Your Premium Dollars at WorkWashington’s Workers’ Compensation System

December 2019 Dear Employer:For the third year in a row, the average workers’ compensation premium rate is going down. The 0.8% decrease we are implementing means Washington employers, as a group, will pay a total of $21 million less in premiums. Preventing work-related injuries, along with L&I initiatives to improve outcomes for injured workers and reduce costs, has made the system healthier. This allows us to keep rates steady and predictable for employers, making it easier for you to budget for workers’ compensation costs.

Over the past seven years, we’ve seen improved outcomes for workers and lower costs to employers through:

� A 25% reduction in long-term disability.

� A decrease of 70% in the amount of time it takes to start vocational services on a claim.

� A 173% increase in return-to-work outcomes for claims with these services.

� An increase of 78.3% in the number of workers who first see doctors from the Centers of Occupational Health and Education (COHE).

One of the ways L&I is helping employees and lowering claim costs is by ensuring injured workers receive return-to-work or vocational assistance much more quickly than in the past. This system-wide culture shift to support the vocational recovery of injured workers has made a real difference by helping prevent work disability and unnecessary time off work. The result has been a significant increase over the last five years in workers returning to work after their initial vocational services referral.

Since this change, for every 1,000 referrals, the number of workers getting back to work has more than doubled. We anticipate even better results as we implement newly tested best practices in 2020.

(continued on back of brochure)

Another way we’re helping employers lower costs is through early communication during the claim process. We have a team of account managers who reach out as soon as we receive a new claim that is likely to involve time off work. These staff help employers understand the impact the claim may have on their experience factor and ways they can mitigate this through resources we have available. These resources include risk management and safety consultation and staff who can assist them with return-to-work options and programs.

For more resources on how to control your workers’ compensation costs, visit www.Lni.wa.gov/insurance/rates-risk-classes/reducing-rates .

Best wishes for a safe and prosperous 2020.

Vickie KennedyDirector of Insurance Services

What is Workers’ Compensation?It is a no-fault insurance for work-related injuries and illnesses that protects both employers and workers. No-fault means workers give up their right to sue their employer for a work-related injury or illness. The insurance also protects employers from the cost of extended claims and tort liability.

Who is covered?Workers’ compensation insurance through the Department of Labor & Industries (L&I) covers nearly 180,000 employers and about 3 million workers. Premiums and investment earnings finance the program. Workers pay on average about 26% of the premium, while employers pay the remaining 74%. Washington is the only state where workers pay a significant portion of the premium.

PUBLICATION F200-029-000 [10-2019]

Workers’ Compensation Statistics at a GlanceOperating Environment FY 2019 FY 2018Employers Insured 182,000 179,000Workers Covered 3,050,000 2,990,000Hours Reported 4,008,000,000 3,927,000,000Premiums Assessed (employers’ portion)* $1,787,182,000 $1,860,914,000Premiums Assessed (workers’ portion)* $413,698,000 $429,199,000Benefits Incurred $1,706,436,000 $1,989,530,000

Claim Statistics FY 2019 FY 2018Number of Claims Filed 111,837 111,604Number of Claims Accepted 94,681 95,213Number of Claims Denied 16,814 16,504Number of Fatal Pensions Awarded 44 36Number of Total Permanent Disability Pensions Awarded 890 886Number of Claims Closed with Permanent Partial Disability Awards 8,784 9,312Number of New Time-loss (Wage Replacement) Claims 16,498 17,812Number of Medical-only Claims Accepted 80,494 79,888Number of Injured Workers Completing Training Plans** 313 347Total Number of Days Lost from Work 5,519,390 5,732,712

Demographics of Accepted Claims FY 2019 FY 2018Percent of Injured Workers Male 66% 67%Percent of Injured Workers Female 34% 33%Average Worker Age at Injury 38 38Percent of Workers Under Age 30 31% 31%Percent of Workers Age 30-50 43% 44%Percent of Workers Age 51 and Over 24% 24%

Most Frequent Injuries FY 2019# of Claims

Finger(s): Open wounds of finger(s), fingernails (includes cuts and lacerations, and amputation of fingertip or finger) 11,114

Back, spine and spinal cord: Traumatic injuries to muscles, tendons, ligaments, and joints (includes sprains and strains) 10,820

Leg(s): Traumatic injuries to muscles, tendons, ligaments, joints, etc., such as knee and thigh (excludes ankle and hip) 4,289

Shoulder: Traumatic injuries to muscles, tendons, ligaments, joints, etc. including clavicle and scapula (injuries to muscles, tendons, and ligaments that are not specifically otherwise classified) 4,241

Multiple body parts: Multiple traumatic injuries 4,148

Notes: The data are a snapshot of FY 2019 (year ending June 30, 2019) as of fall 2019. Because of rounding, some columns may not add up to 100%.

Counts of accepted and denied claims reflect actions in that year regardless of when claim was filed. Counts of new time-loss (wage replacement) claims reflect claims with first time-loss payments, regardless of year claim was accepted.

* Includes Accident, Medical Aid, and Stay at Work premiums. ** Includes only training plans successfully completed during the year.

Your State Fund Premium Dollars at WorkAn accounting of programs and services funded with your insurance dollars July 1, 2018, through June 30, 2019

Total Benefits Paid 81.9%

Insurance Services10.4%

Occupational Safetyand Health 2.5%

General Administrative Expenses 2.1%

Programs Administered by Other State Agencies1.3%

Field Operations0.8%

Other L&I Programs 1.0%

Source: These numbers are based on preliminary unaudited financial information for Fiscal Year 2019. They do not tie directly to the statutory financial information.

EXPENSE CATEGORY AMOUNT PAID PERCENTAGE

Total Benefits Paid $1,532,638,845 81.9%

n Injured workers’ medical treatment, partial wage replacement, disability and pension benefits (excludes cost-of-living adjustments); employer reimbursements under the Stay at Work Program, structured settlement payments

Insurance Services $195,592,376 10.4%

n Claims Management: Manage claims, medical treatment and vocational services, pay benefits

$79,364,951 4.2%

n Insurance Services Division Expenses $29,645,117 1.6%

n Health Services Analysis and Office of the Medical Director: Control medical/drug costs, manage medical providers, develop treatment guidelines, pay medical treatment bills

$29,199,008 1.6%

n Information Services: Technology development, and maintain data and voice systems

$20,066,598 1.1%

n Fraud, Collection and Audit: Investigate worker, employer and provider fraud; conduct audits; collect overpayments and delinquent premiums

$15,105,509 0.8%

n Legal Services: Manage appeal cases, recover claim costs from third parties $12,189,929 0.6%

n Employer Services: Manage employer accounts, assess and collect premiums $10,021,263 0.5%

Occupational Safety and Health $46,006,433 2.5%

n Division of Occupational Safety and Health: Provide safety and health compliance, consultation and education

$43,260,214 2.3%

n Safety and Health Assessment and Research for Prevention (L&I’s safety/health research program)

$2,746,219 0.2%

General Administrative Expenses $38,459,272 2.1%

n Human resources, budget and accounting, facilities maintenance, director’s office support of workers’ compensation

Programs Administered by Other State Agencies $25,130,277 1.3%

n Board of Industrial Insurance Appeals: Independent board, hears appeals in workers’ compensation cases and safety and health citations

$19,137,530 1.0%

n University of Washington Dept. of Environmental & Occupational Health Sciences: Promote safer workplaces and prevent occupational injuries and diseases through teaching, research and service

$5,568,027 0.3%

n Health Care Authority: Consolidation of prescription drug purchasing by L&I and other agencies, manage preferred drug list

$260,432 0.0%

n Department of Health: Consolidation of L&I and Dept. of Health responsibilities for inspection of farm worker housing

$164,289 0.0%

Field Operations: L&I Offices and Staff Costs Statewide $15,691,926 0.8%

Other L&I Programs $17,940,170 1.0%

n Employment Standards/Workplace Rights: Enforce laws regulating child labor, minimum wage, overtime and working conditions

$13,071,012 0.7%

n Apprenticeship: Oversee registered apprenticeship to build a skilled workforce $4,869,159 0.3%

TOTAL EXPENSES $1,871,459,299 100.0%

Note: Because of rounding, some columns may not add up to 100%.