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The COVID-19 pandemic and resultant stay-at-home orders are significantly impacting California’s economic, health care and workers’ compensation systems.

Some COVID-19 workers’ compensation claims have already been filed. However, at this time, it is unclear what proportion of the illnesses and deaths directly resulting from the virus will ultimately be determined to be work-related.

Some states have enacted presumptions of COVID-19 claims being work-related for certain front line workers and similar proposals are under discussion in California.

On April 8, 2020, Assemblyman Tom Daly, Chair of the Assembly Insurance Committee, requested the WCIRB to provide an estimate of the potential cost impact of presumptions provided to front line workers in California. Specifically, the WCIRB was requested to provide the cost impact of a conclusive presumption for health care workers, firefighters, EMS and rescue employees, front line law enforcement officers and other essential critical infrastructure (ECI) employees.

In response and to provide insight on the potential cost impact of COVID-19 claims on the California workers’ compensation system, the WCIRB has completed an initial analysis of these costs.

The cost estimates in this report are based on WCIRB data including unit statistical reports, aggregate financial data calls and medical transaction data. We also relied upon external data from the American Community Survey1 (ACS), the Division of Workers’ Compensation (DWC) Official Medical Fee Schedule, and a number of published studies on COVID-19 incidence rates and medical treatment patterns and costs.

At times, it relied upon judgmental assumptions based on published research or feedback from workers’ compensation experts that may or may not materialize.

In general, the cost impact of COVID-19 claims will vary significantly based on the number of workers covered by a presumption, the proportion of these workers that have COVID-19 and the number of workers’ compensation claims that are filed as a result.

Given the current level of uncertainty surrounding these factors, the cost estimates in this Research Brief are presented as a range of potential impacts based on varying assumptions of the number of COVID-19 claims filed.

On this basis, the WCIRB estimates that the annual cost of COVID-19 claims on ECI workers under a conclusive presumption ranges from $2.2 billion to $33.6 billion with an approximate mid-range estimate of $11.2 billion, or 61% of the annual estimated cost of the total workers’ compensation system prior to the impact of the pandemic.

The complete analysis is available from the WCIRB