August 25, 2006—Employers’ costs for workers’ compensation grew faster than combined cash benefits for injured workers and medical payments for their treatment, according to a new study by the National Academy of Social Insurance (NASI).
The findings are based on 2004 information, the most recent year for which data are available, and continues a trend that began after 2000.
Total workers’ comp benefit payments for injured workers rose by 2 percent to $56 billion, while employer costs rose by 7 percent to $87.4 billion. “Employer costs reflect rising premiums insurers charge to cover future benefit costs,” explained John F. Burton, Jr., of Rutgers University, who chairs the panel that oversees the report. “The recent rise in costs appears to be part of a longer cycle of ups and downs in the insurance market.”
Despite the recent rise in costs, both costs and benefits in 2004 remain far below their peak levels relative to wages, the academy said. Total benefits peaked in 1992 at $1.68 per $100 of covered wages, which is 55 cents higher than the most recent figure. Costs to employers peaked in 1990 at $2.18 per $100 of wages, which is 42 cents higher than in 2004.
The report, “Workers’ Compensation: Benefits, Coverage, Costs, 2004,” is available on the NASI Web site.
