Institute of WorkComp Professionals

Expertise in workers' compensation education and certification at WorkComp Professionals Institute.
Menu

Workers’ Comp Refunds: The 3-Year Window Most Employers Miss

Workers’ Comp Refunds: The 3-Year Window Most Employers Miss

28 days ago , , , , , , ,

Current & Two Prior: Your 3-Year Refund Window

Quick Takeaways

  • The Rule: NCCI and state bureaus allow Experience Mod revisions for the Current policy year and the Two Prior years.
  • The Trap: Thinking that once the data is sent to the rating bureau, there is nothing you can do. .
  • The Opportunity: Find a clerical error or a “non-compensable” claim from 2022? You can still get a refund today.
  • The Move: Run a forensic audit on your last 36 months of data. There may a refund hiding in plain sight.

Most business owners view workers’ comp like any other recurring bill. You pay it and move on.

You might think that once the policy year is over and the audit is finalized, that’s the end of the story.

In workers’ comp, the story stays open for three years. It’s governed by the Current & Two Prior Rule — a mechanism for recovering overpayments from the insurance company.

The 3-Year Lookback

NCCI (and the independent state bureaus) understand that insurance companies are run by humans and humans make mistakes.

That’s why they provide a window for corrections.

If an error is found in a 2023 Mod, the Bureau can be required to retroactively revise that Mod. And once that Mod is lowered, the insurance carrier is legally required to cut a check for the difference in premium.

This window covers:

  1. The Current mod.
  2. The First Prior mod.
  3. The Second Prior mod.

Anything older than that is usually “statute barred.” But three years of premium represents a significant opportunity to recover lost funds.

What Triggers a Retroactive Refund?

You can’t simply request a refund. You need a Triggering Event.

  • Non-Compensable Claims: A claim was reported, a $10,000 reserve was set, but later the court ruled it wasn’t a work injury. If that $10,000 is still on your Mod worksheet, you are owed a refund.
  • Subrogation Success: Your carrier paid $50,000 for an injury caused by a third party. They later recovered that $50,000 from the third party’s insurance via subrogation. If your Mod wasn’t updated to reflect that “recovery,” you are owed a refund.
  • Clerical Errors: The adjuster fails to reduce a reserve or close a claim which they committed in writing to do. It happens, but when it does, the mod must be revised.
  • Ownership Changes: You sold a division two years ago, but its claims are still being “combined” with your main business.

Why Retroactive Corrections Are Uncommon

This type of correction requires “Unit Stat” forensics. To get a refund, you have to find the error, prove it to the Bureau, wait for the Bureau to issue a “Revised Rating,” and then navigate the insurance carrier’s billing department to get the check cut.

It’s detailed work — and the process takes time.

Frequently Asked Questions (FAQs)

How long does a refund take?

From the moment the error is identified to the moment you get the check, it usually takes 60 to 90 days. The Bureau moves deliberately, and the carriers aren’t exactly known for their speed either.

Does this work if I’ve switched carriers?

Yes. The “Current & Two Prior” rule follows the Mod, not the carrier. Refunds can be obtained from carriers you worked with years ago.

Can the carrier “Audit” me back?

A Mod revision only looks at the specific data points that were wrong. It doesn’t reopen the entire audit for a “fishing expedition.” You are protected by the finality of the original audit on all other points. Once a mod expires, even if it were revised upward, you can not be charged additional premium retroactively.

The Technical Edge

Three years of premium is a meaningful lookback window, but only if someone is actively searching for the triggering events. Non-compensable claim rulings, subrogation recoveries, and payroll reclassifications all require a direct comparison between the carrier’s unit stat report and the Bureau’s Mod worksheet. 10 Ways to Find Lost Money in Loss Runs at WorkCompProfessionals.com covers the data points to check across the Current & Two Prior window.

Agents who want to help employers recover overpaid premium will find tools and training at WorkCompProfessionals.com. Employers who want to understand the 3-year retroactive refund process can find practical guidance at ConquerCompCosts.com.