Why did we get an extra premium bill after the policy year ended?

At binding you estimate the exposure base: payroll by class code for workers compensation, occupied beds or licensed beds for liability, sometimes revenue. The premium charged during the year is a deposit against that estimate.

After expiration the carrier audits the actual figures and issues an additional or return premium. In a growing operation the additional premium is the norm, and it arrives as a single bill for money that was earned across twelve months and already spent.

Class code assignment for workers compensation is the biggest source of error. Dietary, housekeeping, maintenance, clerical and direct care carry very different rates, and an auditor who cannot see a clean payroll split will often assign everything to the highest applicable code.

Agency labor is the second. Contract nursing staff paid through an agency that cannot produce a certificate of insurance are commonly picked up as your payroll at your rates, which turns an already expensive labor source into a much more expensive one. Collect agency certificates during the year, not at audit.

Overtime is the third. Most jurisdictions allow the premium portion of overtime to be excluded from the payroll base if the records separate it. If your payroll report shows only gross wages, you pay premium on the overtime premium.

Estimate honestly at binding. Understating the exposure base to reduce the deposit premium does not reduce the premium; it moves it into a lump sum later and damages credibility with the underwriter.

Split payroll by class code in the payroll system rather than reconstructing it at audit. Separate overtime premium as a line. Keep an agency certificate file. Track census monthly so the liability exposure base is known rather than reconstructed.

And ask for an interim audit at six months on any account that is growing quickly, so the true-up is two smaller numbers instead of one large one.

Audits are frequently wrong and are revisable. Request the audit worksheets, not just the invoice. Check the class codes, the payroll figures against your own reports, the treatment of overtime, and whether any uninsured subcontractor was picked up that in fact carried its own coverage.

There is normally a limited window to dispute, and the bill continues to accrue in the meantime. Handle it in the first two weeks rather than the last.