FAQ for Employers

Answers to commonly asked questions about workers' compensation insurance.

General
What is workers' compensation?
Do I need it?
How does it work?
How much does it cost?
Do my subcontractors need it?
How can I buy workers' compensation from MEMIC?

Claims
When should I report an injury?
What information will I need?
What should I expect from MEMIC?
How do I find a medical provider?
What is workers compensation fraud?
If I suspect workers compensation fraud, how can I report it to MEMIC? 

Premium
How premium is determined?
How are job classifications determined?
How are rates set?
How is premium calculated?
What is an experience modification rating?
Does anything else influence cost?
What is a premium audit?

Comp-As-You-Go
What is Comp-As-You-Go?
Are there any additional costs?
How does it work?
What are the benefits?
How and when can I sign up? 
How are payments made? 
Why are Comp-As-You-Go policies audited?
Why do I need to keep verifiable separate records in order to split payrolls at audit time?
What is payroll endorsement?
Why do I have an additional premium after audit? 

Audit (aka Policyholder Report)
How do I provide the most recent Federal 941 forms if the quarter has just ended?
How do I respond to questions that do not apply to my business?
What types of documentation should I include with my audit form?
What should I do if the classification descriptions do not match the work done at my business?

 


General

What is workers' compensation?
It's insurance carried by employers to provide benefits for employees injured on the job, regardless of fault. It includes payment of medical services and lost wages, subject to limits set by law. Workers' comp laws are determined by states, so they do vary. In most states, workers' compensation is the exclusive remedy for employers to cover work-related injuries.

Do I need it?
Most states require employers to carry workers' compensation insurance. There are exemptions. Contact your state's workers' comp board for more information.

How does it work?
When an employee is injured, the employer must contact MEMIC to begin the process of making a claim against the policy. Once an injury is reported, we provide appropriate access to medical providers and pay appropriate wage-replacement benefits.

How much does it cost?
Costs are based on the kind of work an employee does and the wages earned for it. Some kinds of work have higher risk than others and are more costly to insure.

Rates for certain job types are filed with state agencies. The cost is calculated by multiplying that rate by $100 of payroll per employee. For example, if a police officer's classification is $4.00 per $100 and the officer is paid $400 per week, the workers' compensation insurance premium for that employee costs $4.00 per week.

Rates also can fluctuate based on upon your experience modification. In other words, your history of injuries or claims. Go to For Employers: Calculating Premium for more information.

Do my subcontractors need it?
Typically most states require subcontractors to have adequate insurance coverage. Maine, for example, requires a formalized relationship that includes a contract, certificates of insurance for workers' comp and general liability, and a filed Pretermination of Independent Contractor Status form. Otherwise, in the event of an injury, the general contractor is liable for damages. You should contact your state workers' compensation agency to learn about subcontractor requirements.

How can I buy workers' compensation from MEMIC?
You can buy it directly through your insurance agent. If you do not have a relationship with an agent already, search our database for an insurance agent near you.


Claims

When should I report?
You should report the injury to MEMIC as soon as is possible when you have been given notice or have knowledge of an employee's injury. All claims should be reported to MEMIC within 24 hours of your notice or knowledge of the injury. 

What information will I need?
Gather as much information as you can about the accident and injury. You'll also need:

  • Your MEMIC policy number
  • Injured employee's name
  • Employee demographic information (social security number, date of birth, address)
  • Date of injury
  • Date you were notified of the injury

What should I expect from MEMIC?
Once you've reported the injury, we’ll take care of the rest. We’ll report the claim to the state authorities, if necessary.

How do I find a medical provider?
You can search our preferred provider database.

What is workers compensation fraud?
Workers’ compensation fraud can be committed by employers, employees, lawyers, insurance company personnel, physicians, medical providers, and other stakeholders in the system - workers’ compensation fraud is a serious offense.

If I suspect workers compensation fraud, how can I report it to MEMIC?
If you suspect workers' comp fraud you can call your claim adjuster or leave an anonymous tip 1 of 2 ways:


Premium

How premium is determined?
Workers’ compensation premium is determined by the type of work performed and the amount of that work as measured by worker payroll. Depending upon the size of your organization, your premium may also be influenced by your organization’s past experience, known as an experience modification rating.

How are job classifications determined?
Your agent will help MEMIC to determine the proper job classifications for your organization. Most states use a standard set of classifications determined by an independent organization called the National Council on Compensation Insurance (NCCI). There are about 700 unique classes within this system.

How are rates set?
Insurance rates are often set or approved by a state regulatory authority, with advice from actuaries such as those who work for NCCI. These rates are based upon costs of injuries within the various job classifications in past years. Rates are expressed as a percentage of payroll. So, a rate that is $3.25 would be $3.25 per $100 of payroll.

How is premium calculated?
At the beginning of your policy term, you offer an estimate of the payroll dollars you expect to pay within that job classification for the year. To arrive a premium estimate, simply divide that payroll estimate by $100 and then multiply by the rate. If you are not large enough or have not been in business long enough to have attained your own experience modification rating (often known as your “experience mod” or “e-mod”), then this number is your premium. In summary: Payroll/$100 x Rate = Premium.

What is an experience modification rating?
If you do have an experience modification rating, you must multiply the result of the calculation above by your experience modifier. You’ll note that an experience modifier of less than 1.0 will reduce the rate you would pay while an e-mod above 1.0 will increase your cost. This is another reason why it is important to try to establish as clean a record as possible when it comes to workers’ compensation injury claims at your organization. In summary, if you have an experience modifier the calculation is: Payroll/$100 x Rate x Experience Modification Rating = Premium.

Does anything else influence cost?
Your overall cost may also be impacted by items such as additional assessments which are required by state governments, often to fund administration of state oversight of workers’ compensation laws.

What is a premium audit?
Your final cost may be determined by a premium audit, which may be completed once your policy term is up. During an audit, MEMIC would review your records to determine whether your estimated payroll matches the actual payroll for that term. 


Comp-As-You-Go
What is Comp-As-You-Go?
It is a billing option that allows you to pay workers’ compensation premiums based on actual payroll. 

Are there any additional costs?
No! Comp-As-You-Go is a free payment plan that allows you to pay premium when you have payroll. The expense constant is broken up over each payroll submission instead of being collected at audit.

How does it work?
Comp-As-You-Go allows you to pay workers’ compensation premiums as you process payroll. You can either self-report or look into a payroll automation with your payroll company. 

What are the benefits?

  • No down payment
  • Improved cash-flows
  • Automatic withdrawals
  • Reduction in audit payments 

How and when can I sign up? 
Work with your insurance agent to complete the Insured Intent Form at start of policy or at renewal. 

How are payments made? 
Payments are made through automatic EFT withdrawals.

Why are Comp-As-You-Go policies audited?
They are audited to verify accurate reporting of payroll, accurate assignment of classifications and to verify if any subcontractors were used during the policy period.

Why do I need to keep verifiable separate records in order to split payrolls at audit time?
Reporting to different classifications within the Comp-As-You-Go does not count as a verifiable classification split. We need more information and details as to why the employee has moved classifications.

What is payroll endorsement?
Payroll endorsements allow for the most accurate payroll estimates. By increasing payroll estimates, the policy credits and discounts are also increased, which lowers the net rates in the system.

Why do I have an additional premium after audit? 
Additional premiums can occur if incorrectly reported, such as missed payroll reports, misclassification of employees or subcontractors were employed during policy period.


Audit (aka Policyholder Report)
How do I provide the most recent Federal 941 forms if the quarter has just ended?
Send in the four most recently completed 941 forms that you have when you receive the audit form. The 941s or quarterly payroll reports from a payroll agency are used as support for the information you report on your audit form.

How do I respond to questions that do not apply to my business?
Please answer all questions accurately and to the best of your ability. If the question does not apply to your business, please answer with “N/A”.

What types of documentation should I include on my audit form?
You should send the quarterly total report from your 941, which breaks down your total quarterly payroll by quarter. You should also send a spreadsheet including the names of each employee and what he or she earned during the course of the policy period. This information should be sent in addition to, not in place of, your fully completed audit form.

What should I do if the classification descriptions do not match the work done at my business?
The classifications that are on the audit form are the same classifications that are on your policy. Your agent provided these classifications to MEMIC. Please contact your agent regarding the classifications assigned to your policy for an explanation.