In December each firm that is not self-insured will be sent an annual rate notice similar to the one pictured below.

This notice summarizes information for insurance coverage beginning in January about the firm's:

• Experience Factor.
• Premium rates.
• Employee Payroll Withholding for workers' compensation insurance.
• Employer contribution to workers' compensation insurance premiums.

Because the rate notice includes important information on employee payroll withholding, we suggest that you share a copy of your rate notice with your payroll service, if you use one.

Your experience factor

Your experience factor is shown at the bottom of the upper right section of the rate notice (section A). In general, the fewer your workers' compensation claims involving lost time on the job or disability expenses, the lower your factor, which translates into lower rates.

In this example, the experience factor is 0.9789.

Messages from L&I

Section B of the rate notice includes messages from L&I.

Your premium rates and employee payroll withholding

Section C of the rate notice summarizes the employer contribution, the employee withholding, and the total rate for workers' compensation insurance for each unit (usually hours) of work performed for each risk classification.

The example shows the following information:
Risk class code	4904.00
Description of the risk class	Clerical Office, N.O.C.
Accident Fund base rate (AF)	$0.0336
Medical Aid Fund base rate (MA)	$0.0223
Stay at Work Program base rate	$0.0007
Supplemental Pension Fund base rate (SP)	$0.0932
Hourly* Employer Contribution	$0.09075
Hourly* Employee Withholding	$0.05785
Your Total Hourly* Rate	$0.1486

*All rates are per hour worked with a few exceptions for certain risk classes.

For each hour of work performed during 2012 this firm will be assessed $0.1486: $0.05785 will be withheld from the employee's paycheck as their portion of the workers' compensation premium, and $0.09075 will be contributed by the employer.

If this firm reported 38,400 hours during 2012 they would be assessed $5,706.24 (=38,400 × $0.1486) in premium. They could deduct a total of $2,221.44 (=38,400 × $0.05785) from their employees' payroll, and the firm would contribute the remaining $3,484.80 (=38,400 × $0.09075).

The Total Hourly Rate, Hourly Employee Withholding, and Hourly Employer Contribution are calculated as follows.

Your Total Hourly Rate

= [ (AF + MA + Stay at Work Program) × Experience Factor ] + SP.

= [ ($0.0336 + $0.0223 + $0.0007) × 0.9789 ] + $0.0932 = $0.1486.

Rounded to 4 places.

The Hourly Employee Withholding

= [ (MA + Stay at Work Program) × Experience Factor + SP ] divided by 2.

= [ $0.0223 + $0.0007) × 0.9789 + $0.0932 ] divided by 2 = $0.05785.

The term in brackets is rounded to four places before dividing by 2.

The Hourly Employer Contribution

= Total Hourly Rate minus the Hourly Employee Withholding.

= $0.1486 − $0.05785= $0.09075.

Each firm will have their very own hourly employer contribution, hourly employee withholding, and total hourly rate per class, and their own experience factor. However, the AF, MA, Stay at Work Program, and SP base rates for each class are common to all employers.

Your experience factor history

Your prior experience factor and your new experience factor are shown in section D.