Audit your Audit

I routinely provide payroll information for worker’s compensation audits for my clients, however, I am not always the one who gets the final bill. This last week I did get a bill for one of my clients for whom I had filled out the audit paperwork. The second I looked at it, I knew it was wrong. I dug out the original audit and sure enough, the insurance company had overstated my client’s payroll by 30%! The additional audit premium was over $300 wrong. Then I wondered, how many people actually compare their bill to the audit? I always do and this was not the first time this has happened. This happened to be a fax audit but many times the in person audits can be faulty as well. Last year, an auditor for a different client made a worker classification error and tried to overcharge my client $4000. The final bill ended up being much less. Another common error includes charging for an exempt officer. In Nevada, officers of a corporation can choose to be exempt from worker’s compensation coverage. My own carrier made this mistake a while back.

Subcontractors can also be the cause of a large worker’s compensation bill. Generally, in Nevada you need to obtain a certificate of coverage or statement of exemption for any subcontractors you hire. If you do not, your carrier will likely bill you for worker’s comp on those payments as well.

The most common error is probably worker mis-classification. If you don’t correctly communicate your employee’s duties in the right manner, you can end up paying really high rates that are incorrect. The bottom line is that you always need to carefully examine any insurance audit bill you receive and compare it to your records. (I.e. Audit the auditor). If you do find an error, I have found it’s usually pretty easy to correct, depending on the insurance company. There’s usually a time limit to dispute a bill, so make sure to take care of it promptly.

One comment on “Audit your Audit

  1. zero to hero fitness
    August 16, 2011 at 3:06 pm #

    It is truly a great and helpful piece of information. I’m happy that you shared this helpful info with us. Please keep us informed like this. Thank you for sharing.

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