Workers Compensation Facts for Planning and Budgeting in RI and MA

| April 04, 2016
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Workers Compensation policy premium is based on rates and payroll for a particular “class” or type of business.

The rates are set by the state each year and the payroll is what you report as what you expect to pay in employee salaries, bonuses, etc. for a given year.

This payroll is always considered to be just an estimate at the time of a policy renewal, or new business, since the year has not been completed. At the end of your policy term, the company will perform an audit of your actual payroll records.

If the payroll was underestimated, you will receive an additional premium.

If your payroll was over estimated, you will receive a refund of the excess premium paid.

Accurately projecting your payroll at the onset is critical.   Since changes can occur during a policy period, new hires, increases in pay, bonuses, etc., it is important to let your agent know if you need to make payroll adjustments as the year progresses. There are also “Pay as you go” programs that allow you to report payroll as it is actually incurred on a monthly basis, which can be a big help especially for construction risks.

Having an accurate payroll estimate at the beginning of the policy term also allows you to spread the premium payment out on installments throughout the year.  If an additional premium is due as the result of an audit, that premium is usually due within 30 days, and the company may then bump up the payroll on the current/renewal policy for a double unplanned additional premium.

Another important issue to consider is the payroll Minimum and Maximum charges for the officers of a corporation. Each state is different so it’s important to understand these thresholds.

For example, in the State of RI, the minimum for an officer is $46,800.00 up to a maximum of $182,000.00   (anything in between is actual)

In the State of MA, the minimum for an officer is $10,400.00 up to a maximum of $52,000.00 per year (again, anything in between is actual).

These values can change from year to year so it’s important to discuss this with your agent.

Be prepared and know these Work Comp fun facts in your planning and budgeting, and be sure to call us with any concerns you and be sure to call us with any concerns you may have.

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