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PEO workers' comp solutions are a strategic decision for small to mid-sized businesses keen on optimizing their approach to employee protection in the aftermath of workplace incidents. As you contemplate making the shift to a PEO, understanding the tangible benefits becomes paramount.
Let's take a look at workers' compensation requirements, where to get workers' compensation insurance and the top seven reasons why a PEO may provide the best workers comp insurance for small business.
Smart employers take steps to protect employees from the risk of job-related injuries by providing a safe and healthy work environment. Still, accidents and illnesses happen at work.
If they do, workers’ compensation insurance pays medical expenses, lost income and disability benefits for the injured worker. It also reduces your company’s risk of experiencing a huge financial loss as a result of the accident. That’s important, considering the average workers' compensation claim costs $41,353.
Most states, including Kansas and Missouri, require all but the tiniest of companies to carry workers’ compensation insurance. Businesses that fail to do so may face fines and penalties.
Because the requirements for small business workers' comp insurance vary from state to state and can be complex, it's crucial for small business owners to check with their state's workers' compensation board or a worker's comp insurance expert, like a PEO, to understand the specific rules and obligations for their location and industry.
It's also worth noting that while some small businesses might not be legally required to have workers' compensation insurance, obtaining it can still be a good idea to protect against potential liability.
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Your first option for small business workers' comp insurance may be to secure it from private insurance carriers who are licensed to do business in the state where your business is located. This is known as the voluntary market.
If a smaller business is unsuccessful in buying a market policy, it must buy coverage through the state’s assigned risk pool.
However, there are good reasons your small businesses should forego both of those options when trying to obtain the best workers' comp insurance for small business. PEO workers’ comp insurance is another, better option.
PEO’s workers’ comp insurance provides advantages over policies small companies might procure from other providers. Here's how:
One of the mainstays of a PEO's service model is its ability to provide a PEO workers' comp insurance master policy. Instead of multiple, individualized policies for each business, a master policy consolidates coverage under one umbrella.
This leads to uniformity, potentially broader coverage and often a simplification in administrative processes. It also translates into cost savings due to the pooling of many clients under one policy.
By placing its clients into one workers’ compensation program, the PEO has weightier negotiating power, often resulting in lower costs than a small business could get on its own.
One Axcet HR Solutions client puts it this way:
“Our company just skipped having workers’ comp insurance altogether due to the hassle and expense. Since all our employees work in an office, I convinced myself that someday I would get workers’ comp, but we’d be OK until then. I rationalized that we were a small fish and would ‘fly under the radar.’ What a foolish mindset!"
"One day, an Axcet sales rep sent me a proposal that handled all our HR responsibilities. The thought of finally having workers’ comp insurance – and all our other HR issues handled for me – was a godsend. But the kicker was that Axcet actually saved us money over what we were already spending. It was crazy – we got more and paid less!” - J.W, Small Business Owner in Olathe, Kansas
The annual renewal process is time-consuming and can be cumbersome and confusing for small business owners or their internal team members. It involves shopping around for different policies, comparing rates and providers, and deciding on the best coverage for the business.
By using PEO workers' comp insurance, small business owners can outsource this responsibility to a PEO, which handles all aspects of the annual renewal process. This eliminates the need for the business owner or their team members to spend time and effort on this task, freeing them up to focus on other aspects of the business.
The PEO also has the expertise and resources to find the best workers' comp insurance for small business in terms of rates and coverage options, which saves money in the long run.
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Annual workers’ compensation insurance premiums may represent thousands or tens of thousands of dollars. Even for a fiscally sound small business, having to make a lump-sum annual premium payment, or even a down payment on the total before installment payments begin, can create a financial strain.
PEO workers' compensation programs can help alleviate this burden by relieving employers of the requirement to pay these costs upfront. The PEO can handle the payment of workers' compensation insurance premiums on behalf of its clients, allowing the business to spread out the cost over time.
This can help small businesses better manage their financial obligations and avoid any potential financial strain caused by the upfront payment of workers' comp insurance premiums.
Pay-as-you-go workers’ compensation relieves an unnecessary financial and administrative burden because premiums are paid in installments – specifically, with each payroll run based on real-time payroll wages and reporting. Besides improving business cash flow, this payment method ensures smaller companies pay only for the coverage needed based on their actual payroll.
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With traditional workers’ compensation insurance, small businesses forecast expected annual payroll. Premium costs are based on those projections. The best-guess process has a wide margin for inaccuracy, and the reality won’t be known until an audit is conducted at the end of the year.
With traditional policies, the year-end audit requires a thorough accounting of the incurred payroll for each workers’ compensation class code. The painstaking audit process then often leads to additional premiums being owed or returned.
Because PEOs collect workers’ compensation charges based on the actual payroll processed during each pay period, no additional payments will be owed at the end of the policy period and no annual audit is required for PEO workers' comp insurance.
Beyond the policy advantages, perhaps the greatest benefit of participating in a PEO’s workers’ compensation program is gaining access to a dedicated team of experienced risk management professionals. A PEO’s team thoroughly understands the workers’ compensation insurance system and manages claims to reduce the numerous exposures associated with workplace injury.
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Traditional small business workers’ comp insurance policies and providers do their basic job of covering a business if a claim is filed. But only PEO risk management experts become knowledgeable allies that can provide training, workplace safety audits and other expertise that improves a small company’s ability to manage workplace risks overall.
As a certified professional employer organization, Axcet HR Solutions provides a master PEO workers’ comp program and a highly experienced risk management team.
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