What Is a Workers Compensation Audit?
When an employee suffers a work-related injury or illness, workers’ compensation insurance can help. Workers compensation audit can help provide benefits such as:
- Medical care
- Wages from lost work time
- Ongoing care
- Funeral costs
Disability benefits
During a workers’ compensation audit, your company’s payroll will get verified. Audits check out your payroll because your workers’ comp premium is partly supported by the quantity of compensation paid to your employees over a policy term. the quantity paid includes money and benefits your workers have received. Your premium also depends on job classifications. These classifications help show the quantity of risk your workers face. So, if the audit finds job roles have changed at your business, you'll receive a special premium. When reporting your payroll, make certain to incorporate any overtime payments employees receive. this may ensure your payroll record is as accurate as possible.
One of the most benefits to a workers’ comp audit is that it makes sure your coverage and premium match. this is often important because it means you won’t be paying an excessive amount of for your workers’ compensation coverage. Most states require insurance companies to audit a majority, if not all, of its policies. Also, confine mind that if your policy expires, your insurance carrier still has the proper to audit you. For statement or phone audits of expired policies, we’ll typically notify you every week or two after your policy expires. We’ll then attempt to complete the audit within two months. For field audits, we generally complete them in around six weeks to 3 months.
What Is the Purpose of a Workers’ Comp Audit?
Your workers’ comp policy requires audits to verify your estimated payroll. These audits help confirm you’re paying the proper amount for the proper coverage. counting on your state, workers’ compensation audits also can be a legal requirement.
When Should I Expect a Workers’ Comp Audit?
Our agents start the audit process by sending you a notice that your premium audit is due within 35 days. In most cases, our premium auditors will notify you by email. to finish the audit, you’ll get to send us your payroll records and answer any questions we've about your business’ operation. Remember that premium audits aren't done randomly. They’re mandatory once you have a workers’ compensation policy. within the event that your workers’ comp policy gets canceled, a premium audit will likely happen for the policy period once you had coverage.
How Does The Hartford Conduct a Workers’ Compensation Audit?
Our auditors nearly always reach out by email. during this email, they’ll allow you to know if we’ll be doing all of your audits by phone, in-person or online. no matter how we perform your audit, we’re an insurance firm that works hard to form the method as easy as possible. That’s why we provide our online self-service portal. we will do many of our audits online through this portal.
How Does The Hartford Schedule a Workers’ Comp Audit?
In some cases, The Hartford may make a meeting with you for a field audit or phone audit. If this is often the case, you'll calculate us to be flexible together with your schedule. We’ll make certain to schedule your audit on your terms when it works best for you. We’ll also schedule field audits at your home of business and make certain to inform you exactly what records you would like beforehand.
How Are Appointments for Workers’ Comp Audits Made?
Most of the time, our auditors at The Hartford will notify you by email when we’re auditing your business.
Types of Workers’ Compensation Audits
We do most of our audits digitally, but in some cases, we request other sorts of audits.
Field audits are physical audits on-site at your home or business.
Phone audits are done remotely. There’s no travel needed for these workers’ compensation audits. Once you send us your information, we’ll schedule the phone audit.
Comply With Your Insurer During a Workers’ Comp Audit
Providing your workers’ compensation insurer with the knowledge they’ve requested is vital. It’s also important that the knowledge you send is accurate. In fact, there are penalties for providing false information, including policy cancellation or fines. Some samples of fraudulent actions include:
- Underreporting payroll to scale back a workers’ comp premium.
- Supplying inaccurate job descriptions to represent lower risk for reduced workers’ compensation premiums.
- Providing false financial documents, like fake tax returns.
- Not reporting subcontractors to lower your workers’ compensation premium. confirm you check your state’s laws to ascertain if you would like to report independent contractors.
Getting the Results of a Workers’ Comp Audit
Our premium audit team will provide updates on your audit throughout the method. Audits usually take a fortnight to finish. With each audit, we’re striving for an equivalent goal: to make sure your payroll matches up with the payroll listed on your policy. If your payroll is just too low, your audit may generate a further premium. If your payroll is just too high, we may lower your premium.
Audit reports also show changes to your classifications. If your business is misclassified, our team of auditors may add new job classification codes, which may change your premium. this is often why reporting your business’ jobs accurately is important during the audit process.
Prepare for a Workers’ Compensation Audit
The best thanks to being ready for an audit is to always be prepared. you'll do that by:
- Organizing all of your documents
- Collecting information you would like consistently
- Documenting any changes to job descriptions and other business functions as they happen
If you retain the following pointers in mind, you won’t need to scramble to seek out the key information for your workers’ compensation audit.
Create a Workers’ Comp Audit Checklist
Auditors need financial information for the amount covered by your workers’ compensation policy. to organize for your workers’ compensation audit, consider creating a workers’ compensation audit checklist to assist keep track of:
1. Employee information including Form 941 for policies with employee payroll. For policies without employee payroll, you’ll need the Schedule C form or other tax Forms, alongside other payroll report records.
2. Owners, officers, and partners information, including payroll information like:
- Their name
- The state where they work
- Their corporate title
- The percentage of stock they own
- How long they’ve been employed
- Their total earnings
3. Payment and certificate verification, including:
1099 Forms
Certificates of insurance for each leased employee or subcontractor
4. Your business’s information, including:
- Your general ledger
- Sales journal
- Cash receipts
- Sales tax records
Workers’ Comp Audit Checklist
Remember, the main items you’ll need for your workers' compensation audit are:
- An accounting ledger
- Tax forms such as W-2, 1099, Form 941, Form 944 and a federal tax return
- Certificate of insurance for every subcontractor
- Detailed descriptions of each business function
This list can change counting on what state your business is in. Contact our specialists at The Hartford to make sure you've got all the knowledge you would like by calling 1-800-813-1386.
