In Washington, most workers' compensation insurance risk classifications and premiums are based on hours worked instead of payroll.
The workers' compensation premium consists of 4 parts:
- The Accident Fund portion is paid entirely by the employer. This fund covers:
- Wage replacement benefits.
- Permanent partial disability awards.
- Pension awards.
- Burial expenses.
- Certain other benefits.
- The Medical Aid Fund portion is paid equally by the employer and the employee. This fund covers medical treatment for injured workers and the fees for vocational rehabilitation counselors.
- The Stay at Work Program portion is paid equally by the employer and the employee. This fund covers part of the cost of wages, tools, and training for injured workers who are given light-duty or transitional work by their employers.
- The Supplemental Pension Fund portion is paid equally by the employer and the employee. This fund covers the cost of living adjustments to wage replacement and pension benefits.
Supplemental Pension Fund assessments are not experience rated (RCW 51.32.073), and Supplemental Pension Fund costs are not included in the calculation of the experience factor.
Stay at Work Program assessments are experience rated, but the Stay at Work Program costs are not included in the calculation of the experience factor.
Premiums are reported and paid on a quarterly basis after the quarter of coverage has ended.
No minimum firm size exists for firms to be experience rated.
Small firms can earn a claim-free discount from 10% to 40% depending on the size of the firm's historical experience, if the firm had no compensable claims during the three-year experience rating period.
There are limits on the size of the annual change in a firm's experience factor, either up or down. A firm's experience factor cannot change more than 25% from the previous year, unless the previous year's factor was greater than 1.3333 and the current year's factor would be less than 1.0 in the absence of the 25% limitation, in which case the firm's experience factor is set to 1.0000 instead (WAC 296‑17‑865).
Large and small firms pay the same premium rate, given the same experience factor in the same risk classes. This is due to the small administrative expense provision in the rates.
No minimum premiums are required. If no hours are worked, no premiums are due for that period, so you just write "no hours" on your quarterly report and send it to us.
A group of firms can be retrospectively rated as one entity instead of separate entities. Overall retrospective rating refund is based on the relative difference in the pooled loss ratio between retro and non-retro employers. Learn more about Retrospective Rating (Retro).
Occupational disease claim cost charges are pro-rated amongst all the injured worker's employers that are insured by L&I where there was exposure to conditions that lead to the occupational disease (WAC 296-17-870 (6)).
For claims where L&I determines that there is a reasonable potential of recovery from an action against a third party, the claim cost charges for experience rating and retrospective rating are reduced by 50% (WAC 296-17-870 (4)).