Work Comp Audit – Overcharges

How a Workers Compensation Audit Can Cost You $Money$

Auditor picks an “Audit Trail”
“Audit Trail” includes remuneration that is exempted from Workers’ Compensation premiums
Employer is overcharged for remuneration that should be excluded
Auditor puts all employee remuneration in the highest rated class code
Positions the insurance company to have all errors default to their favor
Employer is overcharged as all classification errors are charged at the highest rate
Auditor does not ask for names of employees that are eligible for lower rates
Employees that are eligible for lower rates may not be mentioned
Employer is overcharged for the employees that are eligible for lower rates
Minimal or no requests are made for “excluded remuneration”
Employer is not aware of remuneration that can be excluded
Employer is overcharged for remuneration that should be excluded
Checks General Ledger for uninsured contractors
Some contractors have insurance and some do not
Employer is overcharged for insured contractors and usually charged incorrectly for the uninsured contractors
Auditor drives the process
Employer does not know the rules
Employer is overcharged

Be Prepared for a Workers Compensation Audit Instead of Being Blindsided by it

Preparing for a work comp audit is time well spent, since the insurance auditor is trained to find premium dollars for the insurance company. If the auditor makes mistakes in the audit process you pay for them in the form of increased premiums. At AutoRisk we believe you should pay no more than you are required by law to pay, which is why we will gladly “Guide our Clients” through the audit process by preparing an audit package.

Here are the steps in the process:

1. Prepare Audit Package

  • Obtain certificates of insurance from subcontractors
  • Request audit worksheet from auditor prior to their arrival, normally as you confirm your meeting time and date
  • Compile payroll records and calculate excludable Create audit spreadsheet to provide to the auditor

2. Meet with the auditor, by phone or in person

  • Present “Audit Package” to auditor
  • Offer no gratuitous information to auditor, other than what is required by law
  • Treat auditor as a welcomed guest but do not allow the auditor unescorted access to premises or unsupervised access to financial reports
  • Your agent should NOT attend the audit

3. Verify the final audit

  • Compare auditor’s worksheets to the audit package you provided
  • Use AutoRisk’s Checklist to verify that the audit was completed properly
  • Immediately appeal any audit if discrepancies are found
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