Understanding The Premium Or Payroll Audit Process

I was going back through some of the post over the last few weeks. In The Five Keys To Saving On Workers Compensation post, I had said I would cover #5 - Understanding Your Premium Audit. The premium or payroll audit is one of the most misunderstood areas of Workers Compensation. I thought I would cover some of the myths about your yearly premium audit.

Myth - The premium auditor is trying to help my company.

Truth - The premium auditor is there to collect as much premium as possible allowed under the law.

Myth - My premium audit is a smooth process. The auditor comes in, and I usually owe a bill that I pay right away.

Truth - The audit process should be viewed the same as a tax audit. Please see the preceding audit Myth/Truth for clarification.

Myth - I stand a great chance of getting a refund after my premium audit.

Truth - We have found that over 70% actually result in a premium bill. Less than 10% of premium audits return money to the employer

Myth - The premium auditor works for my insurance carrier.

Truth - There are more subcontractors doing Workers Comp premium audits than insurance company personnel.

Myth - I disputed my premium audit back to my agent and he/she said everything looked great.

Truth - There are specific instructions on how to dispute a premium audit. Appealing to your agent is not one of them.

Myth - My company can ignore the premium audit bill and pay it later.

Truth - You may end up having your current policy canceled if you do not dispute or make arrangement for paying your company's premium billing. I have posted this very often - Never Ignore A Premium Bill

Myth - I received a small refund last year and this premium audit bill is not that large. I am going to go ahead and pay it.

Truth - Just because you have not been hit with a large premium bill does not mean that you are not being overcharged.

Myth - There are no companies out there except my agent that can help me if I have a question on my premium audit.

Truth - There are quite a few companies that aid employers with their premium audits such as J&L.

Myth - I can only dispute the current year's Workers Compensation policy or premium bill.

Truth - Except in a few states, you may "look-back" for three years for any policy or premium audit mistakes that resulted in overcharges.

These are only a few of the myths about the Workers Compensation Premium or Payroll Audit process. If you have any further questions, please contact us at info@cutcompcosts.com or jmoore@cutcompcosts.com