According to a study released in July 2006 by the National Academy of Social Insurance, employer costs for workers’ compensation grew faster than combined cash and medical payments to injured workers in 2004, the most recent year for which data is available. Combined benefit payments for injured workers increased 2.3 percent in 2004 compared to prior year levels, while employer workers’ compensation costs rose by 7.0 percent for the same period.
Combined benefit payments fell by 3 cents for every $100 of covered wages, from $1.16 to $1.13. The chief contributor to this decline was the state of California, where benefits dropped by 10 cents per $100 of covered wages. Nationally, premiums paid for workers’ compensation insurance rose by 3 cents per $100 of covered wages, to $1.76 in 2004. The increase was the smallest annual increase since 2001.
Despite the recent rise in costs, both costs and benefits in 2004 remain far below their peak levels. Total benefits were at their highest in 1992 at $1.68 per $100 of covered wages, 55 cents higher than the 2004 figure. Employer costs were highest in 1990 at $2.18 per $100 of covered wages, 42 cents higher than in 2004.
Since 2000, the rise in benefit payments has resulted from increased spending for medical care. Spending for medical treatment rose from 47 cents in 2000 to 53 cents per $100 of covered wages in 2004. Spending for cash payments to workers remained the same during this period at 60 cents per $100 of wages.
There are specific actions employers can take to curb workers’ compensation costs. The first step is to examine accident records for the past three years. Take each year’s reports and examine as a whole. While reviewing look for specific accident causes and note hazards that should be remedied. You should also be looking for injury repetition and in which department injuries frequently occurred.
The next step is to conduct a physical analysis of the workplace. Utilize your health and safety committee as the catalyst, but be sure workers are also involved. Look for equipment hazards that need replacement or repair. Then search for environmental hazards such as chemical exposures, noise, temperature and ventilation issues.
The third step is to look for task or ergonomic hazards. Request employee input to encourage workers to take ownership of safety in their departments. When workers provide input, make sure actions resulting from their suggestions are documented in health and safety committee minutes and posted on bulletin boards in common areas. If employees do not feel their suggestions matter, they won’t bother to suggest improvements in the future.