02 Mar What is Pay as You Go Workers Compensation?
Workers’ compensation is a requirement for businesses in every State. Employers not carrying this coverage or opting to pay small claims out-of-pocket are at great risk for liability for medical bills and hefty government fines. A newer form of workers’ comp is pay as you go workers compensation insurance.
This insurance may sometimes be go by the names “Pay by Pay” or “Paygo”, and is designed to use true payroll costs instead of a predetermined estimate. With a typical workers’ compensation policy, insurers request employers to come up with an estimated annual payroll cost. This may differ from the actual value, and the premium will need an adjustment at year end. This adjustment may be in the form of either a refund or extra premium, depending on the case. Pay as you go workers’ compensation helps avoid this problem and may be especially suited to small businesses. By insuring with pay as you go, cash flow could better controlled and end-of-year audit surprises may be avoided.
Other benefits of pay as you go workers compensation insurance include the ability to see premium comparisons in real-time, the elimination of down payments, and being able to spread the premium payment over the course of payroll cycles. Would your business benefit from such a policy? Speak to your agent if so.