Work comp policies have two basic methods of billing.
- Stipulated (sometimes referred to as 'stips')
- Reporting. State Fund calls their system "paygo" but it is by reporting.
With stipulated billing an annual estimate of payroll is made at the beginning of the policy year. A deposit premium is charged and the balance of the estimated premium is billed in equal amounts usually over 10 payments. After the policy term an audit is performed to determine what the actual payroll for the year ended up at. Depending on the results of the audit the insured will either owe more premium or they will be due a return of excess premium.
With payroll reporting the insured submits a payroll report on a regular basis either monthly or quarterly or bi-annually. In theory at the end of the policy year the payroll would have been reported exactly but in actuality sometimes the payroll is misreported as to amount or classification. For this reason an audit is usuallly performed and based on the audit there may be differences.
If an insured does not agree with an audit it can be disputed with the proper documentation.
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