Pay As You Go 101: Better Workers' Comp

Posted by Scott Helfrich on Aug 22, 2016 4:10:00 PM

Pay As You Go is a buzzword, but many small business owners don't know what it can do for them.  When it comes to paying your business's Workers' Compensation insurance premium, the traditional method requires that you write a lump-sum check to the insurance company at the beginning of the year. Then, an audit is done at the end of the year to "true-up" how much you paid in premium with how much you actually owed based on your payroll. This can mean a refund... or another bill.


As you probably noticed, this process puts pressure on your cash flow at the beginning of the year (and at the end of the year if you end up owing more after the audit). Luckily, the traditional form of Workers' Compensation is not your only option.

What is Pay As You Go Billing?

Pay As You Go Billing (“PAYG”) links your Workers’ Compensation premium directly to your payroll software and automatically sends small payments to your insurance company based on what you actually owe for each payroll period.


Unlike traditional billing, where your premium is based on an estimate of your annual payroll, PAYG calculates your premium using your actual payroll data each pay cycle. This means that your PAYG premium is a true reflection of your business's finances, and not guesswork.


There are four major benefits to a PAYG Workers' Compensation policy:

  • No large upfront payments
  • Easier cash flow management
  • Decrease or avoid audit surprises
  • Save time and money

No large upfront deposits & easier cash flow management

Traditional billing methods ask you to fund between 25-100% of your estimated annual premium up front. Rather than paying for your insurance a year in advance and tying up vital cash, PAYG lets you pay your premium as you go. You don't need to do anymore financial gymnastics to pay your insurance premium on time.

Avoid or lower audit expenses

Because traditional billing policies are based on an estimated premium, they can’t automatically adjust to unexpected payroll changes, like hiring a new employee. A PAYG policy accurately measures the premium you owe by calculating each pay cycle separately. While PAYG doesn’t guarantee you will not be audited, it certainly lowers the cost, time, and complexity associated with an audit, because you'll no longer be over- or under-paying when your employee situation changes.

Saves time and money

With PAYG, payments are automatic. There are no checks to write or bills to remember. This means more time focusing on your business instead of insurance paperwork. And unlike traditional billing options from insurance comapnies, PAYG has no installment-billing fees.

About AP Intego

AP Intego combines all the traditional licensing, sales, and service capabilities of a national insurance brokerage with the passion and pursuit of innovation that you find in today's leading tech companies. As a national leader in providing businesses Pay As You Go billing options, our team helps find the coverage that small businesses need and seamlessly integrates the billing process with payroll deduction.


AP Intego is an innovative national insurance brokerage focused on helping small and medium sized businesses achieve their dreams.

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