L&I Cost of Living Adjustment (COLA) and Washington State Accident Fund

Website design By BotEap.comCost of Living Adjustment Under an L&I Claim

Website design By BotEap.comIn summary, L&I profits will increase a little over 6% this year. This is a historically high increase. Last year, the 5.5% cost of living change was also historically high. COLAs are based on the average annual salary of all workers in Washington State. For the increase to be greater than 6%, the annual average salaries of the employees must also increase by a similar amount. For work injury claimants, this news couldn’t come at a better time. If you’d like to review more information about the COLA this year, see the 2020-2021 Schedule of Benefits.

Website design By BotEap.comHowever, we must also think about the future considering our current reality. Businesses, workers and employees have been severely affected by the COVID-19 pandemic. Consequently, unemployment rates are very high. And many companies have been forced to close. Some of those closures are temporary. However, many are permanent. This is especially true in certain industries, such as hospitality and retail. Both are industries that previously employed many workers. The Corona virus will negatively affect our economy for quite some time.

Website design By BotEap.comWhat is the L&I Accident Fund?

Website design By BotEap.comThe Department of Labor and Industries administers the Accident Fund. Say you had a workplace injury. Also, state that you are receiving financial benefits and payments under your workers’ compensation claim. So, it is important to know that the money comes from the Accident Fund.

Website design By BotEap.comPreviously, economic recessions had a negative impact on the financial health of the Accident Fund. Specifically, during the economic waves of the early and mid-2000s, Washington state companies experienced increases in L&I rates. In other words, employers had to pay higher rates for workers’ injury insurance toward the fund. In 2003, the rate increase was a staggering 28.8%.

Website design By BotEap.comStarting in 2007, we saw four consecutive years of L&I rate increases. Unfortunately, these rate increases were necessary. The companies received significant discounts in the rates that left the Accident Fund almost empty. In fact, there was $ 200MM in workers’ compensation reimbursements for employers in 1999 and 2000, and $ 315MM in reimbursements in 2007. It is no coincidence that L&I rates had to increase after those employer reimbursements.

Website design By BotEap.comL&I Work Injury Insurance Rates in Washington State

Website design By BotEap.comEmployer reimbursements depleted the Accident Fund. Therefore, L&I implemented a work accident insurance rate increase to repair it. The business and labor sector stakeholders in the Workers’ Compensation Advisory Committee (WCAC) decided to do something about it. Explicitly, the WCAC set targets to ensure that reserves in the Washington State Accident Fund are sufficient to withstand the next recession. Thanks to COVID-19, the next recession is already knocking on our door.

Website design By BotEap.comCurrently, the Accident Fund is healthy enough to sustain the looming recession. Interestingly, recent forecasts estimate that the Washington state government will face a revenue shortfall of $ 8.8 billion through 2023. That kind of deficit will require cuts. Because the accident fund is healthy, the workers’ compensation system will be an easy target for tax cuts. Therefore, now more than ever, it is important to focus and monitor the financial health of the Accident Fund.

Website design By BotEap.comThe point of view of a workers’ compensation attorney

Website design By BotEap.comOur (currently) healthy workers’ compensation ecosystem provides a critical safety net for working families. That safety net prevents financial ruin when catastrophe strikes. For that reason, we must actively resist the types of Accident Fund depletion we saw in 1999, 2000 and 2007.

Website design By BotEap.comAs a society, we cannot afford to empty this workers’ compensation insurance fund and hope to save it with rate increases later on. To learn more about this problem, read this recent article. It was written by The Stand, which is a publication for Washington state workers.

Website design By BotEap.comThis article was first published at https://tarareck.com/l-and-I-cost-of-living-adjustment/

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