Workers’ compensation benefits as a share of payroll for injured workers continue to decline even as employment grows and overall employer costs increase, according to a new report from the National Academy of Social Insurance.
Historically, cash benefits have been a larger share of workers’ compensation benefits than medical payments to injured workers. Due to rising health care costs during the last 30 years, medical benefits now account for an increasing share of total workers’ compensation benefits, from 29 percent in 1980 to more than 50 percent in 2013. About 33 states currently spend more than half of their workers’ compensation spending on medical care for injured workers. California pays 54.7% of costs as medical benefits.
Despite the growth in employment following the Great Recession – and the significant uptick in employees eligible to receive workers’ compensation – benefits per $100 of covered payroll dropped to $0.98 in 2013, a 5 percent decrease from 2009. At the same time, the growing workforce has translated into rising workers’ compensation costs for employers – now $1.37 per $100 of covered payroll, a 5 percent increase from 2009.
Workers’ compensation benefits as a share of payroll were lower in 2013 than during almost any period in the last three decades, according to the report Workers’ Compensation: Benefits, Coverage, and Costs, 2013. Total workers’ compensation benefits in 2013 were $63.6 billion, while employer costs were $88.5 billion.
Benefits as a percent of payroll declined in 39 states between 2009 and 2013, continuing a national trend in lower benefits relative to payroll that began in the 1990s. “The decline is due to a drop in workplace injuries as well as changes in many state laws that made it more difficult for workers’ to qualify for benefits,” said John F. Burton, Professor Emeritus, Rutgers and Cornell University. “These state laws include more stringent compensation rules, the reduction of coverage for certain medical diagnoses, and new legal requirements that make it more difficult for workers to succeed in their claims for benefits.”