Workers Compensation.

Workers’ compensation provides benefits to employees for work-related injuries or illnesses including medical care, wages from lost work time, and more. It also provides a deceased workers’ family with a financial benefit. If a workers’ family decides to sue a company, it can also help cover the related legal fees.

Workers’ compensation insurance can help protect your business and employees in events such as these:

  • An employee slips on ice, injures himself while walking up the stairs to the office, and requires an emergency room visit and weeks of recovery time.
  • An employee injures her back lifting a box of printer paper and requires a doctor’s attention, medication and physical therapy.
  • An employee returning to the office from visiting a client is injured in a car accident and requires hospitalization.

Pay As You Go Workers Compensation

The payment of a large annual lump sum or even quarterly payments for workers’ compensation insurance coverage is an expense many companies find difficult to budget for.  The cost of workers’ compensation coverage based on an estimate of annual payroll at the inception of the policy year can create problems for small businesses with fluctuating staffing needs.  Often the small business does not know what their payroll will be over the next 12 months.  This problem has led to several workers’ compensation insurance companies creating “Pay As You Go” programs for the companies they insure.

Workers’ Comp with No Down Payment:
Healthier Cash Flow

This is often quoted as the biggest benefit to pay-as- you-go workers comp:
the ability to avoid a large, cash-flow- killing down payment up front.

That can markedly improve your cash flow—especially when you compare it to traditional workers comp premiums, which typically require you to put down a hefty 25% deposit (based on your estimated annual payroll) and make several monthly installments thereafter. This can put quite a squeeze on your operating cash. Since most employers earn revenue throughout the year, it makes sense to spread an insurance premium payment over the course of the year.

You can purchase a policy
with little money down, and
pay your premium in smaller
amounts spread over the
course of the year.

PAY AS YOU GO EXAMPLE

DIRECT BILL EXAMPLE

Workers’ Comp Auto Premium Payments

There’s certainly something to be said for convenience. With pay-as- you-go, working with Kazdon, you can combine your workers comp premium with your payroll and pay a single bill—with gross payroll, taxes and workers comp included—each pay period.

Workers’ Comp Premiums Based on
Your Schedule

Workers compensation insurance under the “pay-as- you-go” method allows you to pay your premiums based on a more accurate payroll period—that is, based on your actual payroll. (Premiums are based on a rate per 100 of payroll, just like traditional workers comp.) That can help protect you from audit exposure, because your premium is based on real-time payroll wages, not an estimate.

This contrast with traditional workers comp premiums, which are based on your projected annual payroll. Under this method, you estimate your budgeted payroll for the next policy period —generally a year— and provide the estimate to your insurance agent. Your workers comp policy is then issued with a premium based on that projection.

Pay-as- you-go does not free you from a workers comp audit by an insurance company auditor, at the discretion of your insurer. After all, it’s not a different type of policy; it’s simply a different payment option. Thus, workers comp policy conditions are not affected. Your workers comp program will still be audited, but with pay-as- you-go, those audits will be based on actual, instead of estimated, payroll. The audit—conducted by phone, mail or in person—will determine if your payroll and class codes are accurate, and also ensure that your sub-contractors had workers comp coverage during the audit period. Bear in mind that the audit process can be complicated.