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Safe + Sound Week
Workers’ compensation is tied directly to an organization’s safety program in that it provides medical and wage benefits to people who are injured or become ill at work. A strong safety program can reduce the likelihood of injuries and illnesses. When fewer work-related accidents and illnesses occur, workers’ compensation costs also become less expensive.
The world of workers’ compensation is complex. Each state has different regulations that establish what is required of an organization and what premiums apply. One commonality across the board, however, is the workers’ compensation audit, which insurance companies conduct to make sure coverage and premiums match.
The following tips can help your organization prepare for a workers’ compensation audit and, in turn, improve your safety performance and save money over time.
- Inform yourself. Workers’ compensation audits are generally conducted within 35 days of when a premium is due or within 60 days of policy expiration. These audits are not done at random—they are mandatory. An auditor will contact the organization to send notice of the audit, which may be conducted via mail/email, phone, or field (i.e., in-person). When setting up the audit, it is important to ask, “What exactly should I have prepared to ensure a smooth and timely audit?” Carriers will gladly provide this information so the audit as painless and efficient as possible for all parties. Maintaining documentation is key, as organizations must provide the auditor with the information they request (i.e., employee, payroll, job descriptions) and ensure it is accurate. Not doing so is considered fraudulent activity.
- Project your payroll. While it is hard to see into the future, it is important to make sure your projected payroll is as accurate as possible to ensure you do not pay for additional exposure at a higher rate.
- Understand and expand your safety program. It can’t be emphasized enough—a strong safety program can reduce the likelihood of injuries or illnesses. Safety personnel should take an active role in understanding the workers’ compensation process, as there are important aspects of the safety system that can save the organization money if implemented correctly. Some of the important items that will be considered during the workers’ compensation audit may include:
- Personal protective equipment (PPE) program and availability
- Ergonomic evaluations
- Safety audits (i.e., frequency and type)
- Safety training
- Return-to-work programs
- Hiring practices (e.g., pre-employment evaluations, drug testing)
- Injury response protocols
- Medical evaluation programs
- Maintain contractor control. Having proper contractor control protects an organization from potential safety risks on many levels. For workers’ compensation, this involves ensuring all subcontractors and contractors have certificates of insurance, proper safety programs in place for the work that they will be doing, training for their employees, and supporting documentation for all these items.
Workers’ compensation audits can be a useful tool in an organization’s arsenal to identify gaps in your safety program that could create additional risk. Having your safety program and associated documentation in place will not only prepare the organization for a workers’ compensation audit, it should also improve overall safety performance and save money over time.