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June 21, 2007

Six-month workers’ compensation rate holiday begins July 1

TUMWATER — Beginning July 1, and over the next six months, Washington’s employers and workers will save an estimated $315 million in workers’ compensation premiums.

The partial rate holiday means that most Washington employers will deduct much less from their employees’ paychecks for workers’ compensation premiums. In hazardous industries such as construction, manufacturing and agriculture, the savings for employers and workers will be considerable.

The six-month reduction in workers’ compensation premiums was proposed by Gov. Chris Gregoire late last year and adopted by the Department of Labor & Industries (L&I) in March.

"In the global economy in which we compete, we need to do everything we can to create and retain family wage jobs by recruiting businesses to our state and helping existing businesses to expand," said Gov. Gregoire. "The rate holiday will help businesses, and will also put money into the pockets of workers."

For work performed from July 1 through Dec. 31, employers and workers will not pay the Medical Aid Fund premium. L&I will pay that premium for them from excess reserves that have accumulated in that fund.

On average, the savings will represent about 34 percent of total premiums paid into the workers’ compensation system for work performed in the second half of the year. Because employers and workers pay equally into the Medical Aid Fund, both will benefit equally.

Combined with this year’s overall 2 percent decrease in workers’ compensation insurance rates, which L&I adopted and Gov. Gregoire announced in December, employers and workers will pay about $346 million less in premiums in 2007.

The rate holiday is temporary and will end Jan. 1, 2008.

L&I Director Judy Schurke said higher-than-expected investment returns and L&I’s success at controlling health-care costs made the rate holiday possible.

"In addition, employers and workers continue to improve workplace safety, which reduces what we pay out in benefits to injured workers," Schurke said. "All this means we can use some of the money to reduce premiums for our customers."

How much an employer and worker will save depends on the risk for their industry and the frequency and cost of injury claims. For example, a construction worker who frames houses will save, on average, $440 in premiums over the next six months. His or her employer will save that amount multiplied by the number of framers employed full time. On average, nursing-home workers will save about $177.

All Washington employers have been sent new rate notices that explain exactly how much they will save during the six-month rate holiday. More information is available at www.RateHoliday.LNI.wa.gov.

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For media information: Robert T. Nelson, L&I Public Affairs, 360-902-6043.

Related links:

Audio/WMA: Judy Schurke comments on the rate holiday
State Fund financial reports

Broadcast version
The Department of Labor & Industries said today that an upcoming rate holiday that begins July 1 will save employers and workers an estimated $315 million in workers’ compensation premiums over the next six months.

Governor Chris Gregoire proposed the partial rate holiday late last year, saying it is just one of the ways the state is attracting new businesses and retaining the ones already here.

L&I Director Judy Schurke said the rate holiday covers work performed from July 1 through December 31 of this year. During that period, employers and workers will stop paying the portion of the premium that pays for health-care benefits for injured workers. L&I will pay that premium for them.

The rate holiday is temporary and will end January 1, 2008.

Schurke said the rate holiday is possible because of higher-than-expected investment earnings, L&I’s success at managing health-care costs and a reduction in workplace injuries.

All Washington employers have been sent new rate notices that explain exactly how much they will save during the six-month rate holiday. More information is available at www dot rate holiday dot LNI dot wa dot gov.

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