State law requires that almost every employer provide Workers Compensation insurance for their employees. This insurance provides coverage for accidents or disease arising from employment as prescribed by state laws. Benefits can include lost wages, medical expenses, and permanent disfigurement/disability payments. Businesses in Georgia are required by law to have Workers Compensation coverage if the business has three or more employees, excluding officers.
Many traditional policies require employers to pay their annual premium in advance. The premium, based on the employer’s “best guess” regarding the year’s expected payroll, is often overstated, depriving the company of the use of that money. Similarly, annual payrolls are sometimes understated, resulting in a large year-end retroactive payment.
A monthly reporting Workers Compensation policy was originally developed more than 20 years ago for the construction industry, giving them a better way to manage their money, since construction companies’ payrolls would fluctuate, depending on how many projects they have. Now any type of business can take advantage of a monthly reporting policy.
Monthly reporting policies can be coordinated through a payroll service where the payroll company pays the policy based on the payroll numbers for the pay period. They can often pay the premium from the payroll accounts that wages are paid from, so the process is seamless for the employer. If an employer does not use a payroll service, but rather an independent insurance agent, the employer’s payroll department can still access a monthly reporting option with their Workers Compensation carrier.
The benefits of a monthly reporting Workers Compensation policy include:
- Eliminate down payments and dreaded end-of-year audits;
- Premiums are based on actual payrolls vs. estimates;
- Maximize cash flow;
- Eliminate large installment payments;
- Eliminate or reduce year-end additional premiums that are due to audits, and
- Real-time evaluation of premium payment history and calculations.
At least 60% of all companies these days use payroll companies to report and pay their employees. Henssler Norton Insurance has exclusive agreements with several larger payroll companies in the state, including ADP, where we educate the business owner and sell the product. Once the policy is integrated with ADP’s payroll services, however, ADP, or the payroll company, becomes the agent on the policy.
For businesses interested in a monthly reporting Workers Compensation policy, it often comes down to the relationship the business has with the payroll service or the independent insurance agent. As an employer, if you are happy with the service your payroll company provides, it may be beneficial to purchase the Workers Compensation policy through them. If your company has a better relationship with your independent insurance agent, your agent can shop your policy for the most competitive rates with several carriers.
For more information on monthly reporting Workers Compensation policies, contact Henssler Norton Insurance at 770-429-9166. We can examine your business to determine whether a monthly reporting Workers Compensation policy would be beneficial to your business.
Disclosures
This article is meant to provide valuable background information on particular investments, NOT a recommendation to buy. The investments referenced within this article may currently be traded by Henssler Financial. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The contents are intended for general information purposes only. Information provided should not be the sole basis in making any decisions and is not intended to replace the advice of a qualified professional, such as a tax consultant, insurance adviser or attorney. Although this material is designed to provide accurate and authoritative information with respect to the subject matter, it may not apply in all situations. Readers are urged to consult with their adviser concerning specific situations and questions. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments, there are associated inherent risks. Please obtain and review all financial material carefully before investing. Henssler is not licensed to offer or sell insurance products, and this overview is not to be construed as an offer to purchase any insurance products.
