Pay-As-You-Go Workers' Comp for Trucking: End Audit Season Surprises

## The Audit Season Problem Every trucking company that carries traditional workers' comp insurance knows the dread: audit season arrives, and the carrier tells you that your actual payroll was higher than estimated. Now you owe the difference — sometimes tens of thousands of dollars — in a lump sum. For fleets with seasonal volume, the mismatch between estimated and actual payroll is almost inevitable. Summer contracts spike. Winter routes drop. You couldn't have predicted it accurately when you set your annual estimate. Pay-as-you-go (PAYGO) workers' comp solves this problem completely. ## How PAYGO Works for Trucking Instead of paying an estimated annual premium upfront and reconciling at year-end, PAYGO programs calculate your premium each pay period based on **actual payroll or actual miles driven**. Here's the typical flow: 1. **Setup**: Your PAYGO carrier integrates with your payroll system (or accepts weekly mileage reports) 2. **Each pay period**: You report actual driver payroll or miles 3. **Automatic deduction**: Premium is calculated and debited based on that period's actual numbers 4. **No year-end audit**: Because you paid on actual data throughout the year, there's nothing to true up The result: you pay exactly what you owe, spread across 52 pay periods, with no lump-sum audit bill at the end. ## PAYGO vs. Traditional WC: The Numbers Let's say a trucking company has 12 drivers with an estimated $600,000 annual payroll. **Traditional WC:** - Annual premium estimate: $72,000 (12% rate) - Actual payroll turns out to be $750,000 - Audit bill: additional $18,000 due in 30 days - Total paid: $90,000 in a lumpy, unpredictable way **PAYGO:** - No upfront deposit - Weekly premium: varies with actual payroll - Annual total: same $90,000 — but spread evenly - No audit bill The total cost is often similar. The difference is entirely in **cash flow predictability**. ## Mileage-Based PAYGO: The Trucking-Specific Option Some carriers offer mileage-based PAYGO specifically for trucking, where premium is calculated per mile driven rather than per dollar of payroll. This works well for: - OTR carriers where miles are easier to track than payroll - Companies using ELD data that can be integrated directly - Carriers with variable payroll but consistent mileage We work with several carriers that accept ELD telematics data directly — no manual reporting required. ## Is PAYGO Available in My State? PAYGO is available in most states. Notable exceptions: - **Monopolistic states** (Ohio, Washington, Wyoming, North Dakota): These states run their own WC fund with their own premium structure. PAYGO isn't available through private carriers, but state fund payment schedules can achieve similar cash flow benefits. - **California**: PAYGO is available but limited in carrier options. We have access to California-admitted PAYGO programs. We'll tell you upfront what's available in your state. ## Who PAYGO Is Best For PAYGO makes the most sense for trucking companies that: ✓ Have seasonal or fluctuating driver counts ✓ Have been surprised by large audit bills in the past ✓ Are new and unsure of exact annual payroll ✓ Want to improve cash flow predictability ✓ Use a payroll processor or ELD system we can integrate with PAYGO may be less advantageous for large carriers with highly stable, predictable payroll — though even they often prefer the cash flow benefits. ## Getting Started with PAYGO The application process is similar to standard WC. We need: 1. Your FMCSA/DOT number 2. Driver roster and approximate weekly payroll or mileage 3. 3 years of loss runs (if available) 4. Your payroll processor (if you want direct integration) Most trucking PAYGO policies bind within 48–72 hours. ## Stop Dreading Audit Season If you've been hit with unexpected audit bills or want to smooth out your WC cash flow, PAYGO may be the right fit. Call (888) 234-7891 or request a quote — we'll show you what PAYGO would look like for your specific operation.