What is Pay As You Go Worker's Compensation?
Pay As You Go Worker’s Compensation is an alternative method of calculating and paying worker’s compensation premiums. It synchronizes the payment of premium with the payment of wages.
What Is Workers’ Compensation?
Worker’s Compensation is a no-fault insurance that protects both employers and employees from employee accidents or disease arising out of their employment as prescribed by state laws.
Coverage A – Medical & Indemnity provides coverage for statutory benefits including medical expenses, lost wages, and permanent disfigurement/disability payments.
Coverage B – Employer’s Liability pays all sums that you are legally obligated to pay because of bodily injury by accident or disease sustained by any employee arising out of their employment.
Most states mandate all employers, with certain exceptions, to provide worker’s compensation for the benefit of employees. Texas is one of the few remaining states that does not mandate employers, except for public entities, to provide worker’s compensation coverage. However, even though it is not mandated, every employer should have worker’s compensation coverage because of their statutory liability for employee’s injuries.
In Texas, worker’s compensation is the sole remedy. If an employer has worker’s compensation coverage and an employee has an injury, the employee’s only recourse is to file a worker’s compensation claim. Without worker’s compensation coverage, the injured employee can pursue recovery through a personal injury lawsuit. And, the employer will not have the benefit of statutory limitations on damages. Furthermore, the employer loses their right to common law defenses such as assumption of the risk, contributory negligence, “last clear chance”, and co-worker negligence.
Texas employers who do not carry workers’ compensation insurance coverage are required to report their non-coverage status and work-related injuries and occupational diseases to the Division of Workers’ Compensation (DWC). Employers who do carry workers’ compensation insurance coverage are required to report all known occupational disease and any work-related injuries that result in more than one day of lost time. Employers that fail to meet these requirements commit an administrative violation and may be subject to administrative penalties.Must notify employees and the state.
Some employers buy accident and health insurance policies or disability policies or create employer indemnification agreements with the belief they are less costly alternatives to workers’ compensation insurance coverage. Even though these policies may provide benefits to an injured employee, Texas law does not recognize them as substitutes for workers’ compensation insurance coverage. TDI rules even prohibit insurance companies from representing that alternative coverages are substitutes for workers’ compensation insurance coverage.
Unlike workers’ compensation insurance coverage, alternative coverages typically have specific policy limits on medical benefits for each covered employee. In addition, alternative coverages usually have shorter maximum payment periods than those provided by Texas workers’ compensation laws.
Employers that buy alternative coverages do not have workers’ compensation liability protections. They may be sued by their injured employees and lose their right to use key common-law defenses in the suit. Moreover, many alternative coverages do not provide coverage for judgments for pain and suffering, punitive damages, and attorneys’ fees.
Do I have to use a specific payroll provider?
No. Many payroll providers are already qualified and registered to utilize the Pay As You Go system. For those who are not registered, it is a relatively simple process to get registered. Additionally, if you do your own payroll in-house, you do not have to use a payroll provider at all.
What are the specific benefits of buying worker's compensation on a Pay As You Go basis?
In addition to the important benefits provided by a worker’s compensation policy, the Pay As You Go method improves your cash flow by:
1) our marketing service makes sure you are paying low, competitive rates;
2) eliminating large up-front deposit premiums;
3) synchronizing the timing and amount of your worker’s compensation premiums to the payment of wages;
4) it virtually eliminates the potential surprise of a large additional premium due at the end of the policy; and 5) it eliminates the long wait-time of a return premium at the end of a policy.
Does it cost anything?
It depends on the choice of insurance company and the payroll reporting option implemented. We have options that range from Zero additional cost to a maximum of $15 per month processing fee.
Honestly, how low can the deposit be?
The actual deposit premium depends upon the choice of insurance company and payroll reporting option. Actual deposit premiums range from Zero to the calculated premium for the first covered payday.
Is this employee leasing?
No, absolutely not. You retain the rights and responsibilities of both the administrative and worksite employer.
Do I have to change insurance companies?
Not necessarily, but it may work to your advantage. One of the services we provide is to re-market your policy to make sure you are getting competitive pricing. You choose which insurance company is best for you. However, AIM/Commercial must be the agent of record.
Can you handle the rest of my insurance needs?
Yes, AIM/Commercial is a full-service independent agent. We regularly handle the property and casualty insurance and risk management needs of a wide variety of industries: large and small; complicated and not so complicated. Additionally, we provide full service employee benefits and personal insurance products through affiliates.
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