Tumwater, WA – The state Department of Labor & Industries (L&I) recently announced a 4.8 percent increase in the average worker’s compensation premium rate for 2023.
The rate increase, prompted by wage inflation and rising medical costs, means employers and workers will jointly pay an additional $61 a year, on average, for each full-time employee. It takes effect Jan. 1, 2023.
“We’re adopting this modest increase in the workers’ compensation rate to boost the long-term health of our state workers’ comp system. This move will assure that our contingency reserves, which we’re using to buy-down the impacts of the rate increase, will continue to be healthy and viable,” said L&I Director Joel Sacks. “We want to keep rates steady and predictable. When the new rates go into effect, on average rates will be about the same per employee as they were back in 2016.”
Contingency reserve to cushion impact
L&I has built up a contingency reserve over the years by carefully managing rate increases and keeping program costs down through efforts that promote workplace safety and help injured workers heal and return to work. Those strategic decisions cushioned what could have been a larger rate increase.
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 workplace injuries and illnesses.
Workers will continue to pay on average about a quarter of the premium, a similar percentage to that paid in 2022.
Input received at public hearings
Public hearings for the proposed 2023 rates were held virtually in October. Representatives from business and labor groups were among those who testified and submitted written comments during the rules process, and their input was considered in the rates decision.
Every fall, L&I determines the proposed workers’ compensation rates for the following year by looking closely at several factors, including the expected workers’ compensation payouts, the size of the contingency reserve, wage inflation and other financial indicators.
Washington’s workers’ compensation system
In most states, rates are charged as a percentage of payroll, so when employee wages go up, more premiums are collected. In Washington, employers pay for workers’ compensation based on the number of hours employees work. So when wages go up in Washington, one way the state covers the increase in the cost of providing workers’ compensation coverage is to increase the hourly rates that employers and workers pay.
L&I keeps rates steady and predictable by helping prevent work-related injuries and illnesses, providing services early in the claims process, and helping injured workers recover.
More information about 2023 workers’ compensation rates is available at www.Lni.wa.gov/Rates.
Source: WA L&I