‘Pay-as-You-Go’ Workers’ Comp

Pay-as-you-go workers’ compensation insurance is increasing in popularity in the business world. Eliminating upfront costs and outdated payment methods are two of the biggest reasons businesses are turning to pay-as-you-go for workers’ comp insurance.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 it’s less likely you’ll 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 pay-as-you-go, you work with your existing payroll service provider and/or tax administrator to pay a single bill each pay period. This way, you’re combining your workers’ comp premium with your payroll in one easy bill.

 

Pay-as-you-go workers comp is simply another 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.

 

Not all insurance companies offer pay-as-you-go workers’ comp, and not all payroll providers will support this option. Contact your current insurance provider and payroll bureau to find out if pay-as-you-go is available to you.

 

 

Last Updated: July 10, 2023

 

* Most carriers require a premium audit for workers’ compensation policies.

 

Additional disclosures below.