Pay as You Go Workers Compensation

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Pay as You Go Workers’ Compensation Insurance is designed to allow business owner’s to pay their insurance premium’s monthly instead of in one lump sum. In many cases this can help business owner’s free up cash their business so desperately needs for other more urgent expenses. If you are a business owner who is cash-strapped or you manage a business that is seasonal, a Pay as You Go Option may be just what your business needs.

Pay as You Go

How is Pay as You Go different?

With a traditional Workers’ Compensation Insurance Policy, employers have to estimate their annual payroll and pay 25% of that total for a workers comp deposit. This is typically followed by 3 – 6 monthly installments to the insurance company in order to make up the difference of the premium. If you are a small employer in a less risky class code like clerical, office or a small retail business; your cash-flow may not be impacted by this payment all that much.  If you are in a more risky classification code or your payroll is large, than this 25% payment can be significant. It can cause your cash-flow to be tied up in insurance premium instead of on more immediate business needs like inventory.

How does Pay as You Go Benefit a Business? 

Pay as You Go Workers’ Compensation benefits employers in three main ways:

  1. It allows businesses to pay their premium monthly instead of in one large payment.
  2. It can free up cash flow for more immediate business needs.
  3. It may prevent mid-term audits because both payroll and premiums are calculated monthly instead of yearly.
Monthly Payments

Pay as You Go Workers’ Compensation Insurance Coverage benefits businesses by allowing them to pay premium monthly based on payroll instead of having to pay a 25% up front payment based on premium. In many cases, this is a great option for seasonal businesses like construction, farming or landscaping. These industries sometimes have a hard time forecasting payroll because of the weather and many other factors. If your business deals with these types of issues than Pay Go may be a great option for you and your business.

Frees up Cash

Another benefit of Pay as You Go Workers’ Compensation Insurance is that it frees up cash flow for more immediate business needs. With a traditional Workers Comp policy typically twenty five percent of the premium is due all at once. This is an estimate of your payroll and may be significantly different than your current payroll. This can cause your initial payment to be more or less than what it should be. Now this typically gets ironed out during the end of term payroll, but it still causes your business to either over pay or under pay your premium on the front end.

Prevents Audits

Business owner’s benefit from Pay Go Workers’ Compensation Coverage because it can  prevent audits from happening more frequently than are necessary. An end of term audit still happens, but Pay Go prevents audits from happening mid-term.  With the monthly payment format there is less risk of over or underpaying the premium.

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