Washington Employers Save $315 Million in Workers’ Comp

Washington Governor Chris Gregoire announced that the state’s employers and workers would save an estimated $315 million in workers’ compensation premiums next year as the result of a six-month partial suspension of rates proposed by the Department of Labor and Industries (L&I).

“This is good news for Washington employers and their workers,” said Governor Gregoire. “It reflects the fine job they’ve done to reduce workplace injuries, the higher than expected investment earnings and L&I’s commitment to controlling health care costs.”

The proposed rate suspension would occur in the second half of 2007, when the rate paid by workers and employers into the Medical Aid Fund would be reduced to zero for a period of six months.

“The Medical Aid Fund currently has more money than is necessary to pay health benefits for injured workers,” said L&I acting director Judy Schurke. “We have an obligation to use the surplus to reduce the cost to our customers.”

A wood-framing building contractor who employs 25 full-time workers and has an average claims experience would save about $22,000, according to L&I’s estimates. A vegetable farmer with a similar number of employees and claims experience would save about $5,300.

The savings would come on top of an overall 2 percent decrease in the average premium rate, a change L&I is considering for workers’ compensation insurance next year. If this proposal and the proposed 2007 rates are adopted, employers and workers would pay about $345 million less next year.

The temporary suspension of the Medical Aid Fund rate is the most effective way to lower the workers’ compensation system’s contingency reserve without reducing overall rates to a point where they would need to be raised significantly in the future, L&I said.

Washington’s workers’ compensation system is made up of three funds. The Accident Fund pays partial wage-replacement, disability and pension benefits. Only employers pay into that fund. The Medical Aid Fund provides health care and pays for some vocational counseling. The Supplemental Pension Fund pays cost-of-living increases mandated by state law. Employers and workers pay equally into those two funds.

L&I manages a workers’ compensation system that provides coverage for about 2.3 million workers and 165,000 employers.

Four public hearings on the proposal will be held in December:
*December 13, 1:00 p.m. at L&I’s Tukwila office, 12806 Gateway Dr.
*December 14, 10:00 a.m. at the Ridpath Hotel, 515 W. Sprague Ave., Spokane.
*December 15, 10:00 a.m. at L&I’s Tumwater headquarters, 7273 Linderson Way S.W.
*December 18, 1:00 p.m. at L&I’s Yakima office, 15 W. Yakima Ave.

Written testimony may be sent to Assistant Director Robert Malooly, Insurance Services Division, P.O. Box 44100, Olympia, WA 98504-44100, or maly235@lni.wa.gov.

The State Fund’s financial reports are available at www.statefundfinancial.lni.wa.gov.