Washington Proposes 3% Increase in Workers’ Comp Rates

September 19, 2008

Washington’s Department of Labor & Industries (L&I) has proposed a 3 percent increase in 2009 workers’ compensation rates. Average premiums would go up by just under 2 cents per hour worked.

“We are in times of economic uncertainty and we want to do what we can to keep businesses strong in Washington State,” said L&I Director Judy Schurke. “We are recommending a modest increase, even though inflationary pressures suggest a larger increase is indicated.” Two of the biggest factors that influence rates are workers’ wages, which were up 5 percent last year, and health-care costs, which are estimated to increase next year by 5.5 percent.

Because Washington premiums are based on hours worked, L&I must adjust rates for wage inflation. Other states assess premiums as a percentage of payroll and, as a result, wage inflation is not a factor in their rates.

“The Legislature instructed L&I in 2005 to strive to keep workers’ comp rates stable and predictable to avoid large swings in rates,” Schurke said. “This rate proposal helps achieve that goal and continues that trend.”

The proposed increase, which would bring in an additional $57 million, is an average for all Washington employers. Individual employers could see their rates go up or down, depending on their recent claims history and any changes in the frequency and cost of claims in their industry. L&I has published online and will soon send to employers the proposed 2009 rate tables by industry.

Washington’s workers’ compensation system is made up of three funds that provide benefits when workers are hurt on the job.

Under L&I’s proposal, the Accident Fund rate would increase 1.8 percent. Employers pay premiums in this fund. The Medical Aid Fund rate would go up by 3.2 percent, and the Supplemental Pension Fund rate would increase 7 percent. Employers and workers contribute equal premiums for the latter two funds.

Washington is the only state where workers pay a substantial portion of premiums. Next year, their share would increase slightly but will remain just more than 25 percent if the proposed rates are adopted.

Final 2009 rates will be adopted in late November following six public hearings.

For information, visit http://www.lni.wa.gov/.

Source: L&I

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