Workers’ Comp Audit Mistakes: What to Look For

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No company owner wants to undergo a workers’ compensation audit, but they are a fact of life if you run a business and have employees.

Unfortunately, many audits don’t go smoothly and sometimes your insurer may make mistakes. Missouri-based Workers’ Compensation Consultants, which helps employers through the workers’ comp audit process, recently listed the 10 most common audit mistakes that insurance companies make.

The list highlights a common problem and how you can detect the mistakes to avoid being stuck with a massive audit bill. Insurance companies allow you to review the audit with your broker. If you notice that you have received an audit bill that is obviously overstated, you should contact us.

Here are the things to look for when reviewing an audit by your insurance company:

Wrong class code – Misapplication of job classifications occurs in many workers’ comp audits. With hundreds of job classes to choose from, mistakes can happen. Talk to us and review your old policies to see if any of your class codes have changed.

X-Mod is changed – After your insurer finishes the audit, it will use the information to calculate your premium. When that happens, it has to include your X-Mod to get the right rate. But sometimes the insurer may use an incorrect X-Mod. Check carefully.

Subcontractors are counted – Sometimes insurers will include subcontractors as employees, which results in a new audit bill to account for the additional “employees.” But if they are genuine subcontractors, they should not be counted. Often, uninsured contractors will be included as employees. Make sure to use insured contractors only.

Disappearing credits – Most policies will have some sort of premium credits or other modifiers. Sometimes during audits, the insurer will remove them when recalculating the premium they think you owe. Watch out for missing credits and other modifiers if you get an audit bill, like:

  • Premium discount
  • Schedule credits
  • Deductible credits
  • State-specific credits

 

Audit worksheets missing – If the auditor fails to provide you with audit worksheets, which are used do compile your payroll and other audit information, you should ask to check their work. They will provide you with the information you need to carry out such a check.

Your rates changed – The rates you are charged at the beginning of your policy period must remain the same for the entire policy period. If your base rates have changed, the insurer may have made a mistake. 

Separation of payroll – Depending on your industry, you may or may not be able to split your employees’ payroll between job classifications (like cabinet installers and sheetrock hangers). This is a pinch point when errors can occur. If the auditor says you are not allowed to split job classifications even though you have in the past, your audit may be in error.

Unexpected large premium due – If you get a significant bill for your insurance company after your audit, the auditor may have made mistakes, particularly if you know that your employment has remained relatively stable and you’ve had no significant claims, if any. If it seems out of whack, call us.

Payroll data doesn’t match – If there is a discrepancy between your payroll data and what you see on the audit, a mistake may have been made. Try to match the payroll on the audit with that generated from your accountant. If the insurer made a mistake, you could end up paying for phantom payroll numbers.

No physical audit – There are three types of audits:

  • Mail audit
  • Phone audit, and
  • Physical audit

 

The mail and phone audits are prone to errors, since neither you nor your staff likely have any experience in premium auditing. If you have a big bill after a mail or phone audit, mistakes could have been made.

The Health of Your Drivers May Be Hurting Your Business

Semi Truck Preparing to Drive

Most goods in the U.S. are delivered by truck. Trucking companies, businesses that deliver their own product and their customers rely on well-functioning vehicles and drivers for the success of their operations.

Too often, though, driving a truck is not conducive to good health. That can spell trouble for the drivers and for the profitability of their employers.

There are a number of factors about the truck-driving occupation that contribute to poor physical health, including:

  • Drivers are hired to sit all day behind the wheel, with limited opportunities for exercise.
  • They eat at truck stops and other restaurants where they can get meals quickly, contributing to poor diets.
  • Their work schedules are not consistent, interfering with sleep patterns.
  • The job is stressful. They have to contend with the annoyances and hazards of the road all day long, including traffic delays, dangerous drivers, and poor weather. On top of that, they are under pressure to reach their destinations on time. This gives them incentives to skip on sleep and ingest stimulants to help them stay awake.

Not surprisingly, studies have found that:

  • The obesity rate for truck drivers is double that of the general population.
  • Their smoking rate is almost triple that of the general population.
  • 88% of truck drivers report having hypertension, smoking or obesity, and 9% reported having all three, quadruple the general population’s rate.
  • Truck drivers’ life expectancy is 16 years less than the national average.
  • Unhealthy drivers do not perform their jobs as well as healthy ones do.
  • Among private sector employees, truck drivers have the highest number of illnesses and injuries that cause them to miss work.

A 2017 study found that drivers with three or more serious health conditions like the ones mentioned above are two to four times more likely to have an accident than are those with only one.

One common affliction for many drivers is sleep apnea. Drivers who have untreated sleep apnea are five times more likely to have a preventable accident than are those who treat it.

What you can do

What can you as an employer do to maintain a healthy driving force? Plenty.

  • During the pre-employment screening process, evaluate candidates’ fitness levels through physical examinations and a review of their driving histories.
  • Review employer safety policies and driver wellness and fitness requirements during new employee orientation.
  • Implement injury prevention programs.
  • Offer free or discounted memberships at gyms with locations around the country.
  • Encourage drivers to take quick exercise breaks during trips.
  • Encourage healthy eating both at home and on the road.
  • Monitor drivers’ performance through data provided by telematics devices installed in trucks, review of accident reports, and in-person observation of drivers.

The takeaway

If a truck driver suffers a heart attack or dozes off while hauling a load weighing tens of thousands of pounds, the results can be catastrophic. In addition to the lives lost or forever changed, the cost to the employer could be millions of dollars in jury awards.

Making driver wellness a priority is the right thing to do, but it also makes business sense for employers.

Workers’ Comp Rate Changes: What You Absolutely Need To Know

what you need to know about workers comp rate changesThere’s been a lot of confusion regarding upcoming changes for Workers’ Compensation rates and rightly so.  The Workers’ Compensation Insurance Rating Bureau of California wants to lower the current rate by 1.8% based on what businesses are currently being charged but last year the same bureau wanted to increase rates by around 27%. So which is it?

Continue reading “Workers’ Comp Rate Changes: What You Absolutely Need To Know”