Glossary  /  Audit basics

Policy period

Also called policy term

The policy period is the span of dates a workers' compensation policy covers, and it is the window every figure in a premium audit must be drawn from.

Policy periods rarely align with the calendar year. A policy might run July 1 to June 30, or start mid-month on the date coverage was bound.

Because Form 941 is filed by calendar quarter rather than by policy period, the two calendars have to be reconciled at audit. A policy that begins partway through a quarter touches five calendar quarters rather than four.

Why it matters at audit

Pulling payroll for the calendar year when the policy runs on different dates makes every number in the submission wrong, and is one of the most common reasons an audit is returned.

Related terms

  • Form 941Form 941 is the quarterly federal tax return on which an employer reports wages paid and payroll taxes withheld, and it is the document a premium audit reconciles payroll reports against.
  • Premium auditA premium audit is the review a workers' compensation carrier performs at the end of a policy period to replace the estimated payroll the policy was priced on with the payroll the business actually paid.

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