How is Workers' Comp Calculated in Maine: with Rates for 2024
Workers’ comp is calculated in Maine using two important factors - your type of industry and your annual employee payroll. The process is straightforward: your business's annual payroll is divided by 100 and then multiplied by the workers' comp rate specific to your industry.
This simple formula, Annual Employee Payroll / 100 x Industry Rate serves as a helpful tool. Let’s dive in to see how to use it:
Determining Workers' Comp Premiums in Maine
What is Payroll for Workers’ Comp?
In the context of workers' comp insurance, payroll includes the total estimated annual compensation for all your employees. This includes salaries, wages, bonuses, and any other forms of compensation.
The concept is simple yet effective: the larger your workforce and the higher their compensation, the greater the potential risk and liability for workers' comp claims.
How are Class Codes used in Calculating Premium Cost?
Each industry is associated with a specific class code, which indicates the level of risk of that type of work. Industries that are prone to higher instances of work-related injuries—like construction or manufacturing—tend to have higher workers' comp rates compared to those with lower risk profiles, such as office-based businesses.
The National Council on Compensation Insurance (NCCI) maintains a list of these class codes for use in states like Maine. For each class code, a rate is determined that reflects the risk level of that occupation relative to others within the same industry.
Industry Rates by Class Code for Maine Businesses
To help you calculate your premium, here are Maine rates for common industries, provided by a leading partner carrier:
How to Calculate your Workers’ Comp Premiums
Let's take a hypothetical example of a plumbing business to illustrate how to calculate workers' comp costs using the formula.
Suppose your plumbing business has an annual employee payroll of $100,000. The industry rate for plumbing, as shown above, is $2.59 per $100 of payroll.
To calculate the estimated workers' comp premium for your plumbing business, you would use the following formula:
Annual Employee Payroll / 100 x Industry Rate
Plugging in the numbers, the calculation would look like this:
$100,000 / 100 x 2.59 = $2,590
So, based on this example, the estimated workers' comp premium for your plumbing business for the year would be $2,590.
This simple calculation gives you an insight into how the specific industry rate and your business's annual payroll directly impact your workers' compensation premiums.
Please note: This estimation does not account for taxes and fees. Additionally, your claims history could influence the final cost.
What can I do to lower my Workers’ Comp costs?
Although there are specific industry rates for workers' comp in Maine, there are proactive steps you can take to lower your costs. Here are a few:
Implement Safety Measures
By implementing safety programs and providing proper training, you can reduce workplace accidents and injuries, which can lead to a lower workers' comp premium.
Establish a Return-to-Work Program
Creating a return-to-work program can help injured employees transition back to work sooner, reducing the duration of claims and ultimately lowering your workers' comp premium.
Review and Manage Claims
Regularly reviewing and managing workers' comp claims can help identify any potential issues and ensure that claims are handled efficiently, which can positively impact your premium.
Check Employee Class Codes
Make sure that your business operations and the roles of your employees are classified correctly. If the classification codes are inaccurate, it can result in higher rates.
Need help calculating your Maine workers’ comp premium?
If you need assistance with calculating your Maine workers' comp premium, we're here to help. Contact us at 886-338-8823 or start an instant quote to get the support you need.
At Kickstand, we're dedicated to ensuring that you find the best workers' compensation coverage for your business.
Note: The rates listed above have been provided by one of our partner insurance carriers, and were accurate at the time of publishing and for illustrative purposes only and may not reflect actual current rates for workers' compensation insurance in Maine at this time. Various factors, such as claim history and business experience can affect the rate as well. Business owners should consult with an insurance agent or the NCCI for accurate and up-to-date rate information.
Note: The information provided in this blog is intended for general informational purposes only and is not a substitute for professional legal or insurance advice. Laws and regulations regarding workers' compensation insurance are complex and vary by state and by specific circumstances. Therefore, readers are encouraged to consult with a qualified legal or insurance professional to obtain advice with respect to any particular issue or problem they might have.
Mordechai Kamenetsky, co-founder and lead agent of Kickstand, is recognized as an expert in workers' compensation. He is passionate about helping small businesses manage risks and lower their workers' comp costs. In his articles, he educates readers and clients on the intricacies of workers' comp insurance.
As a small business owner, cheap workers' comp insurance is within reach. By classifying your workers correctly and lowering your experience modification rate, you can save big. Why spend extra money if you don't have to?
