The average base rate Washington businesses pay for workers’ compensation insurance will increase by 2 percent in 2016, according to an announcement by the state Department of Labor & Industries (L&I) this week.
Washington businesses and employees pay workers’ compensation premiums to help cover the cost of providing wage replacement and disability benefits, as well as medical treatment of work-related injuries and illnesses. The money also goes toward building reserves to protect the workers’ compensation funds against unexpected costs.
L&I uses wage inflation as a benchmark to help determine workers’ compensation rates for the coming year because as wages climb, the cost of providing coverage rises. Washington’s most recent wage inflation rate is 4.2 percent. The 2016 premium increase is less than half that amount, in part because of significant cost saving by the agency over the last year.
“When people are hurt on the job in Washington, our workers’ compensation system helps them recover and keeps them financially afloat,” said L&I Director Joel Sacks. “The new rates strike a balance between keeping the premiums as low as we can, while making sure we have a system that’s economically healthy and ready to help workers and businesses when they need it.”
Keeping rates steady and predictable
Director Sacks’ goal is to keep rates steady and predictable, and that’s what has happened in the last three years. Workers’ compensation premium increases since 2013 have been between 0.8 percent and 2.7 percent.
Low increases and predictable rates help avoid surprises and allow businesses to better budget for their workers’ compensation costs. The 2 percent increase for 2016 comes out to a little more than an additional 1 cent per hour worked.
The rate increase is an average across all types of businesses. Many will see smaller increases or even lower rates because they receive a discount for having safe workplaces and low claims costs. Employers and industries with higher numbers of claims and costs will see rate changes of more than 2 percent.
Cutting workers’ compensation costs
L&I covered almost 90,000 work-related injury and illness claims in our state last year, helping workers, their families and their employers. The agency has several initiatives underway to help injured workers, improve service and reduce costs. They include:
- Promoting injury prevention.
- Ensuring injured workers receive high-quality health care and support so they’re able to return to work quickly.
- Supporting employers who want to keep injured workers on a job.
- Improving the workers’ compensation claims process.
These and other improvements have resulted in hundreds of millions of dollars in savings in the past year.
In September, L&I proposed the 2 percent rate increase and then took public input on the plan. The agency held public hearings in six cities around the state in October and also took comments online and by mail before making the final decision.
The new rates take effect January 1. Find more information at www.Lni.wa.gov/Rates.
Source: Washington Department of L & I
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