The Department of Labor and Industries (L&I) proposes that workers’ compensation rates increase by 2 percent next year (on average). There will be a comment period, and L&I will announce the final rates in December. (Last year, for example, it proposed a 1.8 percent increase and the final increase was 0.8 percent.)

L&I Director Joel Sacks said,

We’ve worked hard to decrease the costs of running the program, which is one of the reasons we can propose a rate increase that’s well under the wage inflation rate. Still, this small increase will help build the reserve funds needed to keep our program financially healthy.

The wage inflation rate that he mentions is 4.2 percent for 2016. A few years ago L&I began using the inflation rate as

. . . a benchmark to help determine rates for the coming year because as wages climb, the cost of providing workers’ compensation coverage rises.

L&I decided to do so because every other state calculates workers’ compensation premiums based on payroll, so when wages increase, premiums do too. Washington, uniquely, bases workers’ compensation premium rate calculations on hours worked. The benchmarking is an attempt to eliminate “major swings in rates.”

Still, the proposed rate is “nearly double what the department needs to break even,” as the Association of Washington Business notes. Additionally, the latest data from the National Academy of Social Insurance shows that Washington still has the nation’s highest workers’ compensation benefit costs.

Meanwhile, Oregon recently announced that its workers’ compensation costs will decrease by 5.3 percent on average in 2016.