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What is Pay-As-You-Go for Workers Comp?

Pay-as-you-go syncs workers comp premium payments with a business’s payroll schedule.
Sponsored by Berkshire Hathaway GUARD Insurance Companies
what is pay-as-you-go for workers comp?

If you are an insurance professional and you haven't been discussing pay-as-you-go for workers compensation with your commercial clients, there's no better time than right now.

Better Cash Flow

Many employers, hit hard by the pandemic, are struggling with cash flow. Pay-as-you-go options typically feature a low or no down payment, which eliminates upfront cost and allows a business to hold onto cash longer. Plus, premium is spread out over a longer time frame than with most traditional billing plans.

Precise Payroll

Employers are also still experiencing fluctuations in their payroll. Staffing issues, seasonal hires and changes in positions affect salary throughout the policy cycle. Since employee wages play a large part in how workers comp premiums are calculated, ongoing adjustments to a business's payroll have a direct impact on how much is charged for this type of insurance. With pay-as-you-go, premium is based on precise payroll instead of estimated, so the chance of owing money to the insurance company when the workers comp policy is audited at the end of the term is much less likely.

How It Works

In short, pay-as-you-go syncs up workers comp premium payments with a business's payroll schedule. This is mainly done through third-party human resource or payroll service-type companies, but can be handled directly with the policyholder as well.

While insurance company platforms differ, the majority involve a digital interface with select payroll service companies that have an arrangement with the insurer to provide pay-as-you-go. Due to the growing demand for this option, more and more payroll service companies are teaming up with leading insurance carriers to enable this connection. So, an employer already using QuickBooks® or another popular payroll service has a good chance of a seamless switch to pay-as-you-go. 

Otherwise, you might have to ask the insurer for a list of their participating payroll service companies from which to select.

Once a connection is established between the policyholder, payroll service and insurance company, payroll and employee data are transferred from the payroll service to the insurer each pay period. Premium is calculated based on precise payroll and, in most cases, electronically transferred from the client's bank account to the insurance company. Larger payroll providers may handle the premium transactions themselves.

New hires, layoffs or changes in job classifications during the policy term are taken into account as they occur, so payroll and premium remains accurate. The policy is still audited at the end of the term to confirm classifications and other changes but modifications to the payroll and premium are usually minimal.


Employers who are not working with a payroll service company may still be able to benefit from pay-as-you-go for workers comp through an insurer offering self-reporting. This option simply cuts out the middleman (or payroll service) and payroll and employee data are reported directly to the insurance company via phone, email or sometimes online portal.

However, since self-reporting requires a certain level of discipline, it's an option best suited for businesses that have a dedicated bookkeeper or accounts payable department to make sure data is reported on time. Some terms and conditions might also be slightly different with self-reporting, such as a small deposit and monthly schedule.


Both of these options provide another benefit: convenience. Policyholders don't need to worry about forgetting to make a premium payment because it happens automatically, either through a debit from their bank account or via the payroll service. This turnkey approach helps policyholders avoid late fees and also increases policy retention for both agents and insurers.

Pay-as-you-go might not be the right option for every employer but it's definitely one to consider when talking about insurance with clients.

Having been at the forefront of pay-as-you-go for workers compensation for decades, Berkshire Hathaway GUARD works with hundreds of payroll service companies across the country and also features an online, self-reporting option. Learn more today.

What is Pay-As-You-Go for Workers Comp?

Monday, April 25, 2022
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