
Collecting audit documentation can be hectic and time-consuming without a system in place.
Expedite the process by having these documents handy:
- Quarterly reports
- Payroll registers
- Federal tax records
- State unemployment reports
- Overtime pay by employee
- Payments to subcontractors and
- their certificates of insurance
- Payroll records
#4: Know the warning signs
Overpayments on workers’ compensation policies happen. Keep an eye out for the following signs that you may be paying too much:
- Significant unexplained increases in premiums
- A change in your number of employees
- Charges for subcontractor coverage
#5: Consider a premium payment program
ADP’s Pay-by-Pay® Premium Payment Program integrates your workers’ compensation premium payments with your payroll. By calculating premiums based on actual payroll numbers and carrier rates, Pay-by-Pay can help improve accuracy and minimize the impact of your carrier audit.
We're here to help
At ADPIA we're here to answer your questions. Contact us and we can help you take the stress out of workers' compensation insurance.