Pay-as-You-Go, a Better Approach to Workers’ Compensation Insurance

This article was written by Pam Victor, Director of West Coast Operations, AP Intego Insurance Group

Pay as you WHAT??

Pay-as-You-Go (PAYG) is an innovative, flexible, and, most important, more accurate approach to managing and paying your annual workers’ comp insurance premiums. You’re heads down running a business. If you’re like most small business people, unnecessary hits to your cash flow don’t make you happy — nor does that extra-special surprise expense you get as a result of that year-end workers’ comp audit finding that you have underpaid your premiums.

PAYG is a form of workers’ comp insurance that alleviates these inaccuracies, surprises, and cash flow strains. In other words, all the coverage and compliance of traditional workers’ comp with none of the fuss.

First, a bit about how traditional workers’ comp works. If you have employees, this is likely going to sound familiar since workers’ comp is required in 49 of 50 states. If you don’t currently employ people but are considering making that first hire, this is good information to know in advance.

The process of renewing a traditional workers’ comp policy at the beginning of the year likely finds you sitting down with your insurance broker to estimate how much payroll you think you’ll have in the coming year. Your broker then reaches out to insurance carriers for premium estimates for you to review.

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Once you select your carrier, you receive a schedule to pay the monthly, quarterly, or even all-at-once, up-front premium if it’s small enough. On top of all this, carriers also typically require a 25 percent down payment to begin or renew your coverage for the coming year (sometimes as high as 25 percent). What if the first substantial premium payment is due at a time when another big expenditure is hitting the books?

Well, this is exactly why PAYG is a beneficial alternative to traditional workers’ comp. Why not make it far easier on yourself and your cash flow while staying compliant with labor law? Cliché warning: You’d be killing two birds with one stone. Here’s how PAYG workers’ comp works:

PAYG connects directly to your actual, real-time payroll data every time you run payroll. Your premium becomes a series of regular payments that are automatically and precisely calculated and distributed in harmony with your business’s payroll schedule. There’s no down payment or deposit, and your premium payments are spread throughout the course of the year. Quite literally, you pay as you go.

Additionally, end-of-year workers’ comp audits become a stroll in the park. In most cases you won’t have to deal with annoying, time-consuming audits that actualize your premiums. And, because your premium now better matches your workers’ comp exposure during the year, you minimize the likelihood of a cash flow hit resulting from a true-up (the aforementioned unwelcome surprise).

We hope you found this information helpful and insightful. As you make that last mad dash to the end of the year, heads-down focused on making your numbers, this is the right time to also think about moving to a PAYG workers’ comp platform for next year.

If you use Square Payroll, you can get a quote from AP Intego by visiting Benefits in the Payroll section of your online Square Dashboard. Once you sign your policy, your payroll data automatically syncs with AP Intego every time you run payroll. AP Intego bills you for the actual hours worked that pay period within one week of your pay date.

Simple and stress-free. Just the way insurance should be. Learn more about using Square Payroll and AP Intego PAYG.

About AP Intego

AP Intego combines all the traditional sales and service capabilities of a national insurance broker with a passion for using technology to uncomplicate small business insurance. AP Intego currently has more than 44,000 customers.

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