The Oregon Department of Consumer & Business Services announced the final 2020 workers' compensation rates, which match those proposed in September 2019. (Publication 367, Oregon Department of Consumer & Business Services, revised October 18, 2019.)

As we reported earlier, for the seventh consecutive year, the "pure premium" rate will decrease. Oregon employers will see an average 8.4% decrease in pure premium workers' compensation costs for calendar year 2020. With this change, the pure premium will have decreased by an average of 45% for the periods of 2013–2020. (EY Payroll Newsflash Vol. 20, #153, 10-2-2019.)

The pure premium rate decrease is effective January 1, 2020, but employers will see the changes when they renew their policies in 2020. The combination of the changes to all of the workers' compensation rates for 2020 will result in the average employer paying $1.02 per $100 of payroll for claims costs and assessments, down from $1.11 for 2019.

While some rates will decrease, others are proposed to increase, as follows:

• Pure premium.As stated above, the pure premium would decrease an average 8.4% in 2020. Pure premium is the portion of the premium employers pay insurers to cover anticipated claims costs for job-related injuries and deaths. The pure premium rate is the base premium reflecting the actual cost of workplace injury-and-illness claims before insurer administrative expenses and profit are added. The decreased rate represents an average across all types of businesses. Rates for specific businesses and industry groups may be higher or lower, depending on group and individual claim records. Employers pay their premiums directly to their insurers. Premiums do not fund state programs or services.
• Premium assessment.The assessment to cover the costs of administering the workers' compensation programs is increased from 7.8% to 8.4% in 2020, to offset the decrease in the pure premium. Self-insured employers and public-sector self-insured employer groups will pay 8.5%, up from 8.0% for 2019. Private-sector self-insured employer groups will pay at 8.9%, up from 8.8% for 2019.
  Workers' compensation insurers, self-insured employers and self-ensured employer groups pay this assessment to the state. Insurers can pass the cost of the assessment on to the employers they cover but must identify that cost as a separate line item on billing statements.
• Workers' Benefit Fund assessment.This assessment will decrease to 2.2 cents per hour worked for 2020, down from 2.4 cents per hour for 2019. The benefit fund assessment pays for return-to-work programs, provides increased benefits over time for workers who are permanently and totally disabled, and gives benefits to families of workers who die from workplace injuries or diseases.

Employers pay at least half of this assessment and deduct no more than half of it from workers' wages. Employers then submit the total to the state through Oregon's Combined Payroll-Tax Reporting System.

For more information on workers' compensation costs in Oregon, go here.

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EY Payroll News Flash