Sherry Ford Director of Business Insurance View Bio

Pay As You Go Workers Comp

Why Pay as you Go Workers Comp May Be The Right Solution For Your Company

At Lawley, we look for ways to help clients find solutions to business headaches. One of an employer’s highest expenses is staffing. Pay as you Go Workers Compensation is a non-traditional approach to paying for Workers Compensation premiums that better helps an employer align premium payments to payroll cycles.

The Old Workers Comp Method

Traditionally, the estimated Workers Compensation premium is based on what the employer anticipates their payroll will be for the full upcoming policy year. This estimated premium is then paid up front (Either in installments, or perhaps lump sum at the beginning of the policy year). Then, once the policy year is over, the insurance company compares actual payrolls against the original estimates, and calculates the difference in premium. This difference is then due immediately to the insurance company. This is very similar to your personal income taxes – unless you estimate very closely to your actual figures, you run the risk of either an additional premium due (which may be difficult to pay immediately in a lump sum) or a return premium due back to you—which means that the insurance company had the use of your money for the policy year.

Workers Comp Payment Flexibility

Pay as you Go Workers Comp offers employers a way to recapture that cash flow benefit. Premium is accrued and paid at the end of each payroll cycle. The employer, or their payroll service, takes care of the reporting and premium payment in real-time. This eliminates those potentially large adjustments at the end of the policy term based on the difference between estimated and actual premium due.

Many insurance companies offer Pay as you Go as a payment option for Workers Compensation, but Lawley’s service team will work with you to trigger the Pay as you Go option beginning with the policy effective date. Additionally, if you use our private benefits exchange Lawley Marketplace for your Employee Benefits, your payroll and workers comp reporting can be deducted seamlessly through an integration with our partner Genesis PPG. These are just some examples of ways that Lawley goes the extra mile to partner with our clients to solve their problems. Talk with our Workers Compensation Pay as you Go specialists to see if Pay As You Go is right for your business or download this Workers Comp comparison infographic to help explain the difference.

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