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In September 2018, the Bureau of Labor Statistics released a report on workers’ compensation costs by state. The report includes average premium per $100 wage in 2017 for private and public employees and self-employed individuals to cover medical expenses, lost earnings and permanent impairment due to work injury or occupational disease.
Workers’ Compensation costs by state are a statistic that can be difficult to find. “workers’ compensation rates by state 2021” is the most accurate, up-to-date source for this information.
According to the US Bureau of Labor Statistics (BLS), private sector employers spend 45 cents per hour worked for workers’ compensation, which accounts for about 1.3 percent of overall compensation expenditures. However, each state’s program is managed differently, resulting in differences in workers’ compensation expenditures from one state to the next. Depending on a company’s sector, location, and claims history, rates may be as low as 7 cents per $100 of payroll or as high as $80 per $100 of payroll.
Choose a state Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware The District of Columbia is located in the United States of America. Florida Georgia HawaiiIdaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire is a state in the United States. New Jersey is a state in the United States. New Mexico is located in the United States. New York is a city in the United States. North Carolina is a state in the United States. North Dakota is a state in North America. Ohio Oklahoma Oregon Pennsylvania Rhode Island is a state in the United States. South Carolina is a state in the United States. South Dakota is located in the United States. Tennessee TexasUtah Vermont Virginia Washington West Virginia is a state in the US. Wisconsin Wyoming
Workers’ Compensation Rates at the Lowest and Highest Levels
The data provided by the National Academy of Social Insurance is shown on the map above (NASI). According to the study, Washington, D.C. has the lowest average workers’ compensation rates, at 51 cents per $100 of payroll, which is the same as in the previous year’s report. Alaska is the most costly state, with $2.25 per $100 of payroll, a 2 cent decrease from the previous year.
Workers’ Compensation Rates in the Five Most Expensive States
- $2.25 in Alaska
- $1.84 in Montana
- $1.70 in California
- $1.67 in Hawaii
- $1.66 in South Carolina
5 States with the Lowest Workers’ Compensation Rates
- 55 cents in Texas
- 64 cents in Ohio
- Arkansas, Indiana, and Michigan are tied for first place. 70 cents (tied)
Washington, D.C., while not being a state, has the lowest rates in the nation, at 51 cents. The cost of premiums is shown as a cost per $100 of payroll.
The States with the Largest Increases and Decreases in Workers’ Compensation Costs
Workers’ compensation rates changed in many states between 2019 and 2020, with Wyoming having the highest change, with a 72 cent drop. Kentucky saw the highest rate rise, with rates rising from 91 cents to $1 per $100 of payroll. Increases in rates may represent an increase in overall risk or a higher number of catastrophic claims, while declines are often due to improved workplace safety protocols and fewer claims.
States with the Most Significant Increases
- Kentucky will see a 9-cent rise.
- 8-cent hike in Kansas
- Louisiana will see a 6-cent rise.
- Hawaii will see a 5-cent rise.
- Nevada will see a 4-cent rise.
The States with the Most Reductions
- Wyoming has seen a 72-cent drop.
- Reduced by 17 cents in Montana
- Missouri: a 15-cent reduction
- Iowa, Florida, and California are all down 13 cents.
Factors Affecting the Costs of Workers’ Compensation in States
The disparities in workers’ compensation rates by state may be attributed to a variety of factors. The fact that each state regulates workers’ compensation insurance differently is perhaps the most important element. For example, certain states, such as Wisconsin, cover practically every employee, while others omit a huge proportion of employees. Employers in one state, Texas, are only required to carry workers’ compensation when they have government contracts.
The amount of benefits received by an injured worker is likewise regulated by each state. If a worker suffers an accident that renders them temporarily handicapped, Alaska provides 80% of their salary. Most other states have a 66.67 percent wage replacement ceiling. Costs are influenced by how long the benefits endure. Permanent disability benefits in Massachusetts, for example, end after 156 weeks. Wisconsin, on the other hand, covers some permanent impairments for up to 400 weeks and others for a percentage of 1,000 weeks depending on a doctor’s assessment.
The leading sectors in a state may have an impact on total workers’ compensation expenditures, particularly if those industries contain a lot of high-risk positions. The National Council of Compensation Insurers (NCCI) or the state’s workers’ compensation rating body assigns a class code to each job type based on the risk of harm. After that, a base rate is assigned to each class code. Occupations that are more dangerous have a higher base rate than jobs that are less dangerous.
Compare the federal government, which is the leading industry in Washington, D.C., to oil and gas, which is the major business in Alaska. While not all oil and gas employees have dangerous professions, many do, increasing the probability that insurers may be forced to pay for injuries. As a consequence, premiums in a given state are often higher.
How Are Workers’ Compensation Rates Determined?
Calculating the cost of workers’ compensation insurance is more than just looking at class codes and state rates. Your paycheck and claims history are the other two sections. The fundamental workers’ compensation formula is made up of these three numbers:
Your experience modification rate (EMR) is a figure assigned by the NCCI or state workers’ compensation rating bureaus to indicate your claims history. This figure is multiplied by either your company’ or individual employees’ class codes, depending on your state, to calculate your workers’ compensation charges. One approach to reduce your workers’ compensation rates is to improve your EMR. Other suggestions include employing the correct staff, obtaining numerous bids from different carriers, and requesting reductions.
Trends in Workers’ Compensation for 2021
According to the NASI research, there are a few major trends to look out for in 2021 when it comes to workers’ compensation. For example, wages are rising, resulting in greater payroll expenses being incorporated into workers’ compensation insurance rates. As a result, although the national average rate for workers’ compensation has decreased, employer expenses continue to climb.
The following are some examples of key data that highlight these trends:
- Wages increased by 3% between 2016 and 2018.
- Between 2016 and 2018, covered salaries increased by 10%.
- From 2016 to 2018, total paid benefits decreased by 1.3 percent.
- Workers’ compensation expenditures have risen by 5.01 percent since 2014.
Employers must pay close attention to salary growth as it relates to total increases in expenditures such as workers’ compensation.
Conclusion
The Conclusion when shopping for workers’ compensation insurance rates by state or among multiple states is to understand that there are many factors affecting cost. Every state, company, and small business plays a role in defining the final rate. No two companies will have the same premium costs.
Workers’ compensation rates by occupation are the costs associated with workers’ compensation insurance. The cost of these benefits vary by state and can be a significant expense for employers. Reference: workers’ compensation rates by occupation.
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