What You Need to Know About Pay-As-You-Go Workers’ Compensation
Whether you run a small startup or a large industrial manufacturing business, you must invest in workers’ compensation coverage to protect your company if a workplace accident occurs. In fact, for most businesses, this coverage is required.
The challenge is that workers’ compensation plans can come with high premiums and deposits that add yet another expense to the often-tight budgets of a small business. The good news is that there is an alternative option available in the form of pay-as-you-go workers’ compensation.
Most workers’ compensation premiums are based on estimates of a company’s annual payroll. Pay-as-you-go plans, meanwhile, are calculated using actual payroll and employee information from each pay period. By making payment calculations based on actual payroll data, businesses are able to realize a variety of benefits.
Pay-as-you-go benefits
The following are some of the key benefits of choosing a pay-as-you-go workers’ compensation option:
- Easier budgeting: Formulating a budget for your business is challenging enough without having to navigate inconsistencies and unexpected costs. Pay-as-you-go workers’ compensation can help you avoid costly audit adjustments and maintain a steadier budget throughout the fiscal year.
- Convenient payments: One of the most convenient aspects of pay-as-you-go workers’ compensation is that you can usually set up automatic payments. Doing so allows you to ensure that you make on-time payments and avoid any late charges and fees. It’s one less thing to worry about as you run your business.
- Payment accuracy: Because your pay-as-you-go workers’ compensation coverage costs are based on real-time payroll information, your payments will be much more consistent over the course of your pay periods. You can pay only what you owe on each payroll and avoid the problems associated with inconsistent charges.
- Lower rates: Workers’ compensation on a pay-as-you-go basis is a great way for businesses to reduce expenses and make cash flow a little easier to manage. In many situations, this coverage requires a significant upfront cost and investment from you as an employer. But pay-as-you-go allows you to budget the money you would have spent upfront, and spread the costs over the course of the year.
Is pay-as-you-go right for you?
Every business is unique, and each employer has different needs, goals and priorities. Therefore, it’s difficult to say whether a given option, like pay-as-you-go workers’ compensation, would be right for your company. However, many have found that it’s a great way to save money and make workers’ compensation more predictable. Before you choose the type of coverage that’s right for you and your employees, feel free to reach out so we can connect you with a knowledgeable broker.