All posts tagged Workers’ compensation

Insurance Commissioner Okays Benchmark Rate Decrease for California Employers

Stock market background design

California’s insurance commissioner has approved a recommendation to reduce average baseline rates on workers’ compensation policies by 7.8% at the mid-year mark.

The mid-year reduction to the baseline rate is largely the result of reforms that were introduced in 2013 that have sped up the settlement process for claims (including many long-term claims), in addition to reducing medical costs.

Also, because of these reforms the cost of adjusting workers’ comp claims in California has dropped over the past few years.

Insurance carriers use the benchmark rate – also known as the pure premium rate – as a starting point for pricing their policies.

The benchmark rate is an average across all industries and employers may or may not see decreases in their workers’ comp premium come renewal as many other factors are at play, not the least of which is the employer’s own safety history.

Insurers are free to price their policies as they wish under California insurance law.

Region is also important and insurers are pricing policies for Southern California employers higher than for the rest of the state due to the continuing problem of cumulative trauma claims being filed by workers post-termination, mostly in the greater Los Angeles area.

“Cumulative injury claims often involve multiple injuries [that have developed over time], are very frequently litigated, are filed disproportionately in the Los Angeles Basin and often are filed on a post-termination basis,” the Workers’ Compensation Insurance Rating Bureau stated in a report on the state of the market as of Dec. 31, 2016.

Indeed, while cumulative trauma claims accounted for just 8% of all claims in 2005, in 2015 they comprised 18% of all claims, according to the Bureau.

The state insurance commissioner sets the benchmark rate with guidance from the Rating Bureau, which recommended a 7.8% rise to him in April.

The approved rate is 7.8% less than the pure premium rate for policies incepting on or after Jan. 1, 2017. The average advisory pure premium rate starting July 1 will be $2.02 per $100 of payroll. That’s compared with $2.19 per $100 of payroll as of Jan. 1.

The pure premium rate is a reflection of an overall decline in the total cost of claims thanks to SB 869, the legislation that was signed into law in 2013.

By addressing numerous cost drivers it has helped reduce medical costs, expedite claims settlements, and reduced the frequency of workers’ compensation claims. The legislation also increased benefits for some injured workers.

As a result, the average projected ultimate cost of a claim increased to $82,234 at the end of 2016, compared to $74,699 in 2013.

Getting Buy-in from Managers on Workplace Safety Programs

Inspections at commercial transport dock

One of the keys to instituting a good safety program is to get management and supervisor buy-in.

You need their support and belief in the system if you are to convince your employees to embrace your safety regimen. If your managers don’t believe in the safety plans you have put together, it will show through when they try to sell them to your staff.

If you don’t have buy-in from your managers, the chances are slim to none that your employees will embrace the changes you are proposing. Managers play a crucial role in getting employees on board with safety.

If you are serious about preventing injuries and want to keep your workers’ comp X-Mod low, the role of your management team is crucial.

You will often encounter a few different personality types among your managers and they need to be convinced of the importance of workplace safety in different ways.

  • The excuse-makers: They are the ones that blame external factors that are out of their control for safety lapses, and they may pooh-pooh the harm that a high X-Mod has. They may talk the talk on safety, but they don’t walk the walk.
  • Half-hearted bosses: These managers may actually buy into the safety program, but they are unable to show their commitment in ways that make an impression on the rank and file.
  • Committed: These managers are fully committed and enthusiastically embrace your safety plans and discuss them with staff with exuberance.

 

You’ll need a different approach with each personality type to get them to embrace the concept. Once they do, they can effectively convey the urgency and importance of workplace safety to the rank and file.

Constructor Magazine recently had these recommendations for getting management buy-in:

Select the right leaders – Choose managers who are firm, yet fair with a passion for the safety of the workforce. They should have a track record of success so that they can be an inspiration to their teams. Also, they should not be afraid to get their hands dirty to make a point or demonstrate how something is done.

 

Talk about risk management holistically – Every facet of your operation needs to be addressed if you want a comprehensive global risk management culture to exist.

Executives can influence this by extending discussions of risk management beyond the worksite to help managers see the bigger picture of why safety matters.

Assessing the risk associated with every task, purchase order, estimate or piece of equipment used will reinforce the notion that risk management is a company-wide function and not only in the sphere that the manager is responsible for.

 

Make periodic site visits – Top leadership should make a point to get on the floor and visit various departments to watch the workflow and reinforce the importance of safety to the workers. They should make these visits with the manager who has been put in charge of safety for that department.

At the same time, they should not arrive and start nitpicking and being enforcers of safety policy. Instead, their role should be to start conversations with the workers about safety challenges and asking for advice and ideas to make the operation safer.

They can use these visits to also celebrate successes and challenge the team to do better and always look for issues that could lead to injuries.

Rating Bureau Recommends Benchmark Rate Decrease for California Employers

abacus chinese

IN A SURPISE move, the Workers’ Compensation Insurance Rating Bureau of California has filed a recommendation to reduce average baseline rates on policies by 7.8% at the mid-year mark.

The mid-year reduction to the baseline rate is largely the result of reforms that were introduced in 2013 that have sped up the settlement process for claims (including many long-term claims), in addition to reducing medical costs.

Also, because of these reforms the cost of adjusting workers’ comp claims in California has dropped over the past few years.

Insurance carriers use the benchmark rate – also known as the pure premium rate – as a starting point for pricing their policies.

The benchmark rate is an average across all industries and employers may or may not see decreases in their workers’ comp premium come renewal as many other factors are at play, not the least of which is the employer’s own safety history.

Region is also important and insurers are pricing policies for Southern California employers higher than for the rest of the state due to the continuing problem of cumulative trauma claims being filed by workers post-termination, mostly in the greater Los Angeles area.

“Cumulative injury claims often involve multiple injuries [that have developed over time], are very frequently litigated, are filed disproportionately in the Los Angeles Basin and often are filed on a post-termination basis,” the Rating Bureau stated in a report on the state of the market as of Dec. 31, 2016.

Indeed, while cumulative trauma claims accounted for just 8% of all claims in 2005, in 2015 they comprised 18% of all claims, according to the Bureau.

The state insurance commissioner sets the benchmark rate with guidance from the Rating Bureau. A hearing will be held in June, after which the commissioner can choose to approve the rate filing, reject it or set another rate that’s either higher or lower than that recommended by the Bureau.

The rate filing is 7.8% less than the approved pure premium rate for policies incepting on or after Jan. 1, 2017. It recommends an average advisory pure premium rate of $2.02 per $100 of payroll. That’s compared with $2.19 per $100 of payroll as of Jan. 1.

The pure premium rate is a reflection of an overall decline in the total cost of claims thanks to SB 869, legislation that was signed into law in 2013.

By addressing numerous cost drivers it has helped reduce medical costs, expedite claims settlements, and reduced the frequency of workers’ compensation claims. The legislation also increased benefits for some injured workers.

As a result, the average projected ultimate cost of a claim increased to $82,234 at the end of 2016, compared to $74,699 in 2013.

Rising average payouts for wage losses and medical costs per claim are both contributing to average claim cost increases, according to Rating Bureau data.

Baseline Health Tests Can Shave Workers’ Comp Claims Costs

Digital Tablet with X-ray and Stethoscope

More employers are testing new hires in physical jobs to establish a baseline in case they ever file a workers’ comp claim down the road.

The aim is to establish what physical ailments and pain the new hire already has, so if they are injured you can find out if they aggravated an existing injury or it’s just an existing injury that’s flaring up. And if done correctly, baseline testing doesn’t infringe on the worker’s rights or health privacy.

Baseline testing should not be confused with physical evaluations that are conducted after a job offer, but prior to placement, to ensure the new hire doesn’t have physical constraints that would keep them from performing their job. The data in a baseline evaluation cannot be used for that.

In fact, the data collected in baseline testing is kept sealed from the employer.

 

How it works

Baseline testing is best conducted on workers in physical jobs.

Baseline tests measure the signals traveling in the nerves and muscles, and include the use of electromyography. The tests are non-invasive and often include range-of-motion testing.

Employers that send their employees for testing cannot view the test results unless the information is needed to confirm or refute a subsequent injury.

If a worker files a claim for a soft-tissue or repetitive motion injury, the employer can order a second test, which will be used by the insurance claims adjuster or treating physician to compare to the baseline test. If there is no change in pathology, the claims administrator can deny the claim and the chances are high it won’t be contested.

To avoid problems with singling out specific workers or disabilities, you should perform this testing on the entire workforce – or at least in all of your physical jobs.

Under the law, you can order baseline testing at any time on any employee, and not just when they are hired.

The good thing about the testing is that it can identify legitimate claims. Since there is a baseline, when doctors compare and see a change in pathology, they can order treatment and workers’ comp insurance pays for it and the worker’s time away from work.

On the other hand, a second test can show irrefutable evidence that there was no chain in pathology and so the injury that the worker is claiming is likely not work-related.

 

Savings

Anecdotally, employers that use baseline testing see tremendous results in their workers’ comp claims.

According to an article in <i>Business Insurance</i>, Wisconsin-based Marten Transport since starting baseline testing in 2015:

  • Has seen its rate of soft-tissue injury claims for new hires drop from 3.3 per 100 new hires to 1.4.
  • Has had only three of the 37 claims filed by new hires in their first six months showing actual injuries beyond soft-tissue pain that was documented when they began working.

 

Marten Transport conducts the tests as part of its employment agreement and uses a third-party company to carry them out.

The non-profit organization, the Gatesway Foundation, started using baseline testing by contracting with California-based Emerge Diagnostics to rein in its spiraling workers’ comp costs.

It had been experiencing a high share of work-related musculoskeletal injuries (soft-tissue) claims, like injuries to muscles, tendons, ligaments, joints, cartilage and spinal discs.

The year prior to implementing baseline testing, the foundation’s developed claims losses were $1 million. In the first six months of the next policy year, prior to implementing the program, the foundation’s developed losses were $500,000 but, in the latter half of the year – after implementation – losses had dropped to $30,000.

Overall, it reduced claims costs by $316,544 and the program cost $9,200 – a return on investment of 3,441%.

 

The takeaway
As mentioned, workers in physical jobs are the best candidates for baseline testing. That includes both light and heavy manufacturing, construction, agriculture, cleaning services and movers, to name a few.

But it could also be applied to any job that involves any type of repetitive motion, even without physical exertion.

Pre-existing Conditions Weight Heavily on Workers’ Comp Claims

A multiple exposure illustrating the progressive rehabilitation of a patient recovering. He begins in a wheelchair, then walks with crutches and finally walks without assistance. It is shot against a black background with the legs blending from a sitting position to walking.

Your workers’ underlying health can greatly affect the amount of time they are off the job recovering from a workplace injury.

A new study has found that workers with pre-existing health issues like hypertension, obesity and mental health spend 60% more time recovering from workplace injuries than healthy workers. And because those injured workers are collecting wage-replacement indemnity benefits during that time, the cost of a claim increases in kind.

The findings illustrate the importance of trying to keep your workers healthy through wellness programs and access to health insurance.

The findings in the study of more than 7,000 workers’ compensation claims by Newport Beach, Ca.-based Harbor Health Systems found that in addition to increased claim duration, these underlying health issues affect the cost of claims, increase temporary total disability (TTD) days, recidivism (aggravating of the original injury), and lead to more litigation and surgery.

 

The study looked at seven “comorbidities”:

  • Obesity
  • Diabetes
  • Hypertension
  • Addiction
  • Mental health
  • Tobacco use and
  • Multiple comorbidities (one or more of the above)

 

Shocking outcomes

The results of the study were a confirmation that underlying health problems will worsen outcomes.

The two comorbidities that have the greatest impact are multiple comorbidities and obesity, followed by addiction, mental health and hypertension, with diabetes and tobacco having the lowest impact.

Relationships between comorbidities – such as the link between obesity and diabetes – can exacerbate complications and health risks. The age of the injured worker is another factor that is associated with comorbidities and can complicate the management of a claim.

 

Duration and cost

  • For claims involving multiple comorbidities, claim duration increased by 76%.
  • For claims involving addiction, duration increased 67%.
  • For claims involving obese individuals, duration increased 55%.
  • For claims with multiple comorbidities, total incurred costs increased 341%.
  • Claims in all the comorbidity groups had significantly higher TTD days compared to the control group.
  • TTD days increased by 285% for multiple comorbidities claims and 274% for addiction-related claims.

 

Litigation

  • Litigation rates for claims with multiple comorbidities increased 147%.
  • Litigation rates for addiction-related claims increased 224%.
  • Litigation rates for mental health-related claims rose 248%.

 

The takeaway

Employers can encourage their employees to improve their health through company wellness plans and ensure that they have access to health insurance to treat their medical issues.

Claims management experts say that insurance company adjusters need to intervene early in cases where injured workers are saddled with these comorbidities.

 

 

 

 

Measure Aims to Reduce Unnecessary Opioid Prescriptions

Pharmacist in pharmacy (Digital Composite)

Employers and insurers in California are enthusiastic about the prospects of legislation that aims to reduce the chances of injured workers getting hooked on opioids when they are recovering from workplace injuries.

Senate Bill 482, which is sailing the through the Legislature, would require doctors to first check the state’s prescription drug monitoring system before writing a prescription for opioids.

The bill is moving through the state Legislature after a new study found that doctors have been seriously curtailing the amount of opioid prescriptions they write to injured workers. The study found that stronger laws on prescription drug monitoring were likely a main reason for opioid prescriptions having waned during the study period.

SB 482 aims to further tackle the opioid scourge that has hit injured workers hard, leading to addictions that reduce the chances of them returning to their at-injury employer. California has already seen a decrease in the opioid prescriptions for injured workers, but if this legislation passes, it would strengthen safeguards even further.

SB 482, authored by Sen. Ricardo Lara, a Democrat from Bell Gardens, aims to force doctors to use the Controlled Substance and Utilization Review and Evaluation System (CURES) database.

Even though CURES is the oldest such system in the nation, legislators believe that few doctors consult it before writing prescriptions for opioids, which are highly addictive and are often associated with slower recovery periods for injured workers.

Under the measure, doctors authorized to prescribe, order, administer, furnish or dispense a controlled substance, would be required to check CURES no earlier than 24 before writing a prescription for a Schedule II, Schedule III or Schedule IV controlled substance for the first time – and at least annually thereafter.

Doctors who knowingly fail to check the database before writing a prescription would be referred to their licensing board for administrative sanctions.

The measure has already been passed by the State Senate and two committees in the Assembly (in unanimous votes) and looks like it will have a smooth ride on the Assembly floor thanks to amendments that were made in June.

Employers and insurers are encouraging passage of the bill.

The American Insurance Association says that CURES and other prescription drug monitoring programs have been shown to be effective in controlling the practice of “doctor shopping”, whereby patients will visit different doctors to obtain prescriptions for addictive medications. The association also said it will protect patients and improve outcomes.

Additionally, the California Chamber of Commerce says that SB 482 would discourage doctor shopping and identify the handful of physicians who write the majority of inappropriate prescriptions for opioids.

 

Addictive Medications

Schedule II: Substances that have a high potential for abuse which may lead to severe psychological or physical dependence.

Types: : Methadone, meperidine (brand name Demerol), oxycodone (brand names OxyContin, Percocet), fentanyl, morphine and high-strength codeine.

Schedule III: : Substances with a potential for abuse less than substances in Schedule II, and abuse of which may lead to moderate or low physical dependence or high psychological dependence.

Types: : Hydrocodone (brand name Vicodin), codeine (Tylenol with Codeine).

Schedule IV: Substances in this schedule have a lower potential for abuse than schedule III drugs.

Types: : Brand names Xanax, Soma and Valium.

 

The study

The study, released in June by the Workers’ Compensation Research Institute, found “significant” decreases in the amount of opioid prescriptions being written for injured workers.

Fourteen of the 25 states examined by the institute recorded decreases in opioid prescriptions of between 11% and 31% in the study period, which measured 24-month periods ending in March 2012 and March 2014.

Michigan saw the biggest drop (31%), followed by Oklahoma (29%) and Massachusetts (24%). Texas saw a drop of 19%; Connecticut, 17%; California, 12%; and Pennsylvania, 4%. Just four states saw increases.

The institute noted that the decreases coincided with various states enacting legislation aimed at reducing the abuse of opioids by improving prescription drug monitoring programs and adopting more stringent treatment guidelines and drug formularies.

 

Pharmacist in pharmacy (Digital Composite)

Pharmacist in pharmacy (Digital Composite)

Pay Extra Attention to Safety for Teen Workers

portrait of a salesgirl working  in  gift box store

Summer is coming and many employers take on additional staff, including teenagers who are new to the workforce.

These new workers need special attention and training in workplace safety as they have no experience on the job. Every year about 70 teenagers die while working in the U.S., while another 100,000 are injured seriously enough to require emergency room treatment.

Keep in mind there’s a lot you can do to prevent injuries to your teen workers, and the measures you take to keep them safe will help protect all employees.

The first thing is that you need to know the law and OSHA workplace safety and health regulations. Check your compliance and make sure teens are not assigned work schedules that violate the law, or given prohibited tasks like operating heavy equipment or using power tools. Make sure they have their work permits if under 18.

Make sure also that your supervisors who give teens their job assignments know the law. Encourage supervisors to set a good example, as they are in the best position to influence teen attitudes and work habits.

Ensure that all jobs and work areas are free of hazards. The law requires you to provide a safe and healthy workplace. Involve every worker in your Injury and Illness Prevention Program.

Train teens to put safety first. Give clear instructions for each task, show them what safety precautions to take and point out possible hazards. Prepare teens for emergencies, accidents, fires and violent situations. Show them escape routes and explain where to go if they need medical treatment.

Your teen employees are the next generation of workers. You will help them develop personal skills that make them more likely to go on to further their education and succeed in life.

As you hire these young people, know that you do make a difference.

Educating them about professional standards, workplace health and safety, rights on the job, and how to communicate effectively will shape the workplaces of the future, as well as keep your business running smoothly.

PTSD Claims a Growing Workers’ Comp Problem

stressing

An emerging trend in workers’ compensation nationally is workers filing post-traumatic stress disorder claims from events that they experienced on the job.

These events will typically be something traumatic like witnessing a violent event while on the job or the aftermath of a horrific accident – but not always.

Most recently, the Connecticut Supreme Court held that a Federal Express Corp. driver diagnosed with PTSD in part due to his manager’s demands and stress of a really bad day is eligible for workers’ compensation benefits. In that case, William D. Hart vs. Federal Express Corp. et al., the court upheld 47 weeks of temporarily total disability that had been awarded by the state’s Workers’ Compensation Review Board.

Increasingly, insurers have been denying these claims only to be thwarted by workers’ compensation appeals boards or higher courts when the cases are appealed. Courts are increasingly siding with workers and awarding them disability benefits.

For the most part, PTSD claims are filed by police officers or other first responders, but increasingly, employees that witness a violent crime or a horrific accident while on the job are starting to file workers’ comp PTSD claims.

Many states, but not all, allow workers’ compensation claims based on PTSD. In order to qualify for benefits, a worker must have experienced or witnessed a traumatic event while acting in the scope of employment, and then suffer PTSD symptoms that interfere with the ability to work.

Examples of work-related PTSD claims

Some examples of workplace situations that might give rise to a PTSD claim are:

  • A police officer, firefighter or emergency medical technician responds to a horrific or gruesome situation.
  • A construction worker observes a co-worker’s serious injury or death.
  • A teacher witnesses a school shooting.

 

The individual must also receive a formal diagnosis of PTSD from a psychiatrist or psychologist.

 

PTSD symptoms can include:

  • Flashbacks
  • Heightened startle response
  • Depression
  • Anxiety
  • Irritability
  • Cognitive decline
  • Nightmares
  • Physical symptoms such as headaches, ulcers, nausea and fatigue

 

In many cases, PTSD symptoms may not appear until months or even years after the trauma. Many claimants say the symptoms are so severe that they cannot perform their jobs properly, and they may take long periods off from work.

 

Defending PTSD claims

Under workers’ compensation regulations:

  • The employment must be the “predominant cause” of the employee’s claim.
  • The claim must not arise from a “good-faith personnel issue.”
  • Psychiatric injuries can arise from a specific, traumatic, event-triggering PTSD.
  • Psychiatric injury can be compensable if the worker has a serious physical disability and has been employed at least six months.

 

If you are faced with a stress or PTSD claim, Safety National Insurance Co. recommends that:

  • When you receive the first report, reach out and communicate to the injured worker immediately. Sometimes the issue may be a misunderstanding or they may just want someone to care.
  • Be proactive, not reactive, with trauma cases. If this is a situation that would cause you traumatic stress, it is probably causing the injured worker traumatic stress.
  • You consider your “confirmation bias” and other biases when collecting statements.
  • You document reactions to personnel actions.

 

 

Agency Mulls Not Counting Portion of First Aid Claims in X-Mods

first aid stuff

California’s workers’ compensation rating agency is developing new guidelines that would exempt a portion of first aid claims from being included in the calculation of employers’ X-Mods.

Under state regulations, employers are required to report injuries that require first aid and are not severe enough for the employee to seek medical treatment or miss work. But despite the rules, few employers report the claims to their insurance companies.

The Workers’ Compensation Insurance Rating Bureau hopes that creating an exemption in the experience rating plan for first aid claims and injuries would increase reporting.

According to the trade press, the Rating Bureau is working on a plan that would exclude a portion of every claim from the X-Mod formula. The amount for that exemption has not been set and it’s likely that the change, even if approved this year, won’t take effect until at least 2017 or 2018.

But regardless, the move would be a welcome development for California employers, many of which are reluctant to notify their insurers of any injuries that involve only first aid treatment for fear that it will affect their X-Mod or because they are confused by the rules. The reporting of first aid claims is typically not mandatory in most other states.

The industries in which the lack of first aid claim reporting is most prevalent are the construction and restaurant industries, but it occurs in other sectors as well, according to the Rating Bureau.

When employers fail to report first aid claims it causes problems for claims adjusters, hinders workers’ ability to access workers’ comp benefits and has a negative impact on the employers that play by the rules and report all of their claims.

Also, what starts as an injury that only requires first aid treatment can later develop into a full-blown claim if the initial injury worsens.

According to the trade publication Workers’ Comp Executive, the Rating Bureau is looking at imposing a first aid claim exemption of $250, $500 or $1,000. It has been testing the different amounts and the effects on ensuring reliability of employers’ X-Mods.

 

Depending on the amount, it would have a substantial impact on reportable claims:

  • The $250 threshold would eliminate 15% of the claims in the system.
  • The $500 threshold would eliminate 36%.
  • The $1,000 threshold would eliminate 54%.

 

The biggest concern is that eliminating so many claims could reduce the rating system’s ability to accurately predict system costs and set accurate rates.

The Rating Bureau expects that at the $250 threshold, the change would mostly affect employers who have no other claims and that it would push up their X-Mod by just one percentage point on average.

The committee studying the issue “thought this was a reasonable trade off to get more claims into the system,” David Bellusci, the Rating Bureau’s chief actuary, said during a classification and rating committee meeting in early April, according to the trade publication.

The perception there is that the honest employers reporting all of their claims, including these smaller first aid only claims, are at a disadvantage to employers that are not currently reporting these claims.

Also, the Rating Bureau plans to work Cal/OSHA in regard to changing the definition of first aid. Cal/OSHA regulations do not require that employers report injuries that require first aid to the agency.

 

Seven Tips for Navigating a Workers’ Comp Audit

Audit_1

No business ever wants to be audited, but in the world of workers’ compensation insurance it’s a regular occurrence that does not need to be a stressful event.
A workers’ comp audit by your insurer is common for most mid-sized or larger employers, and the audit threshold in California is $16,000 or more in annual premium.
While many employers are used to audits and have their procedures and policies in place to ensure a smooth experience, some of you may be growing concerns that now are large enough to be subject to audits.
The key to a workers’ comp audit is preparation and having your paperwork (and electronic files) in order, so you can produce the required documents swiftly. We’ve prepared the following seven ways to prepare for an audit, and if you follow this advice it can save you stress and perhaps money.

1. Understand why you are being audited. Workers’ comp carriers base your premiums on your number and cost of any previous claims, your industry and your payroll. At the end of the policy, the insurer needs to audit your payroll to make sure that the payroll and class codes that you reported at the inception of the policy were correct and if they’ve changed during the last year. Remember that an audit can go both ways. The insurer’s auditor will be looking to see if you either owe or are owed money. You may have underestimated your payroll or incorrectly classified employees, or you may have overpaid due to similar classification errors.

2. Gather all records and paperwork requested by the auditor, and ensure that your documentation is in order. You’ll most likely be asked for the following:
• Employee records
• Payroll records
• Cash disbursements
• Certificates of insurance
• A detailed description of your business operations

3. Review prior audits. When you are preparing for an audit, go back further than your current policy year’s documents. Categorizing your employees correctly is what’s most important to ensure a smooth audit and not be hit by surprises. Knowing how your employees have been categorized in the past can help you make sure they’re categorized correctly in future audits.

4. Double-check the categorization for employees of subcontractors. This is one of those situations in which many small businesses have been overcharged by thousands of dollars in a single year because of an error. If your subcontractors carry their own workers’ compensation insurance, you aren’t responsible for paying premiums for them. If they don’t, you could be responsible for the exposure under your policy.

5. Don’t forget to keep track of overtime for your employees. Premiums are not calculated against the full overtime pay rate. Your workers’ compensation premiums aren’t calculated at a full overtime pay rate. Typically, the auditor will break out overtime pay and discount it to straight time. This is another situation that can cost you unnecessarily if your records aren’t accurate.

6. Don’t volunteer more information or records than the auditor asks for. This will help keep the audit focused and moving along, and avoid adding confusion and more questions that aren’t relevant to the audit.

7. Ask the auditor for the worksheet when the audit session is done, and then have us review it for accuracy. If you suspect there are mistakes in the worksheet, it’s your right to ask for a corrected audit.

Spending some time preparing for your next workers’ compensation audit is a worthwhile investment. With workers’ comp being one of your biggest expenses, you should not be paying any more than you need too, especially due to a small mistake.