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Payroll and Premium Audit Urgent Question – $85,000 Audit Bill

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Urgent Question – Payroll and Premium Audit

I received this urgent question on payroll and premium audit at 2 AM. The sender must have been losing sleep over it.

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We are now with a new carrier. Our Workers Comp Payroll Auditor came into our business four months ago. She went through our books and said everything looked good except for a few things.

We just received a bill for $85,000 with an overdue notice. We received no other warning and had no idea the bill would be so much. Our original Workers Comp policy was $105,000.

Should we just pay the bill as we are so late? How do we find out the results of the audit? Can we dispute the $85,000 bill? Should we contact the Insurance Commissioner? Please answer ASAP.

The insurance carrier will usually send the audit bill to the contact information they receive during the premium audit or the address on the policy. I looked up your company address and it is a PO Box. If you have a PO Box and the carrier sent it to your physical address, the bill and the backup info from the audit was likely returned to the carrier.

Your letter may have gone into a pile of returned envelopes at the carrier or will sometimes get lost in the mail. The carrier sent you the final notice by FedEx so it was delivered directly to your physical address.

The best way to find out the results of your audit is to immediately write the billing office noted on the bill. Send the letter certified return receipt. Explain to the carrier what happened and ask for a copy of the audit results and the auditor’s workpapers. Make sure you note that you receive mail at a PO Box.

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This previous article on your choices when you receive an audit bill may help you. Judging from the name of your company, it is likely you have hired subcontractors. That could be the source of the additional premiums.

Quite often, a new carrier will view your workplace differently than the last carrier. Your business may have added in additional employees which will cause a spike in your payrolls resulting in an increase in premiums.

A cardinal sin is to dispute a bill without a basis. Another cardinal sin is to contact the Insurance Commissioner’s office until all other means have been exhausted. This will harm the relationship with your new carrier and your agent even before your first payroll and premium audit.

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James Moore

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Mgmt Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications

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