For most businesses, workers’ compensation is an unavoidable expense. While workers’ comp laws vary from state to state, just about every state except Texas requires most businesses to provide workers’ compensation coverage for its employees. While the intent behind workers’ compensation is well-meaning — to ensure employees who get injured or sick on the job have their medical expenses covered, while also protecting businesses against costly lawsuits — the unfortunate reality is that many employers get a raw deal thanks to overcharges from medical providers and insurance carriers.
Chances are if your business provides workers’ compensation insurance, you’ve been overcharged at some point, maybe a little or maybe a lot. Most overcharges go completely unnoticed by employers, potentially costing huge sums of money and wreaking havoc on a business’s bottom line. Make no mistake, if your business doesn’t have a plan in place for spotting the common errors that lead to workers’ comp overcharges, it could be the difference between running a successful company and struggling to survive.
With that in mind, let’s take a closer look at some of the things you can do to guard against workers’ compensation overcharges.
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1. Have your medical bills carefully audited
Whenever a medical bill from a workers’ compensation claim comes in, you should never just pay it blindly without first having it professionally audited. The truth is the medical billing process is quite complicated, and billing departments often make serious errors. Sometimes, medical providers charge for services that weren’t actually rendered. Other times, they charge more than the amount they’re allowed to charge for particular services. In some cases, the employee may be receiving more treatment than is necessary, leading to costly bills.
That’s why it’s so important that every single bill is reviewed carefully. Partnering with a medical bill review company can ensure that your bills are meticulously audited so any mistakes get spotted and corrected. This could save your company a significant amount of money every year.
2. Review your workers’ compensation policy regularly
There are a lot of different factors that come into play when creating a workers’ compensation policy, such as projecting your payroll for the year and determining the classifications of your different employees. Both of these things will likely change over time as your business grows and evolves. That’s why you need to regularly review your workers’ compensation policy to ensure it still fits the needs of your business so that you’re not paying more for coverage than you should be.
Working with the right workers’ compensation insurance agent and even possibly an independent auditor can help ensure you get the right coverage for your type of business. This could help reduce overspending on premiums to save your company money every year.
3. Monitor your payroll throughout the year
Remember, your workers’ compensation premiums are largely determined by your payroll projections for the year for your different classifications of employees. At the end of the policy period, an audit takes place comparing your payroll projections to your actual payroll for the time. If your payroll estimates were lower than the actual payroll, you’ll owe money to the insurance carrier. If you overestimated payroll, you’ll have spent the year overpaying on premiums and tying up valuable cash resources, but you will be reimbursed at the end of the policy period.
Monitoring your payroll carefully throughout the year can help you identify if your projections are significantly missing the mark so that you can adjust your coverage as needed to avoid overcharges.
By focusing on these areas, you can control your workers’ compensation costs and guard against serious overcharges.
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- 3 Ways To Avoid Workers’ Comp Overcharges - November 7, 2014
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