The National Academy of Social Insurance (NASI) has released its annual report on workers’ compensation benefits. The report covers data from 2017, and it shows that Washington’s benefit costs per covered worker were $766.59—the highest in the country. (Alaska came in second at $736.55.)
When you consider benefit costs as a percent of covered wages, Washington ranks fifth in the country (1.24 percent). According to NASI, covered wages in Washington increased by 30.5 percent from 2013 to 2017, which was the highest increase in the nation.
Although benefit costs are high in Washington compared to other states, they are declining here (they were $865.67 per worker in Washington in 2010).
Workers’ comp costs here have been a long time concern. The Washington Roundtable includes benefit costs as one metric in its Benchmarks for a Better Washington, noting most recently that (again) Washington’s costs are the nation’s highest (“50” in this case represents most costly).
As the WRC writes, the Department of Labor and Industries has proposed a small rate reduction this year.
Last month, the Department of Labor and Industries (L&I) proposed a 0.8 percent reduction in average workers’ compensation premiums for 2020. If adopted, the average rate would decrease for the third year in a row.
The Association of Washington Business released this comment on the proposed reduction in September.
Kris Johnson, president of the Association of Washington Business, issued the following statement on the state Department of Labor and Industries’ proposed 2020 workers’ compensation insurance tax rates:
“The proposed reduction in workers’ compensation insurance rates by an average 0.8% is welcome news for the state’s employers. Washington remains one of the most expensive states in the country for workers’ compensation insurance, so any reduction is a step in the right direction. We remain concerned, however, about the diversion of workers’ compensation funds in recent years. Rather than setting aside these funds solely to help injured works, the state has been using a portion for other programs. This raises the cost of workers’ compensation insurance.
“We look forward to continuing to work with lawmakers and others to make Washington’s workers’ compensation more competitive, to reduce costs for employers and to bring economic prosperity to every corner of the state.”
The WRC also notes that the costs of Washington’s supplemental pension program have increased rapidly in recent years.
The supplemental pension fund provides cost-of-living adjustments (COLA) for workers’ compensation pensions and long-term time-loss benefits…
Looking back over ten years, Washington’s supplemental pension fund benefits increased by 41.8 percent while total benefits in Washington increased by just 12.4 percent. In 2008, the supplemental pension fund accounted for 16.3 percent of total benefits in Washington. By 2017, that percentage had increased to 20.5 percent. (As part of workers’ compensation reforms made in 2011, the COLAs were suspended for FY 2012.)
As I noted above, L&I is proposing an overall average rate decrease for 2020. The supplemental pension rate component of that would actually increase by 9.4 percent.
Still a cost factor worth watching.