Workers' compensation benefits-to-wages ratio declines

Risk & Insurance, July, 2002

Workers' compensation benefit payments and costs continued to decline relative to wages in 2000, according to a newly released report by the National Academy of Social Insurance (NASI) in Washington. This is the eighth consecutive year of declining benefits relative to covered wages and the seventh consecutive year that employer costs declined relative to wages.

Workers' compensation benefits for every $100 in wages declined by 39 percent from their peak of $1.68 in 1992 to $1.03 in 2000. Employer costs declined by 42 percent between 1993 and 2000, from $2.16 to $1.25 per $100 in wages.

The actual dollar amount of benefits and costs rose in 2000 for the third year in a row. Total workers' compensation benefit payments for that same year were $45.9 billion, up from $43.1 billion in 1999. Total costs to employers in 2000 were $56.0 billion up from $54.4 billion in 1999.

The NASI attributes the decline in benefits relative to wages to strong wage growth and fewer reported accidents. The number of workplace accidents that result in lost work days declined from 3.0 per 100 workers in 1992 to 1.8 per 100 workers in 2000, according to the U.S. Department of Labor.

Other reasons for the decline include tightened eligibility rules for workers' comp, a more active management of medical care, and more efficient return-to-work programs.