Worker’s compensation insurance is required in most states. Depending on your industry classification, the number of employees you have, and your company risk profile, you may be paying a substantial amount for premiums. Some business owners have turned to workers comp “pay as you go” plans to help manage these costs. Keep reading to learn more about this strategy.
What Is Pay-As-You-Go Workers’ Comp?
Instead of making a lump sum payment at the beginning of your policy period, pay-as-you-go plans are tied directly to your payroll system. It is automatically taken as a percentage of each payroll total, meaning you get an accurate and consistent system to make payments throughout the year.
How Does It Help Manage Costs?
This has several advantages. First, it frees up cash for daily expenses. It also helps to ensure premiums are accurately tied to your payroll whereas traditional workers’ comp premiums are based on estimates. That means you will never pay for coverage that you don’t actually use. Another huge advantage is that it removes any worry about premium notices, maintaining your coverage, or reporting changes to employees’ status to your insurer.
Workers’ compensation premiums can strain cash flow. Setting up a pay-as-you-go worker’s comp policy can be an effective way to manage premium payments and still have reliable consistent coverage.