As your company’s workers’ comp pro, you know your annual premiums are “confirmed” by a year-end audit. You can’t avoid this audit, but you can be well-prepared for it. Preparation is the key to a workers’ compensation audit that goes smoothly and produces desirable results. Lack of preparation can bring disastrous results, in the form of higher premiums.
To help you prepare, we’ve pulled together some tips from audit experts. These tips come from two national firms, Workers Compensation Consultants and Advanced Insurance Management. They note that the purpose of the workers’ compensation audit is to determine if total payroll you projected for the preceding policy year was accurate. Your annual insurance premium is based on total payroll and worker classifications. “Payroll” includes payments you make to any uninsured contractors you do business with.
The right contact person needs the right attitude, too. Be cordial and helpful, not confrontational. The auditor is just doing his or her job. If you seem uncooperative, the auditor may wonder if you’re trying to hide something. This is not the path to a successful audit.
Preparing everything in advance cuts down on paper shuffling and needed clarifications.
Separate overtime payments, and summarize overtime by job classification. That way the auditor can easily discount overtime pay back to straight time. This is allowed in most states, and it can save you considerable money.
For employees whose work falls in more than one classification, track payroll by dollar amount, not percentage. If this payroll separation isn’t clear, the auditor will apply the employee’s entire payroll amount to their highest classification.
Know your role and what information you’ll need to provide. Prepare in advance and stick to the audit schedule. When you’re forthcoming and can simplify the auditor’s work, your workers’ compensation audit will go smoothly. That’s the best way to ensure your premiums are accurate and as low as possible.
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