New York is known for its bright city lights, iconic attractions, and, unfortunately, expensive workers’ compensation insurance.
Workers’ compensation rates in New York are higher than just about anywhere else in the United States. Instead of moving your business out of New York to avoid high premiums, there are ways your business can get relief on workers’ compensation insurance.
Let’s review how much workers’ compensation insurance costs in New York, along with how to avoid overpaying without sacrificing coverage.
How Much Does Workers’ Comp Cost in New York?
Quick disclaimer: although workers’ compensation insurance and payroll services are thoroughly interconnected, we don’t offer workers’ comp insurance directly. Instead, as a small business payroll provider, we help our clients by connecting them with our network of incredible local insurance brokers.
The trusted service providers we recommend specialize in local, small business workers’ compensation insurance. If you’re interested in connecting with a ConnectPay representative to discuss your payroll and workers’ compensation insurance options, schedule a call today.
New York Workers’ Compensation Rates
Footing the bill for workers’ compensation insurance can be painful, especially in New York.
New York usually bounces between #1 and #2 on the list of the most expensive workers’ compensation insurance in the country. Currently ranking #2 right behind New Jersey, the premium index rate is on average $2.23 per $100 in payroll.
How Are Premiums Calculated?
Most states adhere to the National Council on Compensation Insurance (NCCI) and their data classifications and Experience Modification Rate (EMRs). However, in New York, rates are calculated based on several factors differentiated for every business and are regulated by the New York Compensation Insurance Rating Board (NYCIRB).
To calculate your exact costs, you must first factor in the following components that impact your rates:
- Find your job classification codes (also known as class codes)
- Calculate your total wages paid
- Calculate your Experience Modification Rate (EMR)
Find Your Job Classification Codes
Job classification codes can be complex to figure out on your own. Classification codes aren’t just based on your general industry; the codes are calculated based on the risk associated with a job. For example, if one of your jobs has a higher risk, your insurance costs will be higher based on that elevated risk. If a job has a lower risk, you will see that reflected in the cost as well.
This makes figuring out your exact job classification challenging without professional help.
For example, if you own a construction company, your receptionist and your forklift operator will have different job classification codes. Comparatively, a receptionist's work environment is far less risky than that of a heavy machine operator. Therefore, workers' compensation requirements would be different, as would be the cost.
Your insurance broker and the insurance carrier will determine your job classification code per the NYCIRB regulations.
Calculate Your Total Wages Paid
Your payroll provider can help determine how much wages have been paid out year-to-date for each of your workers. This information should be summarized in a report for your insurance broker to review.
Experience Modification Rate (EMR)
The EMR rate is calculated based on past workers’ compensation claims and varies based on your industry. Generally, if you have a high EMR rate, that means you could have an increased risk, therefore also have higher premiums.
The ideal EMR is 0.95 or lower, indicating you have little to no significant past workers’ compensation claims. When you receive a 1.05 rating or higher, this suggests that you are a ‘high-risk employer’ and have had several recent severe claims.
Your insurance broker can calculate your EMR after reviewing your past workers’ compensation claims and coordinating with your past and future insurance companies.
Getting Workers’ Comp Insurance Relief
Despite the high costs of workers’ compensation insurance in New York, there are ways to negate the pain on your cash flow:
- Work with a broker who will frequently shop for the best rates
- Work with a broker who will take the time to get accurate classifications and will work on EMR discounts based on your good claim history
- Create a safe working environment for your workers
- Provide sufficient training and safety protections
- Sign up for a pay-as-you-go workers’ compensation insurance plan, so your payroll provider and insurance broker can adjust your coverage every pay period for only what you need
One of the best ways to reduce your workers’ compensation insurance rates is to work with a local insurance broker. Insurance brokers who are local to New York know the laws and regulations specific to the area and can shop for the best possible policy and rates.
Get Workers’ Compensation Done Right
Workers’ compensation insurance policies are not one-size-fits-all. That’s why working with a local insurance broker is the best option, especially in New York. In New York, there are so many different laws and regulations for workers’ compensation insurance that impact your premium rate. Working with a local insurance broker for your workers’ compensation insurance ensures you are compliant with all the local laws and receive the best rates.
Exploring different policies and finding the perfect policy match for your business shouldn’t be frustrating. We at ConnectPay aim to provide you with the best service and connections possible. As a payroll service provider, we work with workers’ compensation insurance brokers all the time, especially for pay-as-you-go insurance.
We’re happy to help connect you with one of our trusted, local insurance brokers who can calculate everything in this article and shop around for the most competitive rates. Schedule a call with one of our ConnectPay representatives today, and we will help solve your payroll and workers’ compensation insurance problems.