Client Reporting Best Practices

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You want to make sure proper coverage is in place at all times, and you want to protect your experience modification factor.  Sound client reporting procedures are an integral piece of your overall policies and procedures.  Here’s why…….

Many insurance companies require a prospective client to be approved for addition to your master policy.  They require a formal bind or add request be placed BEFORE the client’s first day of payroll with your PEO.  Failure to report timely can result in a gap in coverage, where you are subject to claims payments under statute.  It is always the carriers prerogative to backdate or not;  all carriers are hesitant to do so, and many will not back date under any circumstance.

  • Make sure your prospect is approved by the carrier before the effective date of your contract.
  • Make sure you designate one person or department to notifying your agent or carrier of the addition BEFORE the effective date of your contract, or the first day of the pay period.  Many states also have client reporting requirements
  • Have a safety net or double check in place to catch new clients potentially not reported.

Client changes throughout the policy life should also be reported timely

  • Most claims systems trigger coverage confirmation by the locations listed on the policy.  If a new client location is not listed,  claims handling will be slowed down
  • If a client adds a new workers compensation code or enters a new state, he may have changed operations that may or may not be approved by the carrier.  Get more details and report new operations immediately to your insurance professional or carrier
  • Again, designate a person or department to track all client changes
  • Periodically reconcile your payroll reports to internal client information as a safety net.  Also monitor your policy coverage and endorsements.  Your insurance professional can aid in this effort.

Most carriers also require that clients who leave your services also be reported timely.  This part gets trickier, since sales or your service team may be trying to save the client, or the client never notified anyone and just stopped running payroll.  What happens if the former client reports a claim directly to the insurance company without your knowledge?  Once a claim is accepted, it is difficult to just stop making payments.

  • If you have not met any state reporting requirements,  the state may statutorily find you to still be the employer of record for the life of the claim.  This can get expensive, and will affect your experience modification.
  • Many states require the approval of a judge or board to allow the carrier to “deny” the claim once client termination status is known to the carrier.  This takes time, and in the meantime, your carrier is on the hook for payments.  These payments will go against your experience mod in most “master policy” states.
  • Designate a person or department to track all client terminations
  • Know your states’ reporting requirements
  • Periodically reconcile your payroll reports to internal client information as a safety net.  Also monitor your policy coverage and endorsements.  Your insurance professional can aid in this effort.

Check, cross-check, monitor, and use the knowledge and resources of your insurance professional.