You may have heard of the new way of paying for your Workers Compensation Insurance; Pay as you go. Now if you are used to the traditional way of paying your premiums, you pay your premium based on an estimated annual payroll that is given to your agent at the beginning of each renewal. You also usually have to pay 20-25% down at every renewal. Oh and let’s not forget those fun Workers Compensation audits that every business owner loves to do every year!
With all of these issues that exist with Workers Compensation Insurance, companies are starting to offer a pay as you go system; let me explain. Instead of paying a down payment when your policy renews, you simply pay a small expense constant (it exists on all Workers Compensation policies) and then only pay insurance premium on the EXACT payroll that you have each pay period. Some companies will require that they also handle the payroll service to make it streamline but more companies are now working with your payroll companies directly. So basically each pay period the payroll for each employee classification is reported to the Insurance Company and then they automatically draft out the exact premium that is owed. At the end of the year there is essentially no audit since there were mini audits every pay period. This type of Workers Compensation has been great for types of business that have seasonal fluctuations in payroll (they don’t pay premium during their slow months) or companies that have grown or downsized (there are no large audit bills or refunds at the end of the year).
It seems in California this has done so well that the State Fund requires their customers to pay their premiums in the pay as you go system. I recently talked to a wholesaler that does pay as you go workers compenstion and he said that they have a 95% retention rate, meaning that when businesses switch to this pay as you go set up they stay with it.
Next time you are renewing or shopping around for your business insurance you may want to ask your agent if they offer pay as you go workers compensation insurance quotes. It could drastically improve your companies cash flow and eliminate a lot of the audit headaches. Of course as always, if you want this quoted from me, don’t hesitate to call. Our agency works with several companies that can offer this for you.
If you want a quote or get an insurance review, please call us at (888) 581-0331, email us at Bryan@cransoninsurance.com
For those businesses that carry Group Health Insurance in Michigan, you have seen some big rate increases every year at renewal. Michigan companies have struggled to keep up with the rising cost of health care for their employees. Many times a company will pass more of the cost on to their employees. Also and maybe a more common method to reduce costs is drastically changing the coverage of the Group Health Insurance. One method is to increase deductibles to $1.000 or as high as $5,000. In addition to deductible increases they may have taken away coverage for prescription drugs and office visits. I have sat down with many companies to come up with a strategy for both keeping the Group Health Insurance affordable and maintain quality coverage. Some times we can simply keep the same type of coverage but just switch Group Health Insurance companies. Although this isn’t always a successful way to cut costs, often times we can get a 10-20% reduction. But many times the employees and the employer really want to keep their existing company. This is where we really have to dig in and re-quote options and get creative to find a solution. This used to be a very difficult task until recently. I came across a form of additional coverage that can be purchased as a Group Medical Gap coverage that can coordinate with a high deductible Group Health Insurance plan. The industry refers to this type of Group Benefit as Group Medical Gap Insurance coverage. It works very nicely when coordinated with a high deductible Group Health Insurance plan. I have seen companies save over $1,000 per employee per year using this method. How it works is the Medical Gap Insurance pay most co-pays and deductibles up to the plans deductible. At that point the Group Medical Insurance policy starts to pay the bills. When I first heard of the idea I thought it may have a place in certain situations. Then I started quoted it on every proposal I came across and found that it works almost every time to save a company money while maintaining excellent coverage and keeping the existing Group Health Insurance company. This coverage is appearing to become very popular. The interesting thing is that Health Insurance Brokers have not been offering this type of coverage at renewal. It is such a powerful concept that they will begin losing clients to other Health Insurance Brokers knocking on their doors to show them a creative and excellent option that can not only save the company money but actually improve their Michigan Group Health Insurance coverage. Your company may be in this situation. Ask your Health Insurance Broker to show you an option with Medical Gap Insurance.
If you would like us to look at your Group Health Insurance, please don’t hesitate to give us a call at (248) 581-0331. Or email Bryan Cranson at email@example.com