Understanding PEO Pricing: Workers’ Compensation Insurance (Work Comp) Pricing

Each PEO quote will have rates you will be charged for Worker’s Compensation Insurance. In general work comp charges are based on:

Work Comp Classification

This is identified by the Work Comp classifications for the type of work being performed at your company. Coverage for high risk work like steel erection is more costly than for coverage for office workers since the job is inherently more prone to accidents. One of the advantages of using a PEO is that work comp costs are “pay as you go”. Based on the type of work being performed in your company, each job type is assigned a Work Comp Code. This is a standardized list published by NCCI that describes the type of work associated with each work comp classification. Your StaffMarket request for PEO proposals (RFP) will identify the work comp codes relevant for your company.

Annual Wages

As you might expect, the more employees working in a particular risk classification, the higher the work comp insurance charges. When using a PEO, employee time is reported to the PEO for each work comp risk classification and is used as the Payroll (renumeration) basis for billing you for work comp.

Each Un-bundled PEO quote you receive will identify the charges for workers’ compensation insurance. Work Comp charges are usually based on a “dollar per hundred” charge. For example a $5.00 work comp charge will be charged at the rate of $5.00 for each $100 of payroll in the particular work comp classification. You should expect to see work comp charges identified for each type of work you identified on your StaffMarket RFP. Unlike many traditional workers’ compensation insurance plans, there are no up-front deposits required to secure coverage. When using a PEO, work comp coverage is part of the program.

For “white collar” companies without significant work comp exposure these costs are usually a minor component of the overall price being quoted. However for companies with higher risk jobs, work comp costs and or savings are a significant component of the overall quote.

Getting Quoted

DEC Page

If you have a traditional Work Comp plan in place, the policy declarations page (DEC page) will identify your current annual costs for your policy and will identify any discounts you may already be receiving.

Workers Compensation Loss Information History (Loss Runs)

Unless your type of business is primarily involved in office work, information about your history of claims for workers compensation insurance (loss runs) may be required in order to get quoted. Policy and claims information should be available from your current insurance agent or PEO. In most states, your carrier is legally required to provide this information upon request. Providing accurate information about your claims history pays big dividends for the quantity, quality and pricing you will receive

"Carving-Out" Work Comp

If your company already has an attractive workers’ compensation insurance plan in place, most PEOs can “carve-out” work comp coverage from the PEO quote. This allows you use the other valuable HR services of the PEO and retain work comp coverage under your current policy.