Pay as you go workers compensation is becoming more popular and often requested by temp staffing companies thanks to a number of benefits that it can provide. The traditional method of providing work comp insurance involves paying upfront costs based on estimated payroll and then not knowing final costs until you complete the annual audit of the actual incurred payroll. Pay as you go workers comp is a more common sense approach to the issue, and one that can save you time and money as well as providing you with many other benefits. Workers comp is required by law, and pay as you go workers compensation offers you the best way to stay compliant while controlling unessary out of pocket costs. Here are some of the biggest benefits that pay as you go workers comp has to offer.
- Lower startup costs – Pay as you go workers compensation eliminates the huge up-front payments that traditional policies include. Typically with pay as you go workers compensation you only need to pay an estimated first months premium and after that you’ll pay into the account in real time, giving you the ability to better manage your cash flow. Pay as you go workers compensation lets you keep more money to operate your business and only pay what you owe.
- No Estimates – Pay as you go workers comp allows you to avoid the archaic estimated payment method that other policies use. With pay as you go workers comp your payments are based on actual data and figures from your payroll based on classification code.
- No Audits – For most Temp Staffing Companies, this is the biggest benefit of pay as you go workers compensation policy. Even though they could end in a return on your payments, audits can result in surprise additional costs and time consuming. Having other parties review all of your company data can be stressful and many times the interpretation of the basic NCCI manual varies from auditor to auditor depending on company guidance as well. Pay as you go workers compensation eliminates the need for costly year-end audits and allows you to keep your company moving forward.
- Real Time Management – Know your total costs and profit margin or payroll burden upfront. With pay as you go workers comp you can review data as you need to and get an accurate look at your costs to do business. So when you add a new code you can get the total costs right then and know the costs even before you report at months end.
- Saved Money and Time – These benefits of pay as you go workers comp are honestly countless and free your time to run your company. Pay as you go workers comp saves your company money by eliminating audits and up-front payments, and saves you time by eliminating audits and letting you manage your information quickly. In short, pay as you go workers compensation is the best way to solve your workers compensation needs. MIG Temp Staffing Division offers Pay As You Go Work Comp on several different carrier platforms depending on state exposure, class codes, years in business, loss history and total payroll. Please visit www.StaffingWC.com for more information.
MIG is your resource for Temp Staffing Insurance! As a proud member of the American Staffing Association we will always continue to innovate with new programs that best fit the needs of your industry.
Finally a solution for the everyday temp staffing firm in California searching for work comp. MIG Staffing Division has a turn key program for startups and experienced temp staffing firms alike. California work comp coverage for temp staffing firms has always been a struggle. At MIG we can solve this problem with our latest offering. We also offer the following services to our clients.
- Payroll Funding
- Back office support
- Work Comp Administration
- ACA Compliance Solutions
- HR Support Desk
- Loss Control Services
We can custom tailor a program to fit your needs. Unlike template programs we can scale a program for a startup or a company that has some loss issues and has trouble finding WC at all. Our services encompass the bulk of administrative items that every employer has to deal with, specifically with payroll/tax compliance, benefits, risk management, and human resources. We take on the full responsibility for reporting and paying payroll taxes accurately. We provide a myriad of benefit plan options and administer those plans, as well as answer employee questions about their insurance coverage. We cover the workers’ compensation risks and provide safety training to help minimize their exposure with safe work practices. We assist companies with the latest HR issues critical to employment, from employee selection, retention and performance, to compliance with EEO, Affirmative Action, OSHA compliance and other regulations. Our cost-effective services enhance profitability. Please visit: http://www.staffingwc.com/ca-staffing.html
Due to the employer mandate to provide eligible temp employees with health coverage we see more exposure for temp staffing firms to be sued due to errors made in administration of employee benefits than ever before. So today lets discuss Employee Benefits Liability Coverage – This is the liability of an employer for an error or omission in the administration of an employee benefit program, such as failure to advise employees of benefit programs etc. Coverage of this exposure is usually provided by endorsement to the general liability policy but may also be provided by a fiduciary liability policy.
Small clerical errors can have major consequences when administering benefits for an employee. For example, suppose your temp staffing firm hires Bob, a new maintenance employee. After the mandatory waiting period Bob completes paperwork to enroll in the company-sponsored health plan. Due to a clerical error by internal staff employee Bob is not enrolled. Several months later Bob is hospitalized with a serious illness and he discovers he has no health insurance. When his medical bills begin to pile up Bob seeks restitution by suing both the employee and your firm.
Claims like Bob’s are not covered under commercial general liability policies because an administrative error is not an “occurrence” as that term is usually defined. This can leave a costly settlement that you have to pay yourself because you failed to add a simple endorsement onto your GL package you might not even have known about.
The types of errors covered by a specific EBL endorsement are often determined by the definition of the word administration. This term generally applies to acts, errors or omissions in:
- Describing the benefit plans and eligibility rules to employees, other eligible family members and beneficiaries. Example: A benefits manager mistakenly tells an employee that her live-in boyfriend is eligible for the company-sponsored health insurance plan.
- Maintaining files and records related to employee benefits, whether the records are electronic or paper. Example: A benefits worker accidentally erases an employee’s electronic file or loses his or her paper file.
- Enrolling, maintaining and terminating employees, eligible family members or beneficiaries in benefit plans. Example: A benefits worker fails to add an employee’s beneficiary to a life insurance plan provided by the employer.
The need for EBL coverage varies depending on employee head count and benefits provided. The coverage protects employers by serving as a hedge against large claims by disgruntled employees or their dependents. It should not be used as a substitute for good risk management. A firm that employs a small number of workers or that offers few or no benefits will not need this coverage. Your agent or broker can help you decide whether EBL coverage makes sense for your company or as usual we will be happy to help. Please email me anytime if you would like to discuss your liability or insurance package.
First of all, lets discuss the primary differences between a PEO and a temp staffing firm. A temporary staffing service recruits employees and assigns them to clients to support or supplement the client’s workforce in special work situations, such as employee absences, temporary skill shortages, or seasonal workloads. A PEO contractually assumes and manages employer responsibilities for all or a majority of a client’s workforce. Worksite employees participate in the PEO’s full range of employee benefits including, health, dental, and life insurance, vision care, and retirement savings plans. The client company through a co-employment relationship will still maintain the right to hire and fire employees while most all the liability is offset though the leasing contract.
In the absence of many work comp options in the temp staffing work comp marketplace there are many asking if a PEO relationship is right for you and your company. The main hurdles we run into are typically the payroll administration. This is typically for companies with daily labor or daily pay that do not have bank accounts. This does create a hurdle in the administration of payroll through a third party. There are some PEOs that will allow their clients to print checks remotely through their software so this could be a solution. In other cases a pay card is a better option. But the main concern here is how much back office admin this creates and does this make it cost prohibitive for the PEO to handle the account.
Outside of daily pay or day labor temp firms there is a more stable workforce and there are less issues. There are other things to consider once we get past the administration hurdles. The one plus that many need to consider is that there can be a considerabl;e savings on SUTA costs and Work Comp. We also want to check the PEO though to make sure it is a reputable company with client references and verifiable tax information and work comp coverage. When it comes to work comp, the PEO is responsible for all claims as the employer of record. You can verify coverage of the PEO has active coverage on the work comp verification services for your individual state. Even through a PEO relationship you should be able to verify your insurance coverage via the state department of labor in your name. Here is a link
You also want to ask for tax payment verification of on time payments and verify if they have any outstanding tax liens or debts. Its good to check in their domociled state and the main state of which you are doing business in. This is a HUGE red flag if they have tax issues because they have been operating on a trust account that should be setup for tax payment pass through only and this is NOT a good indicator of goodwill or financial stability.
If you are considering a PEO relationship you need to work with a well informed broker that can guide you through the quoting process. This may or may not be the right solution for you and you certainly don’t need to make this decision without all the necessary information disclosed. If you would like to discuss any insurance solutions for your staffing company please feel free to stop by my website at www.StaffingWC.com or www.CoverStaffing.com
To view your company through the eyes of an insurance carrier (someone who sees the worst case scenario everyday) can actually make your company better. I know everything from a loss control report cannot be implemented in the real world but let me elaborate on this. Any ole Joe can knock on your door and sell you “cheap” insurance. It doesn’t take any industry expertise to do this and it’s not a bad thing to get a good price but it won’t last and that’s a promise.
It may be that the insurance carrier is buying business to build their book in a marketplace or they just priced business cheaply not fully understanding the liability of a specific industry. When we look at insurance rates think about cost for future claims. Insurance companies typically price business to pay for their in house overhead and reinsurance plus claims costs. The only windfall they see would come from true underwriting profit. (aka less claims than predicted = profit). What you need to ask yourself is what am I doing to prevent claims from happening. Once a claim hits the adjusters desk the only other action is getting the employee back to work quickly. Just ask yourself and answer honestly… Are litigation and medical costs going down? EXACTLY!!!
This would mean your business falls within a scale of underwriting called a loss pick. That means the underwriter calculates the past claims in a formula to see how much your insurance should cost in order to pay future claims plus administrative costs. This is where loss control can help… If you implement procedures to reduce your liability in the first place then the potential for loss is less. So your loss pick/premium will be less!!!
Anyone who can assist you and/or your company to be less likely to have a claim in the first place is worth your time. You should understand that the procedures you put in place now can help your company avoid claims or lawsuits altogether thus making you more insurable. More competition means better prices long term so you don’t have to look for the next sugar rush from the latest fad company trying to “buy” your business. You need to position yourself where you are so profitable to an insurance company that you can either accept the risk yourself through a captive or self insurance program or simply take the savings to offset all the risk in the chance there is a catastrophic claim. If you would like to know more about market strategy or would like to complete a full risk evaluation I will be more than happy to help.
TN Auto and Home Coverage
Temporary Staffing Insurance
Comp Solutions Group
I’ve heard all kinds of different information related to experience modifications and how they are calculated from my clients. There is a lot of confusion on the topic, so I wanted to take a moment to post some accurate information about ex mods. There are also some changes in the calculation methods so I wanted to share the latest information from NCCI and what this means to you.
The National Counsel on Compensation Insurance or NCCI annually produces a MOD calculation for each company. This is the actual MOD worksheet outlining the factors used in determining your experience modification. This data is usually comprised of payroll, premium and claims information from the previous 3 years. The most recent year isn’t included because claims info and actual payroll aren’t available yet. So for example, a 2014 mod will contain policy information from the 2012, 2011, and 2010 policy years. To qualify for a MOD rating, an insured must have had coverage for a minimum $10,000 in premium for one policy period or $5,000 for two consecutive years.
The rating bureau for your state will receive what is called a stat card which contains final audited payrolls by classification for each policy period. Also included are the rates, premium, ex mod for that policy period and the premium discount applied. This information is digested by the rate bureau into their formula to calculate the actual MOD for the coming year. The Ex MOD is your individual landing point of actual work comp losses divided by your expected losses that’s based on the class code exposure (payroll).
Before you fall asleep, here is how NCCI calculates an Ex MOD. NCCI uses a “split point” of a set dollar amount to determine the primary/excess amount of a claim. Currently we are in a transition period where NCCI is changing the split point from $5,000 to a final $15,000 in year three. In summary, a claim is counted at full value until it meets this “split point” to create a ballast that evens out loss experience more biased on the number of claims vs. the total claim amount. Example: A single claim totaling $20,000 will affect an insured less than 10 claims valued at $2,000 because of the “split point” weighting less on anything over the threshold. By NCCI changing the “split point” upward means that the larger claims up to $15,000 will affect the modification more than past years. Payroll in each of the past years per class code will determine the amount of expected losses. These “expected losses” are driven by statistical data from the entire industry in that class code. More or less claims than expected will affect the mod up or down but the claims total is determined by the claims modified by the “split point”
What you need to remember is that the ex mod is calculated by expected losses vs the actual losses. Severity is now weighted more heavily than in the past so a single “shock” loss will move the needle more than ever in the wrong direction.
Please feel free to contact me directly if you would like to discuss your individual situation and how we might be able to help. My website StaffingWC.com contains all of my contact information and some more details about our products etc.