How to Change a Workers Compensation Code –

What? You can change a workers compensation code? Yes, you can. However there must be a valid reason for making a change. So before you go off willy nilly asking that a code be changed you should have a basic understanding of; the purpose of codes, classification of the business, valid reasons for a code change and resulting effects of a changed code. Let’s talk.

If you search this blog you’ll find numerous postings about work comp codes, what they are and how they work. But one of the things I hardly ever talk about is how to go about having a code changed. There’s actually a process involved in arriving at a proper classification and it’s that process that must be used as a guide for having a code changed.

While codes are but one item in the list of premium producing functions of a workers compensation policy they certainly do get a lot of attention! Agents and employers know the importance they play in the pricing of an employers policy. Get a code wrong and the employer will be paying too much or maybe too little in premium. Get a code wrong and the chances are pretty good that it will be corrected at audit time.

What would be considered a valid reason for asking that a code be changed? Here’s a short list:

  • The Original Code Is Wrong. It happens all the time where at the begining of a policy the work process or materials used by the employer are not properly considered or maybe misinterrpreted by the agent or issuing carrier which results in the business being misclassified.
  • Codes Are Changed At Audit. Misinterrpretation of a class code can occur at audit with the result being that payroll is shifted into a higher, or lower, incorrect code. Certain rules apply as to when codes may be changed and knowledge of these rules must govern any code changes at audit.
  • A More Descriptive Code Is Now Available. Classification codes are dynamic. While they may sometimes seem stuck in the Jurasic Period and movement may be judged against that of glaicier speed, rest assured that new, more descriptive codes are being developed as we sleep!
  • Business Operations Change. Yes it happens! A business adds or eliminates a work process, expands into another field or maybe merges or combines with another business entity. Any change in a business operation may create a resulting change in the classification code or codes used.
  •  And there are more…

Ok, ok! Back to the original question! Once you’ve established you have a valid reason to have a code changed you must present the research along with the supportive documentation to the insurance carrier. And the place to start is with your insurance agent. Your agent will have direct access to the underwriting department of your workers compensation insurance carrier. That’s who will initially review the information provided and make a decision as to whether or not a change is necessary.

Now for a word of caution!  We never suggest that an employer goes it alone when it comes to codes. There are costly pitfalls associated with code changes and without proper research an employer could easily find themselves in a situation where more costly codes are applied to their policy. Be careful!

When in doubt look for help from an Independent Work Comp Consultant!

Hope this helps you out! Thanks!