Injuries and illnesses can occur on the job despite the safety measures you set up in your business. Under such circumstances, you may be required to compensate your employee, causing the need for Workmans comp. With the workman’s comp, an injured employee will efficiently cater for damages such as lost wages and medical bills.
Calculating your Workmans comp requires connecting with your insurance provider to establish the annual premium. With an insurance policy, your insurer will ensure you pay the correct amount based on the number of employees and their activities.
Read on using an insurance cost-per-employee calculator for your Workmans comp.
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Factors Influencing The Workmans Comp Calculation
Using an insurance cost per employee calculator for your Workmans comp requires an understanding of the following:
- The gross annual payroll
- Workers’ class codes
- Number of employees
- Claims history
Below, we will discuss the first two factors.
The Gross Annual Payroll
The information in your company’s annual payroll is useful in establishing the gross annual payroll cost for your full, part-time, seasonal, and temporary staff. If a new position lacks a complete annual payroll for assessment, project the gross annual pay. Next, divide the employee‘s annual payroll cost by 100.
An insurance cost per employee calculator should also capture overtime in the workman’s premium. Include the earnings in the total payroll such that an employee working overtime will have more workers comp premiums.
Workers Class Codes
Class codes signify an employee’s risk of injury and vary with the industry and employee roles. Generally, class codes put companies in classifications or groups with others doing similar things, hence the same risks and operations. The groups feature a base rate, a starting point for using the insurance cost per employee calculator to calculate your worker’s comp premium. Depending on other factors, you can make positive and negative adjustments from the base rate.
The more dangerous a job is, the higher its premium. For instance, a clerical employee has lower chances of injury than one in the construction sector. Still, a company should carry insurance as employees in low-risk jobs can get hurt due to common injury causes such as slips and falls. Lastly, while the National Center for Compensation Insurance sets workers’ class codes, there may be a few variations based on your state.
Using The Insurance Cost Per Employee Calculator For Your Workmans Comp By State
States have a workers comp department regulating how this insurance works. These rules include the duration an employee has to claim an injury and the process employers must follow after learning of an injury.
How To Calculate The Workers Comp Premium Rates
Upon establishing your workers’ comp insurance rate for your class code, you can use an insurance cost per employee calculator to multiply the premium rate by the answer you got from dividing the annual payroll by 100 as follows:
Employee’s workers comp = Employee’s Annual Payroll Costs/100*Workers Comp Premium Rate
Use An Insurance Cost Per Employee Calculator For Your Workmans Comp
Now that you can calculate the workman’s comp, knowing how much premiums you will pay for your employees is possible. While you do not have control over the class codes in your state, you can establish a workplace safety culture for reduced premiums. Finally, be accurate in the payroll calculations and employee classifications to avoid overpaying premiums.