Gregoire

“This is good news for Washington employers and their workers,” said Gregoire. “It reflects the fine job they’ve done to reduce workplace injuries, the higher than expected investment earnings and L&I’s commitment to controlling health care costs.”

The proposed rate suspension would occur in the second half of 2007, when the rate paid by workers and employers into the Medical Aid Fund would be reduced to zero for a period of six months.

“The Medical Aid Fund currently has more money than is necessary to pay health benefits for injured workers,” said L&I Acting Director Judy Schurke. “We have an obligation to use the surplus to reduce the cost to our customers.”

The savings would come on top of an overall two percent decrease in the average premium rate, a change L&I is considering for workers’ compensation insurance next year. If this proposal and the proposed 2007 rates are adopted, employers and workers would pay about $345 million less next year.

“Governor Gregoire and employers have told us they want predictable, stable workers’ compensation rates,” said Schurke. “We think we are achieving that goal with our proposed two percent rate decrease next year and this proposed six-month suspension of a portion of the premiums.”

The temporary suspension of the Medical Aid Fund rate is the most effective way to lower the workers’ compensation system’s contingency reserve without reducing overall rates to a point where they would need to be raised significantly in the future.

Washington’s workers’ compensation system is made up of three funds. The Accident Fund pays partial wage-replacement, disability and pension benefits. Only employers pay into that fund. The Medical Aid Fund provides health care and pays for some vocational counseling. The Supplemental Pension Fund pays cost-of-living increases mandated by state law. Employers and workers pay equally into those two funds.