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Inside Premium Audit:

Premium Audit Frequently Asked Questions


NOTE FOR PAY AS YOU GO USERS:

Certain responses below may not apply to you if your policy is on the pay as you go plan, in which premiums are calculated and remitted in conjunction with payroll processing. Please call the premium audit department at 800-677-3252 for further information.


Why is there a year-end Premium Audit?
What audit options are available?
What is a Mail Audit Form and what should my client do with it?
Why is my client required to complete a Mail Audit?
How can my client get a copy of the Mail Audit Form?
How does my client complete the Mail Audit Form?
What is included in the payroll figure on the client's Mail Audit Form?
What is a Telephone Audit?
What is a Remote Physical Audit?
What is an On-site Physical Audit?
What happens if my client does not comply with a Premium Audit?
What happens after the Premium Audit?
Why is my client charged fees and other surcharges, and what are they?
What is premium (excess) overtime?
Can my client exclude Section 125 or 401(k) contributions?
How can my client request a copy of the auditor report?
What can my client do if they disagree with the Premium Audit results?
How can my client contact Premium Audit?
Where can my client submit the Mail Audit form?

 

Why is there a year-end Premium Audit?
Your client's workers' compensation insurance policy was issued based upon estimated payroll figures and classification. During the policy year, changes may occur in their operation. When their policy expires, we will review their operations and actual payroll by classification, and make the appropriate adjustments to calculate a final audit premium (this may result in an additional balance due, a refund, or potentially changes to your client's current policy).

What audit options are available?
Mail Audits, Telephone Audits, Remote Physical Audits, and On-site Physical Audits are available options. The type of audit your client qualifies for is based on their business location(s), policy size, and the type of industry in which they operate. Please click on the links above for further explanation of each audit type.

What is a Mail Audit Form and what should my client do with it? (Does not apply to Pay As You Go plans)
A Mail Audit is a two-page report form that we will mail to your client to complete when client's policy expires. All your client needs to do is enter payroll information by class, answer a few questions, and return it to EMPLOYERS within 15 calendar days through the mail, e-mail, or fax.

Why is my client required to complete a Mail Audit?
Your client's workers' compensation insurance policy was written with estimated figures. We are required in most states to review your client's actual payroll and operations and make adjustments. We use the payroll information your client has have submitted to determine their actual premium.

How can my client get a copy of the Mail Audit Form?
Please click here to download the form.

How does my client complete the Mail Audit Form? (Does not apply to Pay As You Go plans
To complete the Mail Audit form, your client should:

  • Provide a brief, detailed description of their business including tools/equipment they may use and the products/services your client delivers.
  • Provide payroll detail by classification. If your client has paid overtime and tip wages, they should indicate the amounts separately on the form.
  • Describe any employees or business operations that may not be listed on the form.
  • Provide the total payments for casual labor or subcontractors.
  • Provide the names, titles, and payroll information for any owners, officers, partners, or members.
  • Sign, date, and provide contact information including their e-mail address.
  • For further questions, your clients can contact us by clicking the link below.

What is included in the payroll figure on the client's Mail Audit Form? (Does not apply to Pay As You Go plans)
The payroll figure reported on your client's Mail Audit form reflects their total gross payroll, excluding all compensation for the owners/officers/members of your client's business. Compensation figures for owners/officer/members are listed in the Officers/Ownership section located on page 2 of the form.

What is a Telephone Audit? (Does not apply to Pay As You Go plans)
For a Telephone Audit, your client will receive a two-page report form that we will mail to them to complete when their policy expires. All your client needs to do is enter payroll information by class, answer a few questions, and return to EMPLOYERS within 15 calendar days through the mail, e-mail, or fax. After your client has submitted the form, an auditor will contact your client for a telephone interview to complete the final audit process.

What is a Remote Physical Audit? (Does not apply to Pay As You Go plans)
To simplify the audit process and avoid any interruptions caused by an On-Site Physical Audit, we are proud to offer a remote physical audit option. Our experienced audit staff will contact your client to assist in determining if a Remote or On-Site Audit will offer greater convenience. An auditor will call or e-mail a request for payroll records. These records may include 941's, State Unemployment Forms, a Payroll Journal, or a workers’ compensation summary report. An interview will be conducted over the phone at your client's convenience.

What is an On-Site Physical Audit? (Does not apply to Pay As You Go plans)
Your client will be contacted by one of our Premium Auditors to schedule an on-site appointment to visit your client's business location(s) to conduct the audit. Our auditor may request 941's, State Unemployment Forms, a Payroll Journal, or a workers’ compensation summary report. Our auditor may also observe your client's operations to better classify each function.

What happens if my client does not comply with a Premium Audit?
If your client fails to comply with a Premium Audit, we may cancel your client's current policy, if any, or increase your client's final audit premium, and they may be ineligible for an experience modification. We may also estimate, if any, your client's final audit premium which may result in additional premium due. 

What happens after the Premium Audit?
After your client's audit is completed, we will mail them an explanation of their audit results, which includes a premium invoice.


Why is my client charged fees and other surcharges, and what are they?
Most states have a fee schedule for a variety of purposes. The fees are most commonly used for the following:

  • Insurance guarantee funds to guard against insolvent carriers
  • Administrative surcharges to fund rating and administrative organizations
  • Fraud assessments to finance anti-fraud programs
  • Benefit funds to protect uninsured injured workers
  • Terrorism Risk Insurance Act of 2002 (TRIA), as amended, is a federal law that provides funding to carriers following a declared act of terrorism
These fees are mandatory in the states in which they apply.

What is premium (excess) overtime?
Premium overtime, sometimes called ‘excess overtime,’ is the amount paid over an employee’s regular hourly rate. For example, an employee works 50 hours in a week; the employee’s regular hourly rate is $10 per hour and the overtime rate is $15 per hour.
  Hours Rate Pay Premium WC Exposure
Regular 40 $10 $400   $400
Overtime 10 $15 $150 $50 $100
Total 50   $550 $50 $500

An easy way to calculate the premium or excess portion of overtime is to divide the total gross overtime by 3. Please note, overtime is not excluded in Nevada or Utah.


Can my client exclude Section 125 or 401(k) contributions?
If your client conducts business in California, they may qualify to exclude their employees’ contributions to a Section 125 plan. Health Savings Account (HSA) contributions can be deducted in most states. In California, the HSA must be part of a Section 125 plan in order for these amounts to be deducted. 

Any employee contributions to a 401(k) plan are always included in determining your premium.

How can my client request a copy of the auditor report?
To request a copy of the auditor’s report, please e-mail us at Auditdata@employers.com. You may also fax your request to 877-986-5453. Please be sure to provide your company’s name (as it appears on the policy) and your policy number. Our e-mail reply will include your worksheets as a PDF file. 

What can my client do if they disagree with the Premium Audit results?
To request a review of your client's final Premium Audit, they need to provide a written request to the Premium Audit Department at Auditdisputes@employers.com or by fax 888-966-5656. Please be sure to include the reason for your client's request, any supporting facts and/or documents, their contact information, and an ideal day/time for a Premium Audit representative to contact your client.

How can my client contact Premium Audit?
Telephone - 800-677-3252
E-mail - Auditinquiries@employers.com.
Fax - 888-980-5455

Where can my client submit the Mail Audit Form?
You can submit your Mail Audit Form to:
Audit@employers.com. or fax 888-988-1841

To encrypt your mail audit form submission please call us at 800-677-3252 and an auditor would be happy to set up a secure encrypted e-mail file transmission.