WSIA

Every fall, state agencies begin assembling their plans for potential requests to the Washington State Legislature to consider when it convenes for session the following January.

This year, the Department of Labor & Industries is considering several legislative proposals across its many areas of responsibility, and two in particular related to the workers' compensation system.

Taking the Fizz out of COLAs

The first proposal would address steep and unpredictable year-over-year increases in the cost-of-living-adjustment state law provides for temporary and permanent total disability benefits. The COLA is determined every July 1 by the prior year's change in the state's average monthly wage (SAMW) as calculated by the Employment Security Department. Over the last five years, the increase has been all over the place, with some years as high as ten percent. The COLA portion of time loss and pension benefits is paid out of the Supplemental Pension Fund (SPF), which has no reserve for its liabilities and thus is a pay-as-you-go fund covered by quarterly premium taxes (for State Fund employers) and quarterly assessments on self-insured employers. Because the SPF does not have a reserve to use to moderate rate increases, each year's SPF assessment rate tracks annual wage inflation fairly closely, and thus has been volatile.

The Department's proposal would change the rate of inflation from year-over-year change in the SAMW to a rolling ten year average of the change. It would also impose a 5 percent cap on inflation in any given year.

Here it's worth mentioning that most agency legislative proposals -- they're called "request bills" in the parlance of Olympia -- have to be approved by the Governor's office in order for the agency to pursue them. We understand DLI's bills to be under review by Governor Bob Ferguson currently. This one may or may not see the light of day. On the one hand, it is an effort to address a true financial problem in the system. On the other hand, it hasn't attracted much enthusiasm from unions and the claimants' bar, two highly influential groups in the Governor's office and the Legislature's democratic majorities. We'll see.

Piloting PTSD Pre- and Post-Claim Benefits

The Department's other proposal, much more likely to survive gubernatorial review, would establish a four-year pilot program for workers and employers subject to coverage for post-traumatic stress disorder claims. As system observers know, these claims have skyrocketed among first responders since they started being allowed in 2018, have a higher than typical rate of becoming permanent total disability pensions, and thus have a much higher average claim cost.

The Department's pilot would allow for safety and health grant dollars to be spent on PTSD preventative initiatives, and would allow for mental health benefits to be paid for PTSD treatment outside of the four corners of a workers' comp claim. That is to say, before claim allowance and after claim closure. The pilot would be optional for self-insured employers, who theoretically could provide such employee benefits now. The Department clearly wants to test the hypothesis that some risk mitigation on the health care side up front or after a claim might reduce the likelihood of far more consequential and expensive pension benefits.

That may be fine as far as it goes, but workers' comp pilot programs in Washington have a way of transitioning to permanent benefits in the system, so the details and design of this pilot proposal is likely to engender a lot of discussion should it land in front of the Legislature come January.

Review the language of the COLA proposal here.

And the PTSD pilot here.

The 2026 legislative session convenes January 12.