Washington’s L&I Proposes 3.8 Percent Boost in 2006 Workers’ Comp Rates

September 1, 2005

Washington’s Department of Labor and Industries proposed increasing hourly workers’ compensation insurance rates by an average of 3.8 percent in 2006. If adopted, the higher premiums would cover anticipated increases in the cost of medical and wage-replacement benefits paid to workers injured on the job next year.

The agency will hold five hearings around the state beginning Oct. 11 for public comment on the proposed increase. L&I Director Gary Weeks will make the final decision on rates in mid-November. The new rates will take effect Jan. 1 and will show up on employers’ first-quarter 2006 billing in April.

Weeks said the modest rate increase is the result of a continued good economy, increased reporting of hours worked in 2005, and lower expectations of future medical and wage inflation. The higher rates would bring in an additional $56 million next year.

Washington’s workers’ compensation system is divided into three funds:

The Accident Fund pays partial wage-replacement and disability-award benefits when a worker is injured on the job and can’t work. On average, this rate will go up 12.1 percent.

The Medical Aid Fund pays for medical treatment and for vocational rehabilitation counseling. On average, this rate will stay the same in 2006.

The Supplemental Pension Fund, which funds additional cost-of-living increases for workers receiving long-term wage-replacement payments, will go down by 16 percent.

The proposed 3.8 percent increase is an average for all risk classifications. How the rate proposal will impact specific industries is available at www.LNI.wa.gov/ClaimsIns/Insurance/RatesRisk/Check/RatesHistory/default.asp.
Washington is the only state where workers contribute a substantial portion of the premiums paid into the workers’ compensation system. Under this proposal, their share is just over a quarter of total premiums – on average, about 13 cents an hour.

Labor and Industries manages Washington’s workers’ compensation system and the Washington State Fund. The State Fund provides coverage for about 165,000 employers and two million workers. In addition to providing benefits to injured workers, the system protects employers from the high cost of extended claims and from negligence lawsuits that could otherwise result from workplace injuries.

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