There is a better way to pay your workers’ compensation insurance premiums than being hit hard with a sizable one-time sum. You’ve heard murmurs around the metaphorical watercooler of a “pay-as-you-go” method of workers’ compensation payments—rumors that it can’t be done. We’re here to say, yes, it can. We know this because Payroll Management offers it to the businesses we serve.
Before we dive in, let’s cover the basics of workers’ compensation and the options you have as a business owner.
What is workers’ compensation?
Workers’ compensation is insurance purchased by your business that benefits employees who have a work-related illness or injury. With this insurance, employees have assistance paying medical expenses and covering lost wages from missed work. Also called workmans’ comp, workers’ compensation insurance is mandatory for most businesses, but specific coverage and requirements vary by state. In Maine and New Hampshire, a business with one or more employees is required to purchase workers’ compensation insurance.
How is workers’ compensation calculated?
As a business owner, you are required to pay a certain rate per $100 of payroll for total gross payroll. This rate is determined by job classification. An employee in project management has a lower risk of injury than an employee in product distribution, for example. These rates also differ by job industry. Once calculated, your business pays a large insurance premium two or more times a year to ensure that all of your employees remain covered. However, by paying hefty premium installments a few times during the year, your business may be incurring unnecessary costs and diminishing much needed cash flow.
So, what is workers’ comp pay-as-you-go?
Workers’ compensation pay-as-you-go allows you to ditch the large, annual installments and adopt a per-pay-period premium installment (say that five times fast). Pay-as-you-go links directly to your payroll wages by spreading your workers’ comp premium amount across the entire year of payroll.
Does workers’ comp pay-as-you-go benefit my business?
Yes! Payroll Management works directly with your insurance agent to coordinate your per-pay-period premium installments. You can expect:
- Increased cash flow
- No large premium installments
- Reduced over or underpayments
- Minimized year-end adjustments and surprises
- To say goodbye to guesswork and pay for actual wages paid
Worker’s compensation pay-as-you-go is ideal for business owners who want to revise their budget, reduce unnecessary expenses, and restructure operational processes. We know that for your business to operate smoothly, there are endless tasks, priorities and responsibilities for you to manage. Let us handle this one. Learn more about workers’ comp pay-as-you-go here and simplify your workload.