One of the more frequently overlooked cost items for Employee Benefit Statements that may actually be fairly costly for the Employer is Workers' Compensation Insurance, more commonly known as 'Workers' Comp'.
Each State has it's own peculiar set of maximum and minimum benefits that cover a wide variety of accidents and illnesses that take place on the job and these benefits can vary from one state to another by more than you would expect. Possible benefit amounts are irrelevant for this post, but estimating the individual costs of the insurance may be a good idea.
Workers' Comp uses Job Classification Codes to help identify potential costs & risks associated with a particular work duty. You'd be amazed at the level of detail, with some occupations being 'safe' (Clerical (8810) at $.30 per $100 of wage) to others such as Logging & Tree Removal (Code 2702) at a whopping $64.18 per $100 of wage. That's right, for every $100 of wage, you need to pay an insurance premium of $64. Those kind of numbers makes Health Care or FICA look puny. It is highly unlikely that your organization has specified each and every employee (by Employee ID) for their Job Classification. I've been on the production side of millions of statements and for over 1,000 companies and I think that level of hyperactivity has happened one time, by a Defense Contractor. This link gives you an idea of the depth of the subject.
If you are putting the effort in to gather data for an Employee Benefit Statement, don't skip Workers' Comp. Someone has been assigned to managing this item, be it a Risk Manager (large company) or the CFO at a smaller company. Ask that person if they can provide you with the previous year's net premium, after Modification. Then, do the following:
- The WC bill will break out the gross wages, but also give a Grand Total.
- Ask the CFO/Risk Manager who was assigned the classification of 8809 (Executive Officers) and the gross wages that were on the WC bill for 8809.
- Subtract the 8809 wages from the Gross wages on the bill and also that part of the premium that was paid for the Execs. The remainder is 'normal folks'. You can come back calculate the Execs manually, later on.
- Example: 10,000,000 Gross wages on the Bill and a Net premium after Modifications of 76,000. Execs are 300,000 of that number and their portion of the premium was 2,100.
- The math -> (76,000- 2,100)/(10,000,000- 300,000) = Blended Rate of .007619 or said differently 0.7619%. Take this figure and multiply against each persons Gross wage (other than the Execs) and you have a broad approximation of the costs of Workers' Comp per person.
In closing, there are more accurate ways to reach personalized numbers, but sometimes it's best to murmur 'close enough for Government work' and move along to the next fun item, like Company Cars or Cell phones.
Thanks for reading.