SENATE BILL REPORT

SB 5603

BYSenator Rasmussen

Repealing provisions requiring experience rating of the industrial insurance medical aid fund.

Senate Committee on Economic Development & Labor

Senate Hearing Date(s):February 16, 1989

Senate Staff:David Cheal (786-7576)

AS OF FEBRUARY 15, 1989

BACKGROUND:

Employers covered by the state's industrial insurance program pay three separate premiums:  (1)  an accident fund premium which pays for time loss and pension payments; (2) a medical aid fund premium which pays for medical and vocational rehabilitation expenses for injured workers; and (3) a supplemental pension premium which pays for cost-of-living increases on time loss and pension payments.

For some time, the Department of Labor and Industries has adjusted each employer's accident fund base rate by an experience modification which takes into account the particular employer's claim loss experience.  The experience modification is based on actual time loss and pension costs attributable to the employer in the three-year period prior to the effective date of the rate.  This allows employers with better than average safety records to pay a reduced accident fund premium, providing an incentive to employers to reduce workplace injuries.  In 1985, the Legislature directed the department to begin experience rating the medical aid fund premium no later than January 1, 1989, following an interim analysis on the impact on employees, and large and small employers (Chapter 337, Laws of 1985).  The purpose of that legislation was to increase the incentive of both employers and employees to reduce work-related injuries.  The medical aid fund premium is shared equally between workers and employers.  Employers pay all of the accident fund premium.

SUMMARY:

The law directing the department to begin experience rating the medical aid fund premium no later than January 1, 1989 is repealed.  An emergency clause is included which would make the bill effective January 1, 1989.

Appropriation:    none

Revenue:    none

Fiscal Note:      available

Effective Date:The bill contains an emergency clause making it effective January 1, 1989.