Tag Archives: Rates

WA State DLI Proposes Significant Drop in Workers’ Comp Rates for 2019

The price of workers’ compensation insurance in Washington will likely drop significantly in 2019. The state Department of Labor & Industries (L&I) proposed a 5 percent decrease in the average premium employers pay for the coverage.

If approved, the rate decrease would be the largest drop since 2007. The lower rate would mean employers would pay an average of about $58 less a year per employee for workers’ compensation coverage. Employees would pay about $6 less a year for their share of the cost.

The proposed decrease would mean Washington workers and employers, as a group, pay $136 million less in premiums.  

The public will have an opportunity to provide input about the rate proposal before a final decision is made in December.  

L&I Director Joel Sacks says decreases in work-related injuries, along with L&I initiatives to improve outcomes for injured workers and reduce costs, have made the system healthier and are contributing to the proposed decrease. 

“We’ve seen a big drop in injuries at work in our state since 2012. And that’s great news because preventing injuries and making workplaces safe is our number one goal,” said Sacks. “Along with that, we’re doing a better job helping injured workers heal and return to work. That’s good for workers and employers, and helps us lower the cost of workers’ compensation coverage.”  

One example of an effort that’s helping workers and employers is L&I’s Stay at Work Program. It pays for some of the costs for employers to keep injured workers in light-duty jobs until they fully recover. Since 2012, the program has provided $72 million to employers, which has helped provide 27,000 workers with light-duty jobs while they heal.

L&I has also established opioid prescription guidelines which have resulted in a 90 percent reduction in the number of workers receiving opioids at 6-12 weeks after injury. And the agency has been providing vocational support and assistance earlier in injury claims, which has helped reduce long-term disability. In the last five years, these and other improvements have resulted in a more than $2 billion reduction in projected long-term costs for the workers’ compensation system.  

Helping workers recover and keeping the workers’ compensation system healthy

Employers and workers pay into the workers’ compensation system to help cover the cost of providing wage and disability benefits for injured workers, as well as medical treatment of injuries and illnesses. The premiums also provide a safety net by ensuring reserves are available to cover the unexpected, like a natural disaster or downturn in the economy.

Each fall, L&I determines the proposed rate for the following year by looking closely at several factors, including expected workers’ compensation payouts, the size of the contingency reserve, wage inflation and other financial indicators.

A 2.5 percent decrease last year, along with some small increases in workers’ compensation premiums since 2014, have kept rates steady and predictable, making it easier for employers to budget for workers’ compensation costs while also building and maintaining an adequate reserve fund for the workers’ compensation system.

Public hearings planned for October

The agency will hold three public hearings where people can learn about and comment on the proposed 2019 rates. The hearings are scheduled for: 

  • Tumwater, Oct. 30, 9 a.m., Dept. of Labor & Industries Headquarters
  • Tukwila, Oct. 30, 1 p.m., Dept. of Labor & Industries Tukwila Office
  • Spokane Valley, Oct. 31, 9 a.m., Spokane CenterPlace 

People can also comment in writing to Jo Anne Attwood, administrative regulations analyst, P. O. Box 41448, Olympia, WA 98504-4148; or email joanne.attwood@Lni.wa.gov. All comments must be received by 5 p.m. Nov. 2, 2018.

More information about the proposal is available at www.Lni.wa.gov/Rates. Final rates will be adopted by early December and go into effect Jan. 1, 2019.

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WA L&I NEWS: Cost of Workers’ Compensation Insurance Dropping for Many Yext Year

The price of workers’ compensation insurance will go down for many businesses in Washington next year. Today, the state Department of Labor & Industries (L&I) announced that the average amount employers and workers pay for the coverage will drop by 2.5 percent in 2018.

Unlike many states, Washington employers and employees share the expense of workers’ compensation premiums.

After proposing the decrease in September, the agency hosted several public hearings around the state to take input. L&I Director Joel Sacks made the final decision this week.

“We’ve made several improvements that are helping injured workers heal, return to work sooner and avoid long-term disability,” said Sacks. “We’ve also used small rate increases in recent years to make the workers’ compensation system healthier and to build our contingency reserve. As a result, we’re able to cut premiums in 2018.”

Lower rate means businesses and employees will pay millions less

The rate decrease means employers will pay about $34 less a year per employee for workers’ compensation coverage in 2018. As a group, Washington employers will pay $67 million less in premiums. Employees will also pay less for their share.

L&I attributes the decrease to several factors, including the improved economy, employers and workers focusing on safety, and L&I initiatives that are helping injured workers recover sooner and reducing workers’ compensation costs.

One example of an improvement to the workers’ compensation system involves providing injured workers vocational support and assistance much earlier in claims. It’s helping people hurt on the job return to work sooner. The rate of workplace injuries that develop into long-term disability is down by more than 18 percent from 2012.

The 2.5 percent workers’ compensation premium decrease is an average; individual employers may see smaller or larger drops depending on that employer’s industry and claims history. For that same reason, some employers will see increases.

Steady and predictable rates

L&I is working to avoid large rate swings that make it hard for employers to plan. The agency determines the proposed rate each fall by looking closely at expected workers’ compensation payouts, the size of the reserve funds, wage inflation and other financial indicators.

Employers and workers pay into the workers’ compensation system to help cover the cost of providing wage and disability benefits, as well as medical treatment. L&I is the state’s primary workers’ compensation insurance provider, covering about 2.8 million workers and nearly 180,000 employers. The agency accepts more than 90,000 claims a year.

The new rates go into effect on Jan. 1, 2018. More information about 2018 workers’ compensation rates is available at www.Lni.wa.gov/Rates.

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Two Percent Average Increase in WA Workers’ Comp Rates for 2016

Every fall, the Washington State Department of Labor & Industries (L&I) sets workers’ compensation rates for the following year. As wages and health care costs rise, the cost of providing workers’ compensation insurance goes up. This year, the department is proposing an average 2 percent rate increase for 2016.

Employers and workers around Washington pay into the workers’ compensation system so they’re covered if someone gets hurt on the job or becomes ill from something they’re exposed to at work. Last year, L&I covered almost 90,000 work-related injury and illness claims in our state.

L&I takes a close look at expected workers’ compensation payouts, the size of the reserve fund, wage inflation and other financial indicators to determine the proposed base premium rate. The agency is also working to cut costs to help keep rates as low as possible.

“When workers’ compensation rates are like a roller coaster ride, it frustrates everyone. We’re not going to do that. I’m committed to keeping rates steady and predictable,” said L&I Director Joel Sacks. “We’ve worked hard to decrease the costs of running the program, which is one of the reasons we can propose a rate increase that’s well under the wage inflation rate. Still, this small increase will help build the reserve funds needed to keep our program financially healthy.”

The proposed increase comes out to a little more than 1 cent per hour worked. Workers’ compensation premiums help cover the cost of providing wage and disability benefits, as well as medical costs for treatment of injuries and illnesses. The reserve fund protects the system against the unexpected.

 

Workers’ Comp Facts:

  • L&I is the state’s primary workers’ compensation insurance provider, covering about 2.6 million workers and nearly 170,000 employers.

  • The proposed rate is an average. An individual employer’s actual rate change may be more or less depending on that employer’s industry and history of claims that result in wage replacement and/or disability benefits.

  • More than 80,000 claims are accepted each year through the Washington State Workers’ Compensation State Fund.  

 

Cutting workers’ compensation costs

Tens of thousands of workers in our state are injured on the job every year, and Washington’s workers’ compensation system is always ready to help them, their families and their employers. 

L&I has several initiatives underway that focus on helping injured workers heal and get back to work, improving service and reducing costs. That includes:

  • Promoting injury prevention.
  • Ensuring injured workers receive quality health care.
  • Supporting employers who want to keep injured workers on a job.
  • Improving the workers’ compensation claims process.

These and other improvements and efficiencies have resulted in hundreds of millions of dollars in savings in the past year.

 

Keeping the system healthy and rates steady

L&I uses wage inflation as a benchmark to help determine rates for the coming year because as wages climb, the cost of providing workers’ compensation coverage rises. Washington’s most recent wage inflation number is 4.2 percent. Significant cost savings by the agency are allowing for a proposed increase well under the wage inflation rate.

“Eliminating major swings in rates makes it much easier for business owners to budget for their workers’ comp costs. And by using wage inflation as a benchmark, we can keep up with rising costs of providing insurance while making sure we have a reserve fund ready for tough times,” said Sacks.

More information regarding the proposal is available at www.Lni.wa.gov/Rates. Final rates will be adopted by early December and go into effect Jan. 1, 2016. 

L&I Proposes No Increase in Workers’ Comp Rate for 2013

How Much of the Savings Came Out of the Pockets of Workers?

 

September 17, 2012: The Washington State Department of Labor & Industries (L&I) today announced it is proposing no increase in the average rate for workers’ compensation insurance. If adopted, this would be the second straight year with no increase in workers’ comp rates.

 

“Had the Governor and the Legislature not adopted the 2011 reforms, I wouldn’t be making this proposal today,” said L&I Director Judy Schurke. “In fact, without those reforms, we would be facing a rate increase. Instead, we’re able to keep rates down for Washington’s businesses and workers.”  Savings due to reforms are beating expectations. L&I is now projecting the reforms passed in 2011 will save $1.5 billion over four years, $300 million higher than originally estimated.

While the reforms play an important part in lowering costs, Schurke pointed to additional factors responsible for lower costs in 2013, including:

  • Fewer claims in high hazard industries like construction are resulting in fewer long-term disabilities;
  • Overall claim frequency, or the number of claims per 100 workers, has gone down by 6.2 percent;
  • L&I has held medical cost growth below 4 percent over the past five quarters and expects continuing to do so in 2013 with the new provider network and health technology assessments;
  • L&I is resolving claims more quickly as a result of Lean and other improvements.

Today’s proposal would mean an additional $82 million is placed in the State Fund reserves by the end of 2013. In the past, the State Auditor issued strong warnings about the consequences of maintaining inadequate reserves. Schurke also acknowledged the reserves are critically low by industry standards due to increased liabilities, investment losses and drawing down the reserves to hold down rates during the recession.

The Workers Compensation Advisory Committee (WCAC), which has been working with L&I on a plan to rebuild the reserves, endorsed L&I’s proposal to hold rates steady in 2013 and begin rebuilding the reserves. Washington is the only state where workers pay a substantial portion of premiums. Workers will pay about 24 percent of the premiums in 2013. The proposal to keep rates flat in 2013 is an average for all Washington employers. Individual employers may see their rates go up or down, depending on their recent claims history and changes in the frequency and cost of claims in their industry.

Every year in Washington, about 100,000 claims are filed for medical costs and lost wages due to work-related injuries, illnesses and deaths. Each year, L&I must review premium rates and make adjustments to cover the anticipated costs of claims that occur in the next year.

Public hearings on the proposed rates will be held in:

  • Tukwila, Oct. 23, 10 a.m., L&I office.
  • Bellingham, Oct. 23, 1 p.m., Public Library Lecture Room.
  • Spokane, Oct. 24, 10 a.m., CenterPlace Event Center.
  • Richland, Oct. 25, 10 a.m., Community Center Activity Room.
  • Tumwater, Oct. 26, 10 a.m., L&I Auditorium.
  • Vancouver, Oct. 29, 10 a.m., Red Lion at the Quay, Quayside Portside Room.

More information regarding the rate proposal is available at www.Rates.Lni.wa.gov. The final rates will be adopted in early December and go into effect Jan. 1, 2013.

 

“Evidence-based coverage decisions have reduced unnecessary care and avoided $27 million in annual costs.”  (Emphasis added.)

 

Translation: Denying requested treatment costs the State less than authorizing it. – Ed.

 

Background Information:

  • On average, workers’ comp rates have increased less than 3 percent per year since 2006. This is lower than L&I’s anticipated rate of medical and wage inflation.
  • When calculated as a percentage of payroll, which is how rates are calculated in other states, the proposed 2013 overall rates would be equal to a 2.2 percent reduction.
  • Without savings from the reforms, the 2013 break-even rate would have been about 4 percent instead of minus 4.2 percent. The break-even rate is the amount needed to cover projected costs for the next year. L&I will use the difference between the break-even rate and zero – $82 million – to begin restoring the workers’ comp reserves.
  • The elements of the 2011 workers’ compensation reforms have various effective dates, beginning in 2011 and continuing through 2013. Savings estimates are now at $1.5 billion over four years, with continued savings in future years.
  • As a result of Lean and other initiatives, we are seeing a downward trend in the duration of younger claims.
  • L&I has held medical cost growth below 4 percent over the past five quarters and estimates doing so in 2013 with the new provider network and health technology assessments. Our medical costs are 26 percent less than the average workers’ comp program in the U.S.
  • Evidence-based coverage decisions have reduced unnecessary care and avoided $27 million in annual costs.
  • In 2011, the number of long-term disability claims per 100 workers fell by 6.2 percent, the largest decline since 1995. Long-term disabilities account for 85 percent of workers’ comp claim costs.
  • When hiring picks up in construction and other high-risk industries, we can expect an increase in long-term disability injuries. That’s why it’s important to examine safety practices now and be ready to bring more people back to work safely.
  • Workers’ comp insurance rates are based on the likelihood of an injury. Rates for almost half of the job classifications will change 1 percent or less next year.