Workers seeing fewer comp benefitsReprints
While recent analyses disagree on whether workers compensation claim costs are increasing for employers, researchers say injured workers' benefits are decreasing as accident rates decline and states raise the bar to receive comp benefits.
“A lot of workers who used to qualify for workers comp benefits no longer do,” said John F. Burton, professor emeritus at Rutgers University in New Brunswick, New Jersey, and Cornell University in Ithaca, New York. “That means the amount of benefits being paid goes down, and the major determinate of costs for employers is the benefits that are paid to workers.”
A study by Mr. Burton's consulting firm, Workers' Compensation Resources, released earlier this month showed that workers comp costs accounted for $1.77 per $100 of private-sector employer payroll in 2014, down from $1.78 in 2013.
That study, based on U.S. Bureau of Labor Statistics data, showed that employer comp costs have been declining steadily from $2.47 in 2005 to reach their lowest point since 1986.
Meanwhile, an August report by the National Academy of Social Insurance showed that employers paid $1.37 per $100 of payroll in 2013, up from $1.32 in 2012. That report, based on the academy's internal data and including Mr. Burton as a researcher, showed that employer comp costs have increased steadily from $1.25 per $100 of payroll in 2010, but are still lower than a peak of $1.74 in 2003 and 2004.
Experts say it's not entirely clear why the reports reach different conclusions on employer costs, but attribute the difference in part to how data is calculated by the academy and the bureau.
BLS estimates the average costs of wages, salaries and overall worker benefits, including workers comp, while the academy specifically measures aggregate workers comp costs nationwide, said Marjorie Baldwin, an economics professor at Arizona State University in Tempe, and one of the authors of the academy's report.
Jeff Eddinger, senior division executive at the National Council on Compensation Insurance Inc. in Boca Raton, Florida, said rising employer costs in the academy report seem to track with increased hiring among employers that tend to have higher worker injury rates.
“We were in a period of high unemployment, and now we're in a period of recovery,” he said. “Some of the sectors that are recovering, like construction and manufacturing, have higher costs associated with them.”
Although the academy's report shows overall comp costs have increased for employers, it also said comp benefits paid to workers decreased to 98 cents per $100 of payroll in 2013, from $1 in 2012 and a relatively steady decline from a peak of $1.65 in 1991 and 1992.
Ishita Sengupta, Washington-based director of workers compensation and co-author of the academy's report, said employer costs may be increasing despite declining benefits because insurers may have increased workers comp rates for employers with a higher frequency of claims, which would increase their premiums.
Those premiums are a lagging indicator, since it takes time for lower comp claim frequency to be factored into future workers comp pricing, Ms. Sengupta said.
Ms. Baldwin said declining worker injury rates have contributed to falling workers comp benefits.
Nonfatal worker injuries fell to 3.3 cases per 100 full-time equivalent employees in 2013, down from 3.4 cases in 2012, according to the most recent BLS data.
“Workplaces are becoming safer — both the incidence and severity of workplace injuries have been declining,” Ms. Baldwin said.
Ms. Baldwin also said employer costs may be on the rise, despite falling benefit payments, because they're paying higher premiums to cover more new post-recession hires.
“Employer costs increase more rapidly at first, reflecting the increases in premiums paid to cover additional workers,” Ms. Baldwin said. “Benefits increase more slowly with increasing coverage, because benefits commence when an injury occurs and sometimes extend into subsequent years.”
Both Ms. Sengupta and Mr. Burton say declining payments make sense because several states have made it more difficult in recent years for injured workers to qualify for workers comp benefits or have reduced the amount of those benefits.
For instance, states such as Tennessee in 2013 and Kansas in 2011 increased standards to prove that a worker's injury occurred in the course and scope of their employment.
“Claimant rules have become very stringent, and so it's difficult for a claim to be paid,” Ms. Sengupta said.