An accurate estimate of the life expectancy of a workers’ compensation claimant is important for setting reserves, making or accepting offers for compromise and release, and certain other calculations such as commutations for attorney fees, or lump sum payments.

One method of estimating life expectancy is to use a one-size-fits all chart or table based upon historical data. This is the method set by California regulations (§10169. Commutation Tables and Instructions) when a commutation of future benefits is ordered by a WCJ. This table is based on the U.S. Decennial Life Tables for 1989-91, a metric that is outdated by about two and a half decades.

And the calculation of life expectancy is more complex now, than ever.

According to a new study just published in the Journal of the American Medical Association, “inequalities in life expectancy among counties are large and growing, and much of the variation in life expectancy can be explained by differences in socioeconomic and race/ethnicity factors, behavioral and metabolic risk factors, and health care factors.”

And earlier studies have routinely shown that life expectancy in the United States varies geographically, in some cases dramatically. Between 1980 and 2014, life expectancy at birth for both sexes combined in the United States increased by 5.3%. This masks massive variation at the county level; counties in central Colorado, Alaska, and along both coasts experienced much larger increases, while some southern counties in states stretching from Oklahoma to West Virginia saw little, if any, improvement over this same period.

According to a 2010 report by the Los Angeles Times, Los Angeles County residents are living longer than ever, with an average life expectancy of more than 80 years according to public health officials. The average life expectancy in the county was 80.3 years. However Asian and Pacific Islander women had the longest average life expectancy, 86.9 years, while black men had the shortest, 69.4 years, according to the study.

Public health officials in Los Angeles examined life expectancy in 103 cities and unincorporated areas of the county with populations of more than 15,000. They also assessed each of the 15 Los Angeles City Council districts. Of the cities, La Canada Flintridge had the highest life expectancy, 87.8 years, while Compton had the lowest, 75.7 years.

And wait! There’s more!

Life expectancy is viewed differently by the annuity companies that underwrite the Medicare Set Aside Trusts in worker’s compensation cases. This estimate is often referred to as “rated age.” Every life insurance company has different underwriting guidelines that determine what risk class an individual qualifies for. The company will look at an applicant’s personal medical history, smoker status, height/weight profile, results of the medical exam, family medical history (e.g. cancer or heart disease before age 60 in the immediate family), motor vehicle record, and any hazardous activities they may participate in (such as aviation, scuba diving, drag racing, etc).

Thus, a more sophisticated approach to estimating the life expectancy of an injured worker may be a valuable tool for claims administrators as they reserve cases, and propose or reject settlement offers.