Providing wage replacement and medical benefits to injured workers, workers’ compensation is also known as the “compensation bargain.” The benefit to the employer largely rests on the fact that workers may not sue their employer for negligence if a proper insurance policy has been purchased by the employer.
In Washington State, households (the employer) with less than two full time domestic servants (such as nannies, maids, gardeners and maintenance workers) are not required to carry workers compensation insurance.
While a relief for some households, others may wonder:
Should I elect to purchase workers’ compensation insurance?
If a household employee gets injured on the job, you may be personally liable for medical costs and lost wages. Protecting your assets is a concern to many employers, so what are your options?
- Option 2) Purchase workers’ compensation insurance policy from a private company.
If paying $1.0904/hr sounds high, you’re right. It’s likely this high because this risk class includes more injurious professions such as caretakers that “help with ambulating.” A quick look at L&I confirms the fact that this rate is similar to those of other physically demanding professions:
Try shopping around for workers’ comp policies. You’ll likely find a better rate.
- Option 3: Go without workers’ comp. Most families feel uncomfortable with the risk but you’ll probably save a lot of money with this route.
Update: Part II
After contacting a number of insurers about private policies and learning that they had never heard of such a product in Washington State, I reached out to Labor and Industries Small Business Liason office. Recall that households are considered a business in their eyes.
Is there a list of insurers that sell workers comp policies in WA state?
As a monopolistic state, Washington does not have a private insurance market available to purchase workers’ compensation coverage. For the overwhelming majority of businesses, workers’ compensation can only be obtained through the Washington State Fund.
After they stated that large employers (assets > $25 million) sometimes self-insure, I wondered how the high rates of a WA State policy might decrease over time:
Can you tell me about how much the annual premiums decrease assuming no claims?
Premiums can decrease in two different ways. There are annual rate changes that affect the base rate for each risk class, but these can increase or decrease the rate depending on the overall cost of claims across all workers in each particular class. There is a medical-only discount, which is awarded to a business after three years of no compensable claims. With one individual working for you, your experience factor could go down by 10% after that third year.
So, the only discounts that could happen in the first couple years would be if the overall base rate decreased when it is recalculated each year. A personal discount could occur after the third year.
Bottom Line: With no private policy options available, families are stuck with paying nearly a dollar per hour in worker’s comp insurance, and can only hope for a 10% reduction in three years.