Does pay-as-you-go workers' comp get rid of the audit?

No. Pay-as-you-go is a way of paying, not a different policy: premium is calculated from the payroll you actually run each pay period instead of an annual estimate billed up front. The standard NCCI policy still sets final premium after the term ends, and EMPLOYERS and The Hartford both say the audit still happens. What changes is the down payment and, usually, the size of the year-end bill.

Updated September 29, 2026. Written by Andre Beukers, principal at Redoubt, a commercial insurance agency in Salt Lake City, not a government office.

What is pay-as-you-go workers' comp, and how does it work?

On a traditional policy the carrier bills a deposit and installments from payroll you estimated at the start. NCCI's standard policy form says so: "The premium shown on the Information Page, schedules, and endorsements is an estimate."

On pay-as-you-go, each payroll run's wages are multiplied by the rate for each class code, and that premium goes to the carrier. As The Hartford puts it: "You're still getting workers' compensation insurance, you're just paying for it differently."

If I pay as I go, what can still change at the audit?

The standard policy sets final premium "after this policy ends by using the actual, not the estimated, premium basis," and lets the carrier audit your records up to three years after the term. Pay-as-you-go gets the payroll total close; the audit checks everything else. EMPLOYERS: "Premium audits are performed on all policies."

Class codes: payroll bills each worker's assigned code; the auditor compares it with the work actually done
Subcontractors: 1099 subs are not on payroll; unless you prove they carried their own coverage, the policy lets the carrier use the contract price as payroll
Owners and officers: an owner paid by draws is not in the payroll feed; if covered, the auditor adds that pay under state rules
Minimum premium: final premium cannot fall below the policy minimum, however little payroll you ran

What are the pros and cons of pay-as-you-go workers' comp?

The pro: premium tracks payroll, which suits seasonal crews, a contractor adding and dropping workers job to job, or a restaurant whose hours swing. On an annual estimate those businesses overpay all year or owe a large balance at audit.

The cons: it fits less well when most of your exposure never runs through payroll (a contractor using mostly 1099 subs), or when you want to shop the policy freely each year. The Hartford also notes you "may lose direct control and knowledge over the true costs."

Does pay-as-you-go workers' comp cost more?

Not in rate: the class codes and rates are the same; what changes is timing and fees. The Hartford says a traditional policy may need a 25% deposit on the estimate; pay-as-you-go removes most of it. QuickBooks charges $5 a month for Pay As You Go on Workforce Payroll, and ADP notes some states still require assessment fees.

Which payroll companies and carriers offer pay-as-you-go workers' comp?

The Hartford: "Not all payroll companies and insurance companies offer pay-as-you-go workers' comp." Each program below is confirmed on the company's own page as of the updated date above; terms change, so check the linked source.

ADP Pay-by-Pay: needs ADP payroll, ADP tax filing, and ADP's insurance agency as agent of record
Paychex: premiums from actual payroll each check date, through the Paychex Insurance Agency
QuickBooks Payroll: for policies bought through a QuickBooks insurance partner
ERGO NEXT: through partners including QuickBooks, Square, Gusto, Toast, Rippling, Patriot, OnPay, and Homebase
EMPLOYERS PrecisePay: payroll reported by you or one of its listed vendors, such as Paylocity and Heartland
The Hartford: pay-as-you-go billing through your existing payroll service or tax administrator

What happens to my policy if I change payroll companies?

Ask before you switch. Many programs run through the payroll company's own agency, and leaving can end your eligibility for the program: ADP requires clients to use ADP Payroll and ADP Payroll Tax Filing with ADPIA as agent of record. If the policy is canceled, the standard policy still sets a final premium, with a short-rate increase unless the carrier's manuals or state law provide otherwise. EMPLOYERS PrecisePay takes payroll from many vendors, so the policy can stay if your new provider is on its list.

Side by side

Pay-as-you-go vs traditional workers' comp

Same coverage; what differs is when premium is calculated and what you pay up front.

	Traditional (annual estimate)	Pay-as-you-go
What the bill is based on	Payroll you estimated at the start of the term	Wages from each payroll run, by class code
Up-front payment	Deposit on the estimate, then installments	Little or none; premium is collected with each payroll
If payroll drops mid-year	You keep paying on the estimate until audit refunds it	The next payroll bills less
Year-end audit	Carrier audits; EMPLOYERS audits every policy	Still audited; payroll usually close, classes and subs still checked
Tied to a payroll company	No	Often, through the payroll company's agency or an approved vendor list

Terms vary by carrier, payroll company, and state.

Sources

Where these answers come from

Statutes, state agencies, and rating bureaus. Requirements depend on the business, the worker setup, and the current instructions of the state agency, so check the source for your state before acting.

NCCI standard workers compensation policy, WC 00 00 00 C (hosted by WCRIBMA)Part Five: estimated premium, final premium from actual payroll, minimum premium, audit rights up to three years.The Hartford: pay-as-you-go workers' compSays pay-as-you-go does not prevent an audit, and that not all payroll companies and carriers offer it.EMPLOYERS: PrecisePayPremium from actual payroll; does not eliminate the final audit.EMPLOYERS: PrecisePay FAQAudits on all policies; how missed payroll reports are billed.EMPLOYERS: PrecisePay approved payroll providersThe payroll vendors approved to report payroll to PrecisePay.ERGO NEXT: pay-as-you-go workers' compNames the payroll partners it offers pay-as-you-go through.ADP: Pay-by-Pay premium payment programEligibility: ADP payroll, ADP tax filing, ADP's agency as agent of record.Paychex: workers' compensation insurancePremiums calculated from actual payroll each check date; footnote says the program is available in all states except North Dakota, Ohio, Washington, and Wyoming.QuickBooks: workers' compensation insurancePay As You Go for partner policies, and its monthly service fee.Washington L&I: file quarterly reportsState-fund billing in a monopolistic state: quarterly reports and premiums.Ohio Revised Code 4123.35Employers pay estimated annual premium into the Ohio state insurance fund in advance of the policy year.

The next question

Workers’ compensation insurance: every question, every stateThe hub: the 51-state requirement table and the nine buyer questions.The workers' comp auditWhat to prepare, and why the bill rose.Workers' comp class codesThe code your payroll bills under, and how it gets assigned.Workers' comp and 1099 subcontractorsWhen a sub's payroll lands on your policy.What workers' comp costsRate per $100 of payroll and minimum premium.Monopolistic statesNorth Dakota, Ohio, Washington, Wyoming: state fund only.Subcontractor payroll charged to my auditWhich records take a sub off the audit.

By state

Workers’ comp requirements in every state

Each state page gives the employee threshold, the owner and officer exemptions, the penalty for going without, the rating bureau, the market, the enforcing agency, and the exemption filing, each with its statute or agency source.

Frequently asked questions

Pay-as-you-go workers' comp FAQ

Can I get a certificate of insurance on a pay-as-you-go policy?+

Yes. Pay-as-you-go changes how premium is billed, not the coverage, and The Hartford says the policy details "work the same" as under a traditional payment plan. Ask the agent of record, which may be your payroll company's agency, to issue the certificate.

Is there pay-as-you-go in North Dakota, Ohio, Washington, or Wyoming?+

Those four states require state-fund coverage, and the fund sets the billing; Paychex excludes all four from its program. Washington's Department of Labor and Industries bills on quarterly reports, and Ohio's statute collects estimated annual premium in advance.

What if I stop running payroll for a few months?+

Tell the carrier first. EMPLOYERS, for example, bills a missed report from the estimated annual premium, and any policy still owes its minimum premium at audit.

Talk to Redoubt

Deciding between pay-as-you-go and an annual policy?

Tell us your payroll company, how your payroll moves through the year, and whether you use subcontractors. We will tell you which billing fits and what the audit will still check.

Ask about pay-as-you-go Call 385-375-7655

This is general insurance information, not legal advice or a coverage determination. Statutes, agency instructions, policy forms, and the facts of the business control.