What you need to know
Frequently Asked Questions
How much does workman's Comp Insurance Typically Cost?
Rates are based on a percentage of gross wages reported for your employees. Typically there are three simple factors that determine your workers comp costs: 1) Type of work or services your employees do on a daily basis 2) Whether or not your business has had any claims or accidents within the last three years and 3) The total gross wages you are paying the employees. A clerical (white-collar) rate will always be less expensive than a construction (blue-collar) rate because of the difference in exposure. For example, an office employee can be covered for as little as $0.70 cents per week where a trim carpenter can be covered for as little as $25.00 per week
What is Pay as you Go Workers Compensation?
Pay As You Go programs allows the business owner to pay their premium based on real-time payroll. There are three primary benefits including: 1) Lower start-up cost for policies, 2) Better cash flow throughout the policy period, and 3) Less exposure to year-end audit balances.
What is a PEO?
A Professional Employer Organization (PEO), also known as an employee leasing company, is essentially a giant master policy that covers thousands of companies like yours. Since they process so much premium, it allows them to quote and approve coverage for small businesses that normally wouldn’t qualify for standard market policies. The PEO typically provides an simpler and easier way to secure workers comp coverage by covering your employees on a Pay as you Go basis. Since the PEO will provide the payroll processing and tax filing services for your employees, your weekly or bi-weekly cost will be based on your TRUE payroll and you typically have no annual audits. Just like your electric bill, you will pay for what you use, more for your busier weeks and less for the slower weeks. The PEO provides an integrated and cost-effective co-employer arrangement by assuming some of the liability for your employees, coordinating human resources, claims management, safety procedures, wage and labor law compliance and the ability to greatly reduce high MOD score premiums and lower your cost significantly.
How can I save Money with A PEO?
A PEO can save you money on many avenues some of the key ones listed below.
- Lower your premium by discounting your workers comp rates
- Lower your tax burdens. If you have had a high employee turnover rate and notice your SUTA (state unemployment tax rate) has gone up, the PEO can lower your SUTA tax rates by paying the tax rates under the PEO’s FEIN number instead of your own
- Save time and money spent on payroll processing, tax deductions and filings and worries of wage and labor compliance. The PEO essentially gives you an entire HR department for a fraction of the cost of hiring one HR administrator and allows you and your team to focus on what you do best, Growing Your Business.
- Lower your cost on group health benefits for your employees. Typically, when you shop group health benefits for your employees, a carrier will quote you based on a variety of factors including how many employees you have. However, when you are in a PEO arrangement you can get access to Fortune 500 level benefits because the PEO’s master group health policy was quoted based on their ten’s if not hundreds of thousands of employees.
What are some of the advantages of using a PEO?
- Lower Employee Costs
- Payroll Administration
- Employee Benefits
- Workers’ Compensation Administration
- Workers’ Compensation Claims Handling
- Payroll Tax Administration and Compliance
- Risk and Safety Solutions
- No Unemployment Claims to Process
- Health and Benefits
- 401K Administration
- NAPEO reports that small businesses who use PEO’s grow 7-9% faster
- Lower employee turnover
Will a partnership with a PEO involve a contract? Can I cancel without early termination penalties?
Most PEOs do not have a long-term contract or commitments and are on a month to month basis. Some PEO’s offer better discounted rates in exchange for 12 month or more commitments. Just tell us what you prefer and we will place you with the best PEO that meets your business needs.
Who pays the cost of workers comp insurance?
All costs for workers’ compensation insurance should be paid by the employer. Employers can’t deduct any part of premiums from any employees’ wages for workers comp coverage.
Who is Responsible for Employment Taxes?
The PEO handles the administration of the employment taxes and makes payment to the appropriate agencies. The client is responsible for providing funds to cover their payroll and payroll taxes.
What is a certificate of insurance and when do I need one?
A certificate of insurance is an Acord form used by insurance agencies or carriers to provide proof of insurance coverage two a third party on behalf of an insured.
I need a Certificate Yesterday! How can I get one right away?
Most of the PEO’s in our network understand that you may have a contract or permit department waiting on the cert and won’t allow you to do anything until the certificate has been issued. The best way to get a rush certificate is to call our office and speak with one of our brokers. In most cases we can usually give you on the spot pricing. As a general rule of thumb, it takes 24 hours to bind the policy and another 24 hours to have the cert issued but because of the volume of accounts we place, the PEOs happily give us priority and can rush your request. Certain PEOs in our network can even provide the certificates as quickly as the same day!
I received a PEO Quote. How do I understand the Cost?
ALL PEO quotes include four basic categories
- Setup or Policy Origination Fee: This is a fee that is charged to bind and onboard all of your employees into the policy and PEO platform. Our brokers and experienced enrollment specialists will hold your hand and make the enrollment process as quick and easy as possible by reviewing all of your enrollment documents and employee applications to make sure all of the forms are completed and entered correctly ensuring your employees have the appropriate deductions taken out and they are paid properly. Once completed you will have a roster or login to the web portal showing all of your employee data, rates of pay and be able to simply report the hours worked for each pay period and the PEO will provide an invoice for exactly what you owe for the categories below.
- Workers comp code and rate which is multiplied by the gross wages you will report for the employees. For example, a painting contractor would be coded under 5474 and the 2019 state rate for painting up to 2-3 stories is 9.13% so if your employee was earning $500 per week then your weekly cost would be $45.65 ($500 X 9.13%)
- Employer Matching Taxes: These are the employer matching taxes that you should already be paying which goes to the IRS. These are to match the taxes withheld from your employees pay checks. PEO’s can have different SUTA tax rates but usually the FICA, FUTA and SUTA will total 10.95%. For example, if you pay your employee $500 in gross wages the employer matching taxes would be $54.75 ($500 X 10.95%)
- Administrative Fee: This is a percentage of the weekly payroll that the PEO will charge to process their payroll, RT6 and 941 filings, produce W2’s each year, assume some liability for the employees, provide the HR services, wage and labor compliance and help implementing safety procedures along with a host of other benefits and services
The last thing you always need to look at is the requirements section. This usually indicates the cost of the claims fee in the event of an accident, minimum workers comp and/or admin fees that certain PEO’s may bill no matter how much payroll you process and any fees or deposits the PEO my require in order to issue a certificate prior to processing your first payroll if needed.
I understand the quote and I’m ready to bind. What is the next step?
In order to move forward it starts with simply executing and returning the quote and initial setup docs. The initial setup docs are usually only about 4 pages which includes the following.
- Credit/Debit card auth form
- Service fee acknowledgement letter stating you understand the quote and pricing
- No Loss Affidavit confirming you have or have not had any claims within the last 3 years
- Optional Class Code Affidavit confirming that if you have any non-labor employees like clerical or sales estimators, you confirm that they will not be doing any labor services and have been properly classified
- The last page is an optional way to save $50 off of your policy origination fee! Just by listing three companies, owner names, phone and email addresses that might benefit from our services whether they purchase a PEO policy or not we will take $50 off of your policy origination fee.
How fast can I start accruing hours under the PEO Policy?
Most PEO’s enroll your employees this week with the plan of making your first payroll period effective for the following Monday, Tuesday or Wednesday. However, if you need to have the payroll to be effective earlier just let one of our brokers know and we can place you with a PEO that can accommodate your needs.
How does a brokerage Firm like yours Benefit Me?
As opposed for dealing with a representative that works for one PEO for example, naturally that rep will tell you that their PEO is the best on the planet which simply may not be the case for every business. Your company has specific needs and requirements to ensure you move forward smoothly and successfully. As a National Brokerage firm, we work with over 50 different carriers and PEO’s and our extensive knowledge of each PEO’s Underwriting Guidelines and Procedures allows us to place you with the perfect policy. Even more so we look at all of our client’s policies on a quarterly and annual basis for significant changes in operations, payroll and services to make sure that our clients are in the best policy that aligns with your business needs. If we see that you qualify for another policy that offers better discounts or benefits, we can easily move you into a new policy with one of our other PEO partners. As a brokerage firm that has written over 3,000 PEO policies and has over 800 active clients we have a network of referral partners that give our clients EXCLUSIVE discounted rates for services including Online Lead Generation & Marketing, Accounting and Corporate Tax Preparation, Legal Counsel and more exclusive member benefits added constantly. We treat our clients as partners and are constantly finding ways to help our clients grow and become more efficient in their businesses.
What are Lost Runs and how do I get them?
Loss Runs is an employer’s Official Claims Report from their current or prior insurance company. Carriers are legally required to provide Loss Runs within a reasonable amount of time. Most insurance companies typically want to view an employer’s prior claims history for 3 years before offering a quote. This practice is utilized to verify the amount and cost of claims over a period of time. Loss Runs can be requested from your insurance agent or directly from the insurance carrier.