Employers' Guide To Workers' Compensation Insurance In Washington State Page 11
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40Chapter 3
pay this premium. It pays for medical care and
result will affect your workers’ compensation
related services essential to an injured worker’s
premium rates for a calendar year.
recovery, including some vocational services.
Every eligible employer is experience rated on an
annual basis. An eligible employer, as defined by
Stay-at-Work premium.
Employers and
Washington Administrative Code, is an employer
employees pay this premium. It partially
who reported experience (worker hours or units)
reimburses employers for wages and other
during a given experience period.
expenses when they bring their injured workers
back to light-duty or transitional jobs.
Businesses that have common majority
ownership will be experience rated together on
Supplemental-Pension assessment.
Employers
the same policy and share the experience factor.
and employees pay this assessment. It provides
cost-of-living increases to injured workers with
In most cases, businesses that are sold and
extended disabilities. The Supplemental-Pension
continue to perform the same operations
assessment is not experience rated.
in Washington will have their experience
transferred to the new ownership.
Payroll Deduction
What is the experience period?
Under state law, a portion of the premium due,
The experience period is the oldest three of the
equal to one-half of the Medical Aid Fund rate,
four fiscal years preceding the effective date of
Stay at Work rate, and Supplemental Pension
premium rates. (Fiscal year = July 1 through
Fund assessment, may be paid by employee
June 30.) The premium rates are effective on
contribution.
January 1 of each year.
L&I does not collect each worker’s share directly.
L&I calculates your experience factor by
Instead, employers have the option to collect their
comparing your workers’ compensation claim
employees’ portion through payroll deductions.
costs to the expected costs for companies having
The maximum payroll deduction rate for each
the same reported hours and risk classifications
risk classification assigned to your business is
as your business. A business with an experience
shown on your rate notice. It is illegal to withhold
factor greater than 1.0 will be assessed accident
more than the authorized amount.
fund, medical aid fund, and stay at work rates
Each pay period, calculate the amount you
higher than the base rates. Businesses with factors
withhold by multiplying the payroll deduction
lower than 1.0 will be assessed less than the
rate (found on your Workers’ Compensation Rate
accident fund, medical aid fund, and stay at work
Notice) times the actual number of hours/units
base rates.
each employee worked.
New businesses start out with a factor of 1.0 until
Some businesses choose not to make employee
they become experience rated.
payroll deductions. These businesses are still
If an employer buys an existing business and
responsible for paying the total premium due.
continues to perform the same operations in
Washington, in most cases the business’s existing
Experience Rating
experience rating will be transferred to the new
owner (successor).
What is experience rating?
Claims with a date of injury (DOI) and worker
It is the result of your workers’ hours or units
hours/units reported within the experience
(exposure) and claims (losses) occurring during a
period will be used in calculating the experience
period that we call the “experience period.” This
factor for a given calendar year.
7
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