Experience modification rate (EMR): how your x-mod is calculated

An experience modification (mod, x-mod or EMR) is a multiplier on your manual workers' comp premium: 1.00 is average for your classes, below 1.00 a credit, above 1.00 a debit. In NCCI states it compares your actual losses with the losses expected for your payroll and classes over roughly three policy years, counting small claims fully and large claims only partly through a primary/excess split. Independent bureaus and the state funds in Ohio, Washington and Wyoming use their own versions of the same idea.

Checked against 12 sources Last reviewed 13 Oct 2026 How we check figures

Contents9 sections

Key takeaways

NCCI's worksheet divides adjusted actual losses by adjusted expected losses; the adjustment adds a split between primary and excess losses, a weight W and a ballast B, which NCCI says limits the impact of any single loss⁠¹.
Only the first slice of each claim, up to the split point, counts at full weight. NCCI's Item E-1409 filing replaces one countrywide split point ($18,500) with a state-specific value, so the same $50,000 claim counts differently in different states⁠²⁠³.
A medical-only claim enters the NCCI formula at 30% of its value (the 70% Experience Rating Adjustment) in states that have approved it⁠¹.
A mod effective January 1, 2026 uses policies that began 1/1/2022 through 1/1/2024. A policy that began 1/1/2025 is under 21 months old on that date, so it falls outside the window and enters the mod a year later⁠¹.
Ohio, Washington and Wyoming run their own plans with different periods: Ohio uses the oldest four of the last five policy years, Washington the oldest three of the last four fiscal years⁠⁷⁠⁸.

Quick facts

NCCI formula	(Ap + W×Ae + (1−W)×Ee + B) ÷ (E + B) (our restatement of the worksheet steps in⁠¹)
Medical-only claims (NCCI ERA)	70% reduction, where the state has approved it⁠¹
NCCI experience period	Policies effective 21 to 57 months before the rating effective date ⁠¹
Pennsylvania eligibility (PCRB, from April 1, 2024)	$5,000 of premium developed over the experience period (was $10,000)⁠⁶
California eligibility (WCIRB plan, September 2023 edition)	$10,200 threshold, adjusted for wage inflation⁠⁴
Washington experience period	Oldest three of the four fiscal years before the rates take effect⁠⁸

What the mod does to your bill

Workers’ comp premium starts as payroll in each class code times a rate. The experience mod then multiplies that manual premium. NCCI’s own illustration: $100,000 of premium becomes $75,000 at a 0.75 mod, stays $100,000 at 1.00 and becomes $125,000 at 1.25⁠¹. How the mod fits into the rest of the premium is covered in /guides/how-premiums-are-calculated/.

NCCI says the plan exists to recognize “the differences among qualifying employers with respect to safety and loss prevention” by comparing each one’s experience with the average employer in the same classification⁠¹. Its reasoning for weighting frequency over severity: the cost of a specific accident is often left to chance, so of two similar employers with $50,000 in losses, one from a single loss and one from ten, NCCI says the ten-loss employer will generally have higher future costs⁠¹.

You receive a mod only if your state’s plan applies and you meet its size test. Where you fall short, the mod is 1.00⁠¹.

The NCCI formula, term by term

NCCI’s worksheet ends by dividing adjusted actual losses by adjusted expected losses⁠¹. The pieces:

Expected losses (E). For each class: expected loss rate (ELR) × payroll ÷ 100. NCCI’s example: ELR 1.413 on $3,125,350 of payroll gives $44,161⁠¹.
Expected primary losses (Ep). Expected losses × the class D-ratio, the share expected to fall below the split point. The same example: $44,161 × 0.41 = $18,106⁠¹. Expected excess (Ee) is E minus Ep.
Actual primary (Ap) and actual excess (Ae). Each claim’s incurred amount is cut at the state per-claim accident limitation, then split at the split point. Everything up to the split point is primary; the rest is excess⁠¹⁠².
Weight (W) and ballast (B). W is the weight given to excess losses; it is small for small employers and grows with size. B is a stabilizing value that grows with expected losses and “helps prevent the mod from shifting too far above or below unity”⁠¹.

Written as one formula (our restatement of the worksheet steps in⁠¹):

Mod = (Ap + W × Ae + (1 − W) × Ee + B) ÷ (E + B)

NCCI’s worked case confirms the arithmetic: actual primary $88,100, actual excess $75,640, expected $197,071, expected excess $115,498, W = 0.16, B = $45,900. The numerator is $88,100 + $12,102 + $142,918 = $243,120 and the denominator is $197,071 + $45,900 = $242,971, so the mod is 1.00⁠¹. (The $142,918 is NCCI’s “stabilizing value”: (1 − W) × Ee + B.)

Three things follow from the structure:

Frequency beats severity
Primary dollars carry full weight, excess dollars only W. NCCI contrasts ten $5,000 losses ($50,000 of primary) with a single $50,000 loss (only the split-point amount, $18,500 in its example, is primary)⁠¹.
Limits cap outliers
A claim above the state per-claim accident limitation is cut to that limit. NCCI’s example uses $200,000: a $500,000 loss counts as $200,000⁠¹. Since the 2024 update the limit is set at the state’s 95th percentile of lost-time claims, which NCCI says lowers it in every state⁠²⁠³.
Medical-only claims are discounted
Where the Experience Rating Adjustment (ERA) is approved, only 30% of the primary and excess portions of a medical-only claim enters the formula. NCCI’s example: a $30,000 medical-only claim has $18,500 primary and $11,500 excess, which become $5,550 and $3,450⁠¹.

Split point: the number changed in 2024

NCCI’s Item E-1409 filing makes the split point state-specific, aiming for an average D-ratio of about 40% in each state, and said it would be indexed with each state’s annual loss cost filing. NCCI’s own examples of possible values were $15,000 for a lower-severity state and $25,000 for a higher-severity one; it published the countrywide value being replaced as $18,500⁠²⁠³. The same filing recalibrated the credibility parameters behind W and B and the G value (state average claim severity)⁠²⁠³. The filing applies to rating effective dates on and after each state’s loss cost or rate filing effective on or after November 1, 2023 (for example January 1 or July 1, 2024); NCCI expected most employer mods to change by less than ±5%⁠³.

This page does not list any state’s current split point, per-claim accident limitation, W or B values; ask your insurer or NCCI for the values on your worksheet.

Worked example (our calculation, assumed values)

The state values below are assumed for illustration, not any state’s filed values. Assume expected losses E = $100,000 over the experience period, a D-ratio of 0.40 (so Ep = $40,000 and Ee = $60,000), W = 0.20, B = $30,000, a split point of $15,000 and a per-claim accident limitation of $200,000. Manual premium for the coming policy: $50,000.

Three loss histories against the same assumed rating values
	A. Three claims	B. Same, without the large claim	C. Large claim becomes $400,000
Claims	$60,000 lost-time; $10,000 medical-only; $4,000 lost-time	$10,000 medical-only; $4,000 lost-time	$400,000 lost-time (limited to $200,000); same two small claims
Actual primary Ap	$15,000 + $3,000 + $4,000 = $22,000	$7,000	$22,000
Actual excess Ae	$45,000	$0	$185,000
Numerator	22,000 + 0.2×45,000 + 0.8×60,000 + 30,000 = 109,000	7,000 + 0 + 48,000 + 30,000 = 85,000	22,000 + 37,000 + 48,000 + 30,000 = 137,000
Mod = numerator ÷ 130,000	0.84	0.65	1.05
Premium on $50,000	$42,000	$32,500	$52,500

Scroll the table sideways to see every column.

The medical-only claim enters at 30% ($10,000 × 0.30 = $3,000 primary; it sits under the split point, so no excess). Mods are rounded to two decimals in the table. Two lessons: the $400,000 claim in column C moves the mod by about 0.21 relative to column A, not by its full size, because only $15,000 counts at full weight and the excess counts at W = 0.20; and the small claims in column B alone leave this employer with a credit because its losses are below the $40,000 of primary losses expected.

Who gets a mod, and when it applies

Eligibility is set state by state. NCCI says experience rating is mandatory once the premium threshold is met, either on enough premium in the most recent 24 months or on average across the whole experience period; the thresholds are published in each state’s plan⁠¹. NCCI’s illustration of the two-way test uses $14,000 in the latest two years or an average of $7,000, which it presents as an example only⁠¹. NCCI publishes each state’s amount in its plan; this page does not list them.

The window. The experience period is “generally based on three years”, and can contain from under 12 to 45 months of data. A policy is used if it took effect no less than 21 and no more than 57 months before the rating effective date⁠¹. That excludes the current policy, because the mod is produced about 60 to 90 days before the rating effective date, and insurers need not report a policy’s data until 18 months after inception⁠¹. NCCI’s example: a January 1, 2026 renewal uses the policies effective 1/1/2022, 1/1/2023 and 1/1/2024, and January 1, 2027 adds the 2025 policy and drops 2022⁠¹.

Duration. The mod usually applies for one year, but can be as short as three months or as long as 15⁠¹. A status of preliminary (the state’s approved rating values are not yet in), final or contingent (audited payroll or loss data not yet received) tells you whether it will be revised⁠¹. That is why an audit matters: see /guides/premium-audits/.

Unity mod. You get 1.00 if you do not qualify, lack the minimum data, are a new business, the calculation comes out at 1.00, or an ownership change prevented data from being provided⁠¹. Ownership changes can combine or transfer experience, so report them to your insurer; NCCI’s guide gives a 90-day notice period⁠¹.

Independent bureaus: California, New York, Pennsylvania

NCCI says its plan does not apply in California, Delaware, Michigan, New Jersey, New York or Pennsylvania⁠¹. Three of those publish their own plans:

How the three plans differ (primary documents, dated)
	California (WCIRB)	New York (NYCIRB)	Pennsylvania (PCRB)
Formula	(Ap + Ee) ÷ E⁠⁴	Primary/excess formula with a capped debit⁠⁵	[Ap×C + E×C×L + E×(1−C)] ÷ E; C = credibility, L = limitation charge⁠⁶
Eligibility	Premium from expected loss rates × payroll at or above $10,200 (September 2023 plan edition)⁠⁴	All employers with New York exposure in the experience period⁠⁵	$5,000 on audited exposure at current loss costs, down from $10,000 from April 1, 2024⁠⁶
Experience period	Three years, starting 4 years 9 months and ending 1 year 9 months before the modification date⁠⁴	Rating effective date rules with a 45-month maximum of data⁠⁵	Not stated in the PCRB FAQ cited
Split	Primary threshold by risk size from Table II; first $250 of each claim excluded⁠⁴	Split point varies by expected losses (Table II)⁠⁵	Variable split point from $10,000 to $300,000 by expected losses, previously a flat $42,500⁠⁶
Caps	A single-claim risk cannot rise more than 25 points above its no-claim mod⁠⁴	1.12 with one claim, 1.40 with two, 1.75 with three; with four or more, 2 + 0.000003 × expected losses⁠⁵	Maximum mod from 1.10, rising with expected losses; one-year increases limited to +40%⁠⁶

Scroll the table sideways to see every column.

Source notes: the California threshold is from the plan edition dated September 2023 and is adjusted for wage inflation, so check the WCIRB for the version in force for your rating date. New York’s plan manual is the 2022 edition (original printing effective October 1, 2022); the tables in the cited file are dated October 1, 2024. Pennsylvania’s plan changed for policies renewing on or after April 1, 2024; PCRB says the two-year transition capping stops applying for mods effective April 1, 2026⁠⁶.

In California a risk below the threshold can still be rated if it was experience rated the year before, its mod excludes unaudited payroll and the resulting mod is above 1.00⁠⁴. The plan states that payroll in the calculation is audited payroll⁠⁴.

The monopolistic funds: Ohio, Washington, Wyoming

NCCI does not apply in these states, which administer their own plans and rates⁠¹. Coverage is bought from the state fund (self-insurance aside), so the “mod” here changes the fund’s price directly.

Ohio. Rate = EM × the manual class base rate⁠⁷. The formula in the rule is EM = 1 + C × (TML − TLL) ÷ TLL, where TML is the employer’s limited actual losses, TLL is total expected losses times a limited loss ratio, and C is a credibility value set by expected losses⁠⁷. The experience period is the oldest four of the latest five completed policy years, for policy years starting on or after July 1, 2016⁠⁷. To be modified, expected losses must reach a minimum amount in the rule’s appendix⁠⁷; the first credibility group in the appendix to rule 4123-17-05.1 (table effective July 1, 2019) starts at $2,000 of expected losses, which the verified dataset records as the threshold.

Our calculation, assumed values: class 5551 (roofing) on $200,000 of payroll at the July 1, 2026 base rate of $5.7709 per $100 = $11,541.80⁠¹¹. With assumed TLL $50,000, TML $35,000 and C = 0.40, EM = 1 + 0.40 × (−15,000 ÷ 50,000) = 0.88, so $10,156.78. An EM of 1.20 would give $13,850.16.

Washington. L&I states the premium rate as experience factor × (accident fund + medical aid + stay-at-work) + supplemental pension; the supplemental pension is not experience-rated⁠⁹. The experience period is the oldest three of the four fiscal years before the rates take effect; L&I’s example is rating year 2019 using July 1, 2014 to June 30, 2017⁠⁸. Applying that rule to 2026 rates is our inference: July 1, 2021 to June 30, 2024. A claim affects premiums for three calendar years⁠⁸. L&I weights the employer’s own losses by credibility, which rises with the employer’s expected losses, so a large firm in a low-hazard class still gets modest weight⁠⁸.

Our calculation, assumed factors: class 0507, roof work, 2026: accident $3.7862 + medical aid $1.76 + stay-at-work $0.0556 = $5.6018 experience-rated, plus $0.1912 supplemental pension, total $5.793 per hour⁠¹⁰. At 10,000 hours:

Washington class 0507, 10,000 hours, 2026 rates
Experience factor (assumed)	Rate per hour	Total premium
0.80	$4.6726	$46,726
1.00	$5.7930	$57,930
1.20	$6.9134	$69,134

L&I says the experience factor also affects employees’ premiums⁠⁸.

Wyoming. The Workforce Services guide records a three-year claims history with a split plan (frequency and severity). An EMR below 1.0 lowers and above 1.0 raises premium against the base rate, and new employers without a full year of premium history get 1.0. By statute, W.S. 27-14-201, experience discounts or penalties may not exceed 85% of the base rate (for rates from 2017 on)⁠¹². Wyoming’s 2026 base rates are before EMR and discounts; for example, clerical code 000010 is $0.31 per $100 of payroll (Wyoming 2026 base-rate table, in the verified dataset below).

Official workers’ compensation base rates for this work in the three state-fund states that publish them
State	Class	Description	Base rate	Effective
Ohio	5551	ROOFING – ALL KINDS AND DRIVERS	$5.7709 per $100	1 Jul 2026
Washington	0507	Roof Work - Construction and Repair	$5.793 per hour	1 Jan 2026
Wyoming	238000	Specialty Trade Contractors	$2.39 per $100	1 Jan 2026
Wyoming	000010	Clerical Office Occupations (Special Exception Classification Code)	$0.31 per $100	1 Jan 2026

Base rates set by the state fund before experience modification. Ohio and Wyoming charge per $100 of payroll; Washington charges per hour worked, and part is withheld from wages. Other states’ insurers file their own rates; see where rates are published.

What you can and cannot change

You cannot change a closed year. You can influence the next years: claims in the latest year will enter your mod after the lag explained above, and the NCCI window drops each oldest policy as a new one is added⁠¹. Audited payroll and class assignment errors flow into the mod too, since expected losses depend directly on them⁠¹⁠⁴. Washington’s plan counts a claim for three calendar years and its Q&A explains why long claim-free periods do not keep improving the factor: only three years are considered⁠⁸.

For budgeting, ask your insurer or the bureau for the worksheet rather than a quoted mod: it shows which claims drive the primary losses, the split point and limit used, and whether the status is preliminary. The /workers-comp-calculator/ lets you apply a mod to manual premium.

Sources

1
National Council on Compensation Insurance, ABCs of Experience Rating Checked 13 Oct 2026 · Back to text ↑
2
National Council on Compensation Insurance, Experience Rating Plan Methodology Update FAQs Checked 13 Oct 2026 · Back to text ↑
3
National Council on Compensation Insurance, Experience Rating Plan Methodology Update Filing Summary (Item E-1409) Checked 13 Oct 2026 · Back to text ↑
4
Workers' Compensation Insurance Rating Bureau of California, California Workers' Compensation Experience Rating Plan—1995 (September 2023 edition) Checked 13 Oct 2026 · Back to text ↑
5
New York Compensation Insurance Rating Board, New York Experience Rating Plan Manual (2022 edition; tables dated October 1, 2024) Checked 13 Oct 2026 · Back to text ↑
6
Pennsylvania Compensation Rating Bureau, Experience Rating Plan: frequently asked questions Checked 13 Oct 2026 · Back to text ↑
7
Ohio Bureau of Workers' Compensation, Ohio Adm.Code 4123-17-03: experience rating Checked 13 Oct 2026 · Back to text ↑
8
Washington State Department of Labor & Industries, Experience rating (questions and answers) Checked 13 Oct 2026 · Back to text ↑
9
Washington State Department of Labor & Industries, Calculating premium rates Checked 13 Oct 2026 · Back to text ↑
10
Washington State Department of Labor & Industries, 2026 hourly rates by risk classification and fund Checked 13 Oct 2026 · Back to text ↑
11
Ohio Bureau of Workers' Compensation, Ohio Adm.Code 4123-17-06, Appendix A: base rates effective July 1, 2026 Checked 13 Oct 2026 · Back to text ↑
12
Wyoming Department of Workforce Services, Workers' Compensation Division, Wyoming Workers' Compensation Employer Guide (rev. 04.2025), with W.S. 27-14-201 Checked 13 Oct 2026 · Back to text ↑

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