Financing Work Comp Options
Pay as you Go Work Comp Plans
Most of Work Comp Staffing Solutions workers compensation programs are offered as “pay-as-you go” payment plans. With the PEO or staff leasing options, work comp fees are paid on a weekly or monthly basis and are directly related to the amount of payroll processed the previous week or month. This is one of the big benefits to using staff leasing or PEO programs. With direct carrier policies or captive programs, usually a 25% deposit is required upfront. Then the staffing company is required to make monthly installments to the insurance company based on a mutually agreed upon schedule. This is fine if your payroll increases during the course of your policy term, but if your payrolls fall, these prearranged monthly payments can become a cash flow burden.
Work Comp Premium Deductibles
Unlike a guaranteed program (like most State funds), with a work comp deductible element on a policy or PEO program you agree to pay a specific amount of money out-of-pocket when you file a covered claim.
For example, one of your employees has an accident, and the accident will cost the insurance company (or PEO) $5,000. If you’ve set your deductible at $500, then you’ll pay the first $500. The workers’ comp insurer pays the remaining $4,500. Alternatively, if your employee’s accident results in $500 worth of comp costs (or less), you’ll pay the entire workers’ comp claim.