The National Academy of Social Insurance (NASI) reports that workers’ compensation benefit costs per covered worker in Washington were $777.33 in 2019 (up from $769.52 in 2018). This is the highest in the country; the second highest was California, with $713.52 benefits per covered worker.

Washington’s workers’ compensation benefit costs are also high as a percent of covered wages: In 2019, Washington ranked 6^th highest (1.12%). According to NASI, Washington’s covered wages increased 35.9% from 2015 to 2019, which was the strongest growth in the country.

One component of benefit costs are special funds used by some states to administer benefits to certain types of workers. An example is Washington’s supplemental pension fund, which provides cost-of-living adjustments for pensions and long-term time-loss benefits.

Nationally, benefits paid through special funds grew by 8.7% from 2015 to 2019. NASI notes, “This increase was driven by Washington, which alone accounted for 58.8 percent of special benefits paid in 2019.” From 2015 to 2019, special funds benefits paid in Washington grew by 23.6%. The chart shows the growth in total benefits paid in Washington and benefits paid from special funds since 2008. (Note that as part of workers’ compensation reforms made in 2011, the COLAs were suspended for FY 2012.)

The supplemental pension fund COLAs are tied to the state average wage, which means Washington’s supplemental pension benefits will continue growing in future NASI reports. The state average wage grew by 5.5% in 2018 (affecting 2019 COLAs). It has grown even more strongly since then: 6.7% in 2019 (affecting 2020 COLAs) and 10.1% in 2020 (affecting 2021 COLAs). The strong average wage growth in 2019 and 2020 isn’t yet incorporated in the NASI data given the data lag.  

Meanwhile, the Oregon Department of Consumer and Business Services released its 2020 workers’ compensation premium rate ranking study earlier this year. According to the study, Washington has the nation’s 22^nd highest premium rates, an improvement over our 16^th highest rank in the 2018 study.

Benefit costs (as reported by NASI) are the best way to measure workers’ compensation system costs and compare them across states. While the Oregon study is often cited in cost discussions, we do not consider it a good measure of Washington’s workers’ compensation system costs. For more on why, see this report.

Average workers’ compensation premium rates were reduced by the Department of Labor & Industries in 2018, 2019, and 2020. There was no change in 2021, but L&I has proposed a 3.1% increase for 2022. The supplemental pension component of the rate would increase by 14% under the proposal.