WORKERS’ COMPENSATION INSURANCE AND RESERVES

We provide workers’ compensation insurance for our temporary and permanent employees. The majority of our current workers’ compensation insurance policies cover claims for a particular event above a $2.0 million deductible limit, on a “per occurrence” basis. This results in our being substantially self-insured.

Our workers’ compensation reserve for claims below the deductible limit is discounted to its estimated net present value using discount rates based on average returns of “risk-free” U.S. Treasury instruments available during the year in which the liability was incurred. The weighted average discount rate was 1.6% at April 2, 2017 and January 1, 2017. Payments made against self-insured claims are made over a weighted average period of approximately 4.5 years at April 2, 2017.

The table below presents a reconciliation of the undiscounted workers’ compensation reserve to the discounted workers’ compensation reserve for the periods presented as follows (in thousands):



	April 2, 2017		January 1, 2017
Undiscounted workers’ compensation reserve	$	290,810	$	292,169
Less discount on workers’ compensation reserve	15,417		14,818
Workers' compensation reserve, net of discount	275,393		277,351
Less current portion	75,532		79,126
Long-term portion	$	199,861	$	198,225

Payments made against self-insured claims were $15.9 million and $18.9 million for the thirteen weeks ended April 2, 2017 and March 25, 2016, respectively.

Our workers’ compensation reserve includes estimated expenses related to claims above our self-insured limits (“excess claims”), and we record a corresponding receivable for the insurance coverage on excess claims based on the contractual policy agreements we have with insurance carriers. We discount this reserve and corresponding receivable to its estimated net present value using the discount rates based on average returns of “risk-free” U.S. Treasury instruments available during the year in which the liability was incurred. The claim payments are made and the corresponding reimbursements from our insurance carriers are received over an estimated weighted average period of approximately 15 years. The discounted workers’ compensation reserve for excess claims was $50.6 million and $52.9 million as of April 2, 2017 and January 1, 2017, respectively. The discounted receivables from insurance companies, net of valuation allowance, were $46.6 million and $48.9 million as of April 2, 2017 and January 1, 2017, respectively, and are included in Other assets, net on the accompanying Consolidated Balance Sheets.

Workers’ compensation expense of $19.8 million and $24.1 million was recorded in Cost of services for the thirteen weeks ended April 2, 2017 and March 25, 2016, respectively.