Workers Compensation Audits: What You Need to Know
Any fellow business owner can tell you, preparing for a workers' compensation audit can feel overwhelming. In the event your business insurance provider requires an audit, you’ll need to prepare. Below we do our best to help take come of the anxiety away from this process. The first thing to keep in mind is that workers' compensation audits usually aren’t too difficult to manage.
So what exactly is a Workers’ Compensation Audit?
Workers’ Compensation Audits are also commonly called premium audits. They are essentially your company’s verification of its period payroll. Specifically, it is the examination of the payroll period for your plan’s coverage. The overall amount paid out to your employees is one of the bases of your workers' comp premium. During the audit, the payroll’s amount must receive verification.
What’s the Audit’s Purpose?
These audits help assure that the premiums employers pay for their workers comp coverage correctly match their risks. Your business insurance company will make sure you’re properly classified. It’ll also make sure your payrolls, used for rating purposes, have the necessary and correct values.
If you have the wrong payroll classification, you might be spending the wrong amount of money on your workers' comp. Insurance providers usually audit policies that have premiums greater than a specific value, the standard value is $10,000.
How Can You Conduct an Audit?
The auditing process can be fast and convenient if done the proper way. Normally, audits fall under three types. The type of audit you’ll need to prepare for and conduct depends on three factors:
On-Site Physical Audits
Many audits can occur on-site at the physical location of the business. When this is the case, an auditor will schedule an appointment with the owner and then, they will visit your location. The auditing process happens completely on the premises. It generally doesn’t require a follow-up.
Remote Physical Audits
You might get a letter from your insurance provider asking for your company’s payroll records. These records can include your payroll journals, unemployment forms and federal tax returns. Once the proper documentation has been gathered, you simply send them to the audit department.
Telephone audits aren’t exactly entirely conducted on the phone. First, you’ll receive an audit form to complete by mail or email. Then, you send the completed form to the audit department. Then, the audit department will contact you to talk about your operations and payroll.
Make sure you check the categorization for subcontractor employees before the auditing process. Otherwise, you might face overcharges. Review your audit work papers, and collect your payroll summaries. If you have your information on hand, your business insurance policy will be ready for anything.
For more information on Workers’ Compensation Insurance, Commercial insurance, Employee Liability Insurance, etc be sure to contact a representative at Heil and Kay Insurance today!