Advantages of ‘Pay-as-You-Go’ Workers’ Comp

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Quick Summary
Pay-as-you-go workers’ compensation insurance is increasing in popularity in the business world. Eliminating up-front costs and outdated payment methods are two of the biggest reasons businesses are turning to pay-as-you-go for workers’ comp insurance. Compared to an estimated annual payroll amount, pay-as-you go relies on real-time payroll to calculate workers’ comp premiums, resulting in more accurate premium payments. This means less of a chance to pay too much throughout the year – or have a premium* adjustment at the end of the policy term due to under-reported payroll. Find out more about workers’ compensation insurance rates.
With just a little digging online, you’ll likely find dozens of providers offering workers’ compensation insurance on a pay-as-you-go basis. In doing your homework be sure to keep this in mind:
Pay-as-you-go workers comp is simply an alternative way of making your premium payments. It’s not different insurance, and it doesn’t replace your workers comp insurance or your responsibility to pay premiums, collect/issue certificates of insurance from subcontractors, etc. Your coverage must still be provided through a state-approved workers comp insurance carrier or approved self-insured source.
With that said, there are compelling reasons for small businesses to consider the pay-as-you-go method of paying workers’ comp insurance costs. You can learn about a few of the major ones in this module.
* Most carriers require a premium audit for workers’ compensation policies.

Lower Upfront Cost and Competitive Workers' Comp Insurance Costs

With pay-as-you-go, you don’t have to make a large, cash-flow-killing down payment up front. You can buy workers’ compensation insurance with little money down, and then pay your premium in smaller amounts spread over the course of the year.

How to Get Workers' Comp Insurance - Pay-as-You-Go

Working with your payroll service provider, you can bundle your workers’ compensation insurance premium with your payroll and pay a single bill – with payroll, taxes, and workers' comp included – each pay period.

Pay Your Workers' Comp Premiums Based on Your Schedule

With pay-as-you-go, your premium payments are based on your actual payroll, not projected annual payroll. That can help protect you from audit exposure, because your premium is based on real-time payroll wages, not an estimate. Plus, spreading these costs out over the year, versus an up-front payment, helps your business manage workers’ compensation insurance costs.

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