Following up on last month’s blog about the history of workers compensation, this month we’ll take a closer look at one of the most important documents in your workers’ compensation policy: the Declaration Page, often called the “Dec Page.” The declaration page serves as an executive summary of your workers’ compensation policy and contains key information about your coverage, classifications, premiums, and experience rating.
For many small business owners, the declaration page can seem like insurance jargon. However, understanding a few key sections can help you better manage your costs, prepare for audits, and ensure your business is properly protected.
Understanding your workers’ compensation classifications
The first area to review is your classification codes, often referred to as class codes.
These codes are selected by you, your insurance agent, and the insurance carrier and are used to define the type of work your employees perform. While classifications can vary slightly by state, they are generally consistent across the country. One common example is Class Code 8810, which is used for clerical and office employees.
The number of classifications assigned to your business depends on the nature of your workforce.
A dental practice, for example, may have a single workers’ compensation classification that covers most employees. A sign company, however, might have multiple classifications, including:
- Sales employees
- Graphic designers
- Manufacturing or sign-production staff
- Installation crews
Because workers’ compensation premiums are based on payroll assigned to these classifications, proper payroll tracking is critical.
Why payroll departments matter
One of the best ways to prepare for workers’ compensation audits is to create departments within your payroll system.
By tracking wages by department, you can:
- Accurately allocate payroll to the correct class code
- Simplify annual workers’ compensation audits
- Reduce the likelihood of premium disputes
- Gain better visibility into labor costs across your business
Even businesses with only one workers’ compensation classification benefit from departmental payroll tracking.
For example, a dental practice may organize payroll into:
- Dentists/Owners
- Hygienists
- Dental Assistants
- Administrative Staff
- Billing and Scheduling Personnel
While these employees may share the same workers’ compensation classification, departmental reporting provides valuable operational insights and helps business owners better understand where labor dollars are being spent.
What is a MOD Rate?
The next important item on your declaration page is your Experience Modification Rate, commonly called a MOD Rate.
Your MOD Rate reflects your company’s claims history and serves as a measure of workplace safety performance.
Most businesses begin with a MOD Rate of 1.00, or 100% of the standard premium for their industry classification. A favorable claims history can reduce that number over time. For example:
- A MOD Rate of 0.95 means you pay 95% of the standard premium.
- A MOD Rate of 0.90 means you pay only 90% of the standard premium.
Conversely, businesses that experience frequent injuries or costly claims may see their MOD Rate increase to 1.10, 1.20, or higher, resulting in increased insurance costs.
Simply put, safer workplaces are often rewarded with lower premiums.
The declaration page tells a story
Your declaration page is much more than a billing document. It tells the story of your business:
- The type of work your employees perform
- How your payroll is organized
- Your claims history
- Your overall workers’ compensation cost structure
Taking the time to review this document annually can help you identify errors, improve payroll reporting, and better control insurance expenses.
ConnectPay’s role: supporting small businesses and their trusted advisors
At ConnectPay, we believe small businesses deserve access to expert guidance and local relationships they can trust.
Unlike some payroll providers that attempt to replace insurance agents and brokers, we take a different approach. We believe business owners benefit most when they have a strong team of advisors working together on their behalf. In fact, ConnectPay has intentionally built its business around partnering with trusted advisors, including insurance agents, brokers, CPAs, bookkeepers, and retirement professionals.
When it comes to workers’ compensation, our role is not to sell insurance. Instead, we work alongside local brokers and agents to help our mutual clients:
- Organize payroll by department and class code
- Simplify workers’ compensation audits
- Improve payroll reporting accuracy
- Support pay-as-you-go workers’ compensation programs when appropriate
- Provide the information business owners and brokers need to make informed decisions
We believe the best outcomes occur when payroll professionals, insurance brokers, accountants, and business owners collaborate as a team.
Final thought
If you haven’t looked at your workers’ compensation declaration page recently, now is a great time to pull out a copy and review it with your insurance broker. A few minutes spent understanding your classifications and MOD Rate could lead to better reporting, smoother audits, and lower premiums over time.
At ConnectPay, we’re always happy to help our clients organize the payroll data that supports those conversations — while leaving insurance advice to the trusted local experts who know it best.