Workers Compensation insurance for the majority of businesses represents a significant operational expense. Mandated in most states, Workers Comp coverage protects your business if an employee gets sick or injured on the job. An injured or sick employee receives Workers Compensation benefits to cover expenses like medical bills, job retraining, and pay up to a certain amount while away from work.
At Insure My Work Comp, we understand that for many businesses paying a lump sump for Work Comp premiums can impact cash flow, tying up money that can otherwise be used for daily expenditures. That’s why we offer a Pay-As-You-Go option in which you make premium payments each time you run your payroll. Your Workers Comp insurance costs are spread out throughout the year. In lieu of paying a large lump-sum payment to cover the estimated cost of your liability, with Pay-As-You-Go Workers Comp, the amount you pay is based on each payroll you run. If you add or lose employees, your premium liability will change. This is particularly a smart option for organizations with seasonal or highly fluctuating payroll.
You connect your policy to your payroll service and put your payments on autopilot saving time and freeing up cash flow.
For example, let’s say your Workers Compensation insurance costs $0.80 per $100 in employee wages. You employ five workers who will earn a combined total of $225,000. Divide the total wages by $100 to get $2,250. Then, multiply $2,250 by the Workers Comp rate to get $1,800. Instead of paying the $1,800 at one time, with Pay-As-You Go, you would make incremental payments each time you run payroll to ease your financial burden.
Also, with traditional Workers Comp, premiums are based on estimates. You project your annual payroll and pay for the coverage upfront. At the end of the year, the insurance company either refunds you the difference or requests further payment. With Pay-As-You-Go, your payments are not estimates. You pay the money you owe based on your payroll, enabling you to pay accurate premium amounts and avoiding over- or under-estimating.