Pay as You Go Workers Comp
Florida mandates that nearly every business entity carry workers compensation insurance. For small companies, this requirement can create a significant burden because the regulations can be complicated and paying the annual insurance premiums disrupts cash flow. The process can distract employers from effectively running their business, redirecting their focus to addressing workers comp requirements. Pay as you go workers comp provides an easier solution.
Under the traditional workers’ comp insurance structure, employers pay a large initial down payment. Premiums are set based on anticipated or estimated gross payroll wages. This estimated premium is paid to the insurance company on a scheduled basis, usually quarterly. At the end of the policy, an audit is conducted to determine if you underpaid this insurance and if so, the insurance company collects the outstanding amount due. This bill can be a significant and unexpected expense. Of course, the audit may show that you overpaid your insurance, but this means that unneeded amounts of money was diverted from cash flow and into an unnecessary expense. Pay as you go workers comp eliminates all of these issues. There is no initial down payment, premiums are paid during the actual pay period. It doesn’t matter if employees are paid weekly or bi-weekly, every time payroll is run, a premium payment is made. That means these payments reflect actual employee wages rather than an estimated payroll. There is no audit or fear of overpaying or underpaying premiums.
Benefits of Pay as You Go Workers Comp
Since employers are only paying premiums based on actual wages, this system is much easier to budget and manage. Workers compensation premiums are spread out over each payroll period, so employers only pay for what they need in any specific pay period and expenses match operations. This system also allows employers to match premium payments to their exact employment levels for the pay period, and the premium amount will adjust up or down with their staffing needs. This accuracy combined with flexibility means that you never pay a penny more than necessary.
Elimination of Lump Sum Payments
Since you literally pay as you go, you no longer face annual or quarterly lump sum payments. Rather than putting money aside to meet this large expense, you have a smooth cash flow process with real-time expense payments.
Automated Workers Comp Payments
Nearly every insurance company that offers pay as you go coverage can also automatically collect your premiums with each payroll and debit your bank account. This is one less thing to remember and one less task to manage.
Most small to mid-size businesses find that the pay as you go workers comp system best meets their needs and saves them time and money. Curious to learn how pay as you go workers comp could benefit your business? Call Applied Business Solutions at (855) 792-2808 to speak with one of our experts. Ready to dive in? Request a free quote. At Applied Business Solutions, we help employers focus on being employers while we handle the rest.
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