What Is Pay-As-You-Go Workers’ Compensation Insurance?
Workers’ compensation insurance provides benefits to your employees if they get sick or hurt from a work-related cause. Our workers’ compensation insurance programs are designed to support businesses, promote employee safety, get employees back to work or to transitional work, and provide access to training for new skills.
Pay-as-you-go workers' comp is an alternative way of making premium payments. It’s not a different type of insurance; you’ll still get a workers’ comp insurance policy. Pay-as-you-go workers’ comp means you’ll pay your premium in smaller amounts spread over the course of the year.
Pay-as-you-go workers’ comp insurance from The Hartford means your employees can receive benefits if they’re sick or injured while on the job. Instead of paying for your premium with one large payment, you’ll make payments throughout the year. You’ll make a premium payment each time you run payroll.
Traditional workers’ comp plans may require a large annual premium payment to cover the estimated cost of your liability. With pay-as-you-go workers’ compensation, the amount you pay is based on each payroll you run. If you hire or lose employees, your premium amount may change.
What Are the Benefits of Pay-As-You-Go Workers’ Compensation Insurance?
The benefits of pay-as-you-go workers’ compensation insurance include a lower upfront cost. Plus, you’ll have competitive workers’ comp insurance costs. Additional benefits include:
- Large lump sum payments eliminated. This can help you with your business’s budget.
- Workers’ compensation insurance premium rates are calculated each payroll cycle.
- Workers’ compensation audits are an easier process. This can save you on additional costs and time.
- Improved cash flow by adjusting workers' compensation premiums to payroll changes.
- Audits that help make sure you’re paying accurate premium amounts. This could mean a lower overall cost of workers' comp insurance coverages.
Eliminating Large Upfront Workers’ Compensation Premium Costs
The Hartford can help your business eliminate upfront large insurance workers’ compensation premiums that are based on estimates – not actual payroll. With pay-as-you-go, businesses pay based on what they owe. This means you’re paying exact premium amounts and could potentially lower your overall workers' compensation costs.
Distributing the Cost of Workers’ Compensation Premiums Throughout the Year
By giving businesses the option of pay-as-you-go workers’ compensation insurance, The Hartford can help put businesses in a better position to budget. Breaking the premium cost into payments based on payroll can result in businesses seeing improved cash flow. The payments are also applied to the months when costs are incurred.
For both a small and large small business, pay-as-you-go workers’ compensation can be beneficial. Rather than making one large payment for your workers’ compensation insurance premium, you can better manage your business’s budget by making smaller payments throughout the year.
Saving Money and Time With Simplified Annual Audits
You can enjoy a simplified audit process because your workers’ comp premium amount is based on actual payroll, rather than estimates.
The Hartford’s pay-as-you-go workers’ compensation insurance can simplify annual audits. This means businesses can save time and money associated with an audit. Businesses that take a few minutes each month to calculate the pay-as-you-go costs can save hours a year having an audit.
How to Calculate Workers’ Compensation Premiums
You can purchase The Hartford’s pay-as-you-go workers’ comp insurance policy with little money down. And your premium is spread into smaller amounts over the year. So, this means your business could see improved cash flows.
Your business’s deposit for workers’ comp insurance will depend on the overall premium cost. The premium is affected by a variety of factors, including job type and industry. For example, it may cost plumbing companies in Florida about 47 times more than an accounting firm for workers' compensation per employee.1
Although you’ll still have to pay a deposit with pay-as-you-go workers’ comp insurance, it’ll likely be lower than the annual payment plan.
How Much Does Pay-As-You-Go Workers’ Compensation Insurance Cost?
Workers’ compensation insurance cost is calculated with several factors. These include state requirements, number of employees, payroll, the risk involved for the work, and industry. These factors are also used to calculate the cost of pay-as-you-go workers’ compensation insurance premiums.
Get a quote today online to find out how much your workers’ compensation costs may be.
What Other Factors Can Affect the Cost of My Pay-As-You-Go Insurance?
The Hartford’s pay-as-you-go workers’ compensation insurance rates and premiums can vary by state. The premiums are based on factors, such as your industry, number of employees, and your company’s safety record. For example, the workers’ comp cost for a landscaping company in Florida may be different than the same type of business in California.
Depending on the different factors and the job types, your business’s workers’ comp premium cost can add up.
Here’s an example of what workers’ compensation costs could look like for a landscaping business in Florida:
- The 2018 workers' compensation rate in Florida for landscapers was $9.82 per $100 of payroll. The landscaping business has three employees, each earning $40,000 a year.
- The workers’ compensation premium for the business is about $11,784. This is calculated by using this formula: Workers’ Classification Code Rate X Experience Modification Number X (Payroll/$100) = Premium.*
- The landscaping business can make one lump sum payment of $11,784 for workers’ compensation coverage for the year.
- The landscaping business could also make smaller payments throughout the year with pay-as-you-go, while still receiving workers’ comp insurance. Because the payments are based off of payroll, this could change depending on if employees are hired or leave.
Additional Pay-As-You-Go Deposits and Fees?
Since each state has its own workers’ comp regulations, it’s a good idea to familiarize yourself with your state’s laws. This could help you understand how much of a deposit you’ll have to pay for workers’ compensation insurance.
Tips to Save on Workers’ Compensation Costs?
A factor that may be used in calculating workers’ comp premium costs is your business’ safety rating. The safer your business is the better. If you increase security, fire safety, or workers’ safety programs, it could bring the annual costs down.
It’s important to make sure you have the right workers’ compensation insurance coverage for your business. Equally important is having the support you and your business needs. Our team of specialists can help answer any workers’ compensation insurance questions you may have. And if one of your employees gets injured or sick while on the job, we’re here to help you through the claims process.
Other Workers’ Comp Considerations
Investing in the right level of coverage for your business and employees is important. When you’re looking into workers’ compensation insurance, keep these things in mind:
- The industry your business is in and the risk involved
- The number of employees you are covering
- The location of your business
The coverage limits
1 FloridaWC.com, “Workers’ Compensation Rates,” https://fitsmallbusiness.com/workers-compensation-insurance/
* This is a simplified calculation for educational purposes only. Actual premium calculations can be more complex. Experience mods are subject to state requirements and do not apply to every policy.