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clock April 30, 2021

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How to Get a Premium Refund for Workers’ Comp

Every business is required to provide workers’ compensation insurance to its employees. But did you know the laws concerning workers’ compensation are different in every state? It’s essential as a business owner to know what the law requires and how to administer this coverage for your employees.

That’s where National Workman’s Comp Solutions (NWCS) can help! We serve more than a thousand businesses, helping them select the right insurance carrier and getting the best rates possible. In some cases, we can help you get a premium refund.

You read that last sentence correctly. It is possible to get a refund on a portion of your workers’ compensation premiums. Read on and learn how.

Workers’ Compensation 101

If you’re not familiar with workers’ compensation insurance, here is a brief overview. Insurers created this type of insurance in the late 19th century. In 1948 the United States required businesses to carry these policies in all fifty states.

Workers’ compensation policies provide compensation to employees for on-the-job injuries. The insurance provides wage replacement benefits, medical treatment, and vocational rehabilitation. The cost of a policy varies by state, but employers will pay between a few hundred and a few thousand dollars per employee.

Every business must carry workers’ compensation insurance on its employees, but most companies are paying too much for it. 

You Might Be Overpaying

Open claims and misclassification of incidents can result in higher than necessary premiums. The Society for Human Resources Management estimates that nearly 70% of businesses overpaid premiums for workers’ compensation. The only way to know for sure is with a premium audit. 

A workers’ compensation premium audit takes a careful look at your insurance premiums. An independent party will verify your company’s payroll to ensure your premium is based on an accurate accounting of your employee salaries and benefits. Changes to either of these areas can cause you to overpay insurance premiums.

An audit will also take a look at the different job classifications you have assigned to people in your company. Different classifications carry different degrees of risk. If someone’s job role has changed, their risk level may have decreased, and your insurance premium should be lower.

Every workers’ compensation policy requires an annual audit of your payroll. A classification audit may not be required. If you aren’t reviewing these classifications, you might be overpaying insurance premiums. 

You Might Be Eligible for a Premium Refund

If you are part of the 70% of businesses overpaying workers’ compensation insurance premiums, it might be possible to get back some of that money. NWCS specializes in workers’ compensation issues and may be able to help you recover some of your overpaid premiums. 

Insurance companies seldom refund overpayments unless you make a request. There are many reasons your company may be eligible for a refund on some of your workers’ compensation insurance premiums.

If your company is in an “assigned risk” pool or your Experience Modification has been rising, you could be eligible. These circumstances cause employers to pay higher than average premiums. The opportunity for overpayment is high.

If your annual premium is more than $100,000, there could be something in your policy causing the overpayment. Misclassifications or clerical errors in claims are likely culprits. It’s important to review your policy and claims to see if you are eligible for a premium refund.

Have you merged with another company, closed any of your operations, or expanded into other states? These are all conditions that can cause overpayment of workers’ compensation insurance premiums. If you don’t make corrections, you could overpay for years.

How Do I Get a Workers’ Compensation Premium Refund?

The first step is to make sure you meet the minimum refund requirements:

  • You must have ten or more employees
  • Your company must generate payroll of $250,000 or more per year
  • You currently pay at least $30,000 per year in workers’ compensation insurance premiums
  • Your workers’ compensation loss ratio must be in the acceptable range

If your business meets these requirements, our refund program could be the right fit for you. We can help you get a refund on overpayments and find a policy that meets your requirements for the future. 

Workers’ compensation premium refunds may be recoverable as far back as six years. Once you’ve found mistakes that have caused overpaid premiums, you can reduce the amount of your premium payments.

Special Circumstances for Refunds

During the coronavirus pandemic, some carriers may provide refunds for workers’ compensation premiums. Have you reduced your payroll or closed some of your operations? A premium refund might be possible.  

There is no state or federal mandate for insurance companies to provide refunds due to COVID-19. Most workers’ compensation insurance companies have a department handling coronavirus questions. Pull together all your records for the past year, and contact your insurer to see if refunds are available. 

COVID-19 has resulted in many changes for businesses. If you suspect these changes may have caused you to overpay for workers’ compensation insurance, act now. It’s critical for you to seek information about a refund sooner rather than later.

Pay for What You Need, Get Back What You Deserve

Every state requires businesses to pay for workers’ compensation insurance. Depending on the location of your business, and your employees’ types of work, your policy’s cost can vary greatly. In many cases, employers or insurers’ mistakes can cause you to overpay for workers’ compensation insurance. 

It’s possible to get a premium refund for overpayments. Our refund program can help you identify why your insurance premiums are overpaid. We can help you get a premium refund.

If you need a quote for workers’ compensation insurance, we can provide a quick quote online. Contact us today for information on how to get a refund on some of your workers’ compensation premiums. We’ll work with you to make sure you have the insurance you need, and get back the money you deserve.

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