Workers Compensation Payroll Issues
The term “payroll” is actually a misnomer when it comes to workers’ compensation premium calculation. In this context payroll is “money or substitutes for money.” The correct term is actually “remuneration.”
Why You Should Consider Us: – Because We Literally Wrote the Book on These Issues.
Yes, you could say we wrote the book:
- On audits;
- On the Classification System (class code);
- On the Experience Mod System;
(or the e-mod; or the experience modification factor);
- On the formula for High Deductibles;
- On the definition of “Payroll” for purposes of calculating premium;
- On all PEO workers comp issues, such as proper corporate combinations for e-mod calculations;
- On the formula for Retros;
- On the formula for schedule rating.
Because we did. And All of these items drive the final calculation of your workers comp premium.
17 Components; 14 Exclusions – Payroll is defined by the NCCI and other State Rating Bureaus. They have detailed definitions of payroll in the workers compensation manual (for NCCI – Basic Manual). In the Basic Manual, there are actually 17 separate components of compensation that are included in payroll, and 14 specified components of compensation that are excluded from payroll. Other State Rating Bureaus have similarly detailed definitions.
Only Employee Payroll is Included – State statutes define “employee” for the purposes of workers’ compensation premium calculation. Any worker that is not an employee is not covered by your workers’ compensation policy. You are not required to pay workers’ compensation premium on behalf of these workers. The most commonly known grey area related to this issue relates to independent contractors (vs. employees). In addition, there are numerous additional rules detailing which workers are and aren’t included as employees. As an example, Florida Statutes list over 20 categories of workers that are not employees. You are not required to pay workers’ compensation premium on behalf of any of these workers.
Payroll Can Be Wrong for Several Years in a Row – If your insurance company is calculating payroll incorrectly, chances are they did it that way last year, and the year before. If they have been calculating payroll incorrectly in the past, they must correct all of their payroll determinations and reduce your past premiums accordingly – resulting in premium refunds to you.
Why You Should Consider Us: – Because We Literally Wrote the Book on Payroll Determination. Yes, you could say we wrote the book:
- On the definition of payroll and remuneration (namely the NCCI Basic Manual);
- On the definition of employee and independent contractor (through our work with state legislatures as executives representing the only workers’ compensation rating organization in most states, the NCCI);
- All of which drive how the workers’ compensation premium is calculated.
What We Do, Step One: Did the Insurer Determine the Payroll Correctly? As stated, we know payroll and employee determination issues, so we analyze the relevant facts surrounding your payroll, state statutes, and State Rating Bureau definitions. Is there a payroll issue? Is there an employee issue? Have all of the appropriate exclusions to compensation been removed from the payroll? Is your insurance company relying on up-to-date definitions appropriate for your jurisdiction? Are there issues with last year’s payroll determination? The year before? These are not simple tasks because many of decisions are made with regard to interpreting the rules on payroll determination, and the difference in a word or two can be the difference in a huge amount of premium. So the first key application of our expertise as to your circumstance is whether in fact the insurer has properly included or excluded all relevant information against the Basic Manual or whether the decisions are erroneous, resulting in unwarranted premium.
What We Do, Step Two: Challenge the Insurer. If you are the employer and we conclude the insurer has wrongly calculated the payroll, we will take the matter directly to the insurer and insist that they properly calculate the payroll and reduce the premium. We know insurance companies and are confident in working with them. We are both former insurance company executives. If you are the insurer, we will prepare a strong defense to the employer’s challenge of our payroll decision.
What We Do, Step Three: Appeal to NCCI or the State Rating Bureau. In the event the insurance company does not agree with the right payroll, NCCI and the State Rating Bureaus have an appeal process in place where an employer can appeal an insurer’s premium determination directly to NCCI or the State Rating Bureau. We know NCCI and the State Rating Bureaus. We are confident in our abilities to put forth a powerful case for the payroll determination. If NCCI (or the State Rating Bureau) rules in favor of the policyholder, the insurance company must correct the payroll and the resulting premium calculation.
What We Do, Step Four: Appeal to Your State Department of Insurance. Additionally, a number of State Departments of Insurance have an appeal process as well. That is to say, absent policyholder success before NCCI or the State Rating Bureau, a second appeal is available to the State Department of Insurance. As above, we are likewise confident in our abilities to work with all state Departments of Insurance. We are former state insurance regulators and understand the process. Again, if the State Department of Insurance rules in favor of the policyholder, the insurance company must correct the premium calculation – in the favor of the policyholder.
What We Do: Step Five: Advocate Your Case. Your insurance policy is a contract between you and your insurance company. If your insurance company is not charging a premium or e-mod allowed by the policy, the supporting rating manuals, and the filed rating factors, we will advocate on your behalf and take the matter to the next higher authority. We will directly apply our high level firepower to the case.
Ready to Work for You Now. This team is prepared now – as in today – to begin working with you. Please contact Bill Hager at 561-306-5072 or firstname.lastname@example.org for more information. To determine whether you are paying too much premium because of erroneous payroll calculations, too much because of erroneous employee inclusion: in short too much premium.